The retail cash bonanza that is Black Friday will have to be approached differently this year in view of Covid-19 prevention measures. But retailers that get it right, can end 2020 on a reasonably high note and set themselves up for growth and success.

Last year, was the biggest Black Friday in South Africa to date. The total number of transactions processed by BankservAfrica (in-store and online) was just over seven million, a 36% increase on 2018’s 5,2-million transactions.

 

Total spend was in the region of R6-billion, an impressive 106% increase on 2018’s R2,9-billion (which was already double the takings of an ordinary trading day).

But 2020 is a far cry from 2019. Some of South Africa’s biggest retail chain stores have been pummelled by the pandemic. Massmart, owner of Game and Makro, reported a R1-billion loss for the half year ending 29 June 2020, while Woolworths expects its earnings to fall by 70% compared to a year ago.

“In this retail tunnel, Black Friday shines a welcome light – an opportunity for retailers to recoup at least some of the losses they suffered during lockdown, provided they think differently, plan creatively and access funding smartly,” says Steven Heilbron, CEO of the Connect group of companies.

 

2019 versus 2020

A post-Black Friday study conducted by GeoPoll in 2019 could be useful to retailers for planning purposes in the three months leading up to 27 November 2020.

Survey participants indicated that food items, beauty accessories and electronics and appliances were the most sough-after items on their Black Friday shopping lists. In view of the economic hardship visited upon millions of South Africans at the hands of Covid-19, it is only reasonable to expect that basics, instead of luxuries, will be what consumers want in 2020.

The GeoPoll survey further revealed that 67% of South African consumers did their Black Friday shopping in-store only. A much smaller group of shoppers, 21%, indicated shopping both in-store and online, and only 11% of shoppers shopped online. While it can be expected that online shopping has gained traction beyond 11% over the past few months of isolation, quarantine and social distancing, the vast majority of South African consumers simply don’t have the means yet to shop online.

In the past few months, the coronavirus pandemic has hurt the economy – globally as much as locally – to the extent that consumers have less money to spend on Black Friday this year than was the case in 2019. Many have lost their jobs, had to accept a pay-cut or are earning less than a year ago. Even those who had been saving to buy a big-ticket item or to get ahead on their Christmas shopping on Black Friday, might have had to use some of those savings to make ends meet.

In addition, South Africa cannot afford for Black Friday to be a Covid-19 super-spreader event, despite the fact that local consumers prefer to shop in-store.

 

Retailers must be prepared

“All these factors leave us with a complicated Black Friday picture,” says Heilbron. “The day, and in fact, the whole month during which Black Friday extends, remains a golden opportunity for retailers to recover some of the losses they have suffered this year, but they will have to be very smart in their approach.”

According to Heilbron, factors to consider include extended trading hours to compensate for fewer shoppers that can be allowed in-store at any given time, and having more hands on deck to process shoppers as they arrive and leave stores. Retailers should also consider services such as pre-orders and drive-through pick-ups, which have marketing and logistics implications.

In addition, retailers would do well to stock up early on items they expect to be in demand on Black Friday. Global supply chains have been severely disrupted and turnaround times on imported goods are in many cases significantly longer than before.

“These realities in the time of Covid-19 add to the complexity and cost of doing business, but addressing them is an investment worth making – not only to leverage Black Friday, but also to get a head start on trading successfully in the future,” Heilbron says, adding that Capital Connect provides the funding answer business owners need.

Capital Connect offers retailers short-term unsecured business finance.