Black Friday could inject R88bn into South African economy
|Published
Nicola Mawson
As anticipation starts building for Black Friday specials when items are expected to be heavily discounted on November 29, new research shows that consumers seem to be more interested in the annual sale than in any of the past three years, which could add R88 billion to the economy.
Research conducted by the Bureau of Market Research (BER) for fintech Capital Connect released yesterday stated that that retailers in South Africa will generate R22bn in additional direct revenues because of Black Friday sales this year, as well as generate R28bn in indirect economic impact.
In this same period, the wholesale sector will gain additional sales of R32.1bn, while there will be an additional R6.2bn in fuel sales.
“The positive outlook for Black Friday 2024 indicates that the tide is turning for South African retailers after a long period of economic and retail stagnation,” said Steven Heilbron, CEO of Capital Connect, part of Nasdaq and JSE-listed Lesaka Technologies.
“Among the factors that have helped to improve the economic outlook include vastly reduced load shedding, the introduction of the Two-Pot retirement system, an interest rate cut, and lower inflation. Innovative retailers with the right product mix and promotions will benefit from the resulting rise in consumer confidence.”
In September, South African’s take home pay went over the R17 000 mark for the first time since the BankservAfrica Take-home Pay Index series began.
BER’s research said total retail sales for November are expected to grow in nominal terms by 17.3% from the R116.1bn reported a year ago. It found that total retail sales during 2024 are expected to hit R1.45 trillion, a 5.7% improvement in nominal terms, a figure that has not been adjusted to remove inflationary effects, on overall retail sales of R1.37trln during 2023.
Cash Connect Capital senior operations manager, Riona Maharaj, said Black Friday, said was a “silver bullet” for retailers given that a fifth of all retailers’ sales come in between November and December.
Heading into that period, retailers will benefit from lower interest rates, higher compensation among South Africans, and an indication that load shedding was not likely.
The sectors that are likely to benefit from additional Black Friday sales, the research found, are:
- General dealers: R10.5bn
- Textiles, clothing and footwear retailers: R5.6bn
- Household furniture, appliances and equipment retailers: R1.8bn
- Hardware, paint and glass stores: R1.5bn
- Food, beverages and tobacco in specialised stores: R278 million
- Pharmaceutical and medical goods stores: No significant gains.
All other retailers: R2.4bn (those that do not fall into any one strict sub-category, i.e. second hand stores)
Maharaj noted that retail growth, especially in key subsectors like textiles, clothing and household goods, indicates that momentum is starting to build and normalise for the first time since Covid.
“Retailers are better positioned to adapt, and we expect this trend to continue into 2025,” Maharaj said.
The retail sector is expected to gain 1.4% in real terms this year as South Africa shows slow but steady growth, Maharaj said.
The sub sectors that will lead this charge, she said, are textiles, clothing, footwear and leather goods, anticipated to grow at 6.15%. This is followed by household furniture, appliances and equipment forecast at 4.27% and pharmaceuticals and cosmetics just more than 2%.
Maharaj said that the market remains cautious even as the outlook brightens.
While “the tide is turning,” some downside risks remain such as South Africans having a “wait and see” approach to load shedding and the new government, said Maharaj.
Retailers are concerned about blackouts, as well as Shein and Temu making inroads into the local market, she noted.
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