South African retailers are expecting a massive pay day this Black Friday.
The Bureau of Market Research (BMR) provides data that suggests that retailers are expecting an increase to the amount of around R7 billion.
The research said that last year 15% of sales was online and they expected a significant proportion of sales to also be online this year.
Research by the BMR on behalf of retailer finance provider Capital Connect found that Black Friday spending is expected to increase from R19bn in 2022 to R26.6bn this year.
The November 24th shopping extravaganza is by no means just a American phenomenon. E-commerce platform Picodi has noted that “sales on the day have easily been 2,000% higher compared to an ordinary shopping day”.
PricewaterhouseCoopers says that South Africa has a consumer-driven economy.
The research by the organisation states that “nearly 64% of the country’s gross domestic product (GDP) attributed to private final consumption in 2022.”
“The power of the consumer wallet is critical to the strength of the economy and, therefore, lends largely to the strength of the retail sector,” PWC notes.
CONSUMERS FEEL THE PINCH AND MAY NOT SPEND
While the research by BMR argues that consumers are going to spend more this Black Friday, professor Irrshad Kaseeram, from the University of Zululand’s Economics Department, said households are beleaguered with high interest payments and this will impact their spending power.
“The prime lending rate during the 2020/21 Covid-19 period averaged 7.25%. Today it is at 11.75% and is expected to remain that high at least until June 2024, given our high inflation level, especially due to food and fuel,” Kaseeram notes.
Kaseeram argues that, “any hire purchase over the Black Friday period as well as in the build-up to Christmas will result in an elevated debt burden and further applications for debt counselling”.
Economist Dawie Roodt also seems to stress that there will be less spending this Black Friday and the festive season.
“It is clear that South African consumers are getting more into trouble with debt. They are becoming more distressed and have less money available to spend on different things. That is likely to affect total consumption, expenditure and spending in the economy, and when that happens, we are going to see fairly weak spending over the Black Friday and the festive season period,” Roodt concludes.