A recent Nielsen survey shows that South Africans are the third most discount-obsessed shoppers in the world.
The tougher economy and its strain on consumers has resulted in cutting back on their discretionary spending, impacting on the volume of grocery baskets.
As a result, South Africans have become obsessed with promotions, with 30% of the total volume of FMCG products in South Africa in 2018 sold at a discounted price, up from 27% in 2017.
Add to this South Africa’s current credit crisis with 56% of borrowers (both unsecured and other credit) in default, as detailed in the Differential Capital report, and you have the perfect storm for consumers taking full advantage of the discounted shopping of Black Friday 2019.
“Weak economic growth in South Africa has forced consumers to become more cost conscious across all purchase categories,” says Derek Cikes, commercial director at payment fintech Payflex. “This heightened attention to price has turned South Africans to search harder and longer for bargains, which in turn fuels the increased demand for Black Friday discounted deals.”
Cikes shares six take-outs from Black Friday 2019:
* Average online order value – The average order value increased year on year (YoY) by 60% at PayFlex due to an increase in fashion spend where customers tended to load up on online Black Friday specials.
* Transition to online and mobile purchasing – As the millennial internet-savvy generation matures into the dominant segment of the consumer market, so the demand for online sales grows. Growth in online sales is further supported by the much-improved logistics and customer experience of the pure-play online retailers, such as Superbalist and Takealot.
* Drivers of increased online spend – A large section of online stores. Payflex now has nearly 100 merchants who offer goods across most spend categories, including segment leaders like Superbalist (fashion), ePetstore (pets) and Raru (gadgets and games). Fashion is the key followed closely by gadgets and tech.
* Shopping activity – Black Friday spend was more spread out than in previous years as retailers started to discount early in the week so as to spread demand across a few days during the Black Friday week.
* How South Africa’s Black Friday compares to the US – The US online market is huge and deep with online sale penetration of 16% in 2019, up from the initial 1% in 2000. These markets are a lot more mature than South Africa, where online retail was 1,4% of total retail in 2018. The average online order value on Black Friday in the US rose 5,9% from 2018, setting a new record for Black Friday at $168. South Africa showed a similar trend, but lagging a bit – so there’s potential for more growth.
* Online retail activity – Online shopping increases during the Black Friday period. One of the reasons is that of convenience, rather than fighting it out at the malls with the crowds. Online shopping also offers an expansive choice at the click of the button, with the customer having more control in managing their experience with the added facility to easily return goods as well as the various payment options, making a compelling argument for shopping online.
“The South African Black Friday phenomenon has only been around for eight years, compared to the US version which started in the mid 1950s,” says Cikes. “However, despite its nascent state, Black Friday has grown exponentially in South Africa YoY from R2,9-billion in card transactions on Black Friday 2018 to R6-billion in 2019, increasing 106%, according to Bankserv which records only a portion of the entire sales figures.
“This discount period continues to have a significant impact on retail in South Africa, where it is now an established retail day that will only continue to grow, particularly in the online arena as the ecommerce trend matures.”