Rethinking Black Friday: Fewer deals, more caution

Black Friday has once again taken the spotlight, with consumers eagerly flocking to stores and online platforms to snag deals and discounts. Chriszelle Joseph, Senior Coverage Banker for Consumer Goods & Services at Absa CIB, and Andrew Stein, Group Marketing for Massmart, shared their insights on the evolving trends and consumer behavior in the retail sector. Massmart, home to popular brands such as Macro, Game, and Builders, has observed a surge in consumer response this year, attributing it to factors like interest rates, inflation, and increased liquidity in the market. This year's Black Friday promotion spanned five weeks, showcasing improved performance compared to previous years. Consumers were not only purchasing big-ticket items but also stocking up on pantry essentials, reflecting a shift in spending patterns. On the other hand, data from Absa CIB revealed a slowdown in consumer spending since 2019, with a decline in transaction volume and consumer spending. The economic challenges in South Africa, including high interest rates, inflation, and unemployment, have reshaped consumer spending habits, prioritizing essentials over discretionary purchases. However, the recent uptick in consumer spending in October, fueled by reduced interest rates and higher disposable income, signals a positive trend for the retail sector. The emergence of fast fashion platforms like Temu and Shein has disrupted the market, offering customers more options and driving competition. Retailers are adapting to the changing landscape by emphasizing rewards and loyalty programs to attract value-seeking consumers. E-commerce platforms have intensified competition, compelling brick-and-mortar stores to adopt an omnichannel approach to enhance customer experience and remain competitive. The surge in online shopping, evidenced by a doubling of online traffic and app downloads, indicates a shift in consumer preferences. Despite the high cost of living crisis, consumers are prioritizing pantry essentials, festive gifting, and back-to-school supplies during Black Friday. Chriszelle Joseph emphasized the significance of these categories in driving consumer demand. As consumer confidence improves and the economic environment shows positive signs, the retail sector is expected to witness a gradual recovery post-pandemic. Both experts are optimistic about the future outlook, anticipating a steady momentum in consumer sentiment and retailer confidence. While the recovery may not be rapid, the retail sector is poised for growth and adaptation to meet evolving consumer needs and preferences.