Black Friday this year is set to highlight the major shopping shifts, including online vs in-store spending trends and the impact of the move from single-day deals to ‘Black November’ promotions. Sales are expected to reflect renewed economic optimism as the country rebounds following the 2024 national elections.
“In the ongoing showdown between online and in-store retail sales, BankservAfrica’s online card authentication service, 3D-Secure1 reflected continued online sales growth in 2024 with steady year-on-year increases,” says Solly Bellingan, head of marketing and acting head of cash services at BankservAfrica.
“With a booming e-commerce sector offering competitive deals, shoppers can conveniently hunt for bargains from home. Our findings from last year shows Black Friday activity peaked during the first and final hours.”
The South African economy is shaping into a ‘tale of two halves’ in 2024, with several recent developments expected to positively influence this year’s Black Friday and November sales.
“The unexpected election outcome resulting in the formation of the Government of National Unity has indeed propelled the economy to a better medium-term growth trajectory. Improved confidence levels among businesses and consumers, and a renewed focus on structural reform measures could push economic growth to higher levels,” says independent economist Elize Kruger.
Consumer spending is expected to surge this November, specifically for Black Friday and Cyber Monday, driven by several factors, including:
- Significant fuel price relief in the past few months: since June 2024, the petrol price has dropped by a cumulative R4.21/l and the wholesale diesel price fell by R3.63/l since April, bringing immediate savings for households. Specifically comparing the fuel price in November 2024, the R21.30/l for the 95 ULP petrol price in Gauteng is 10.9% lower than in November 2023 (R23.90/l).
- Interest rate cuts: following the 25bps prime interest rate cut in September, a further 25bps cut is anticipated at the Monetary Policy Committee meeting on 28 November, one day before Black Friday. If realised, the prime rate will be 11.25%, 50bps lower compared to a year earlier, easing monthly budgets.
- Cooling inflation pressures: consumer inflation has moderated notably during the past 12 months, from 5.5% in November 2023 to 3.8% in September 2024. October’s forecast of 3% is set to enhance consumers’ purchasing power.
- Additionally, 2024 may deliver the best salary performance in four years. “Due to the better performing economic environment, companies have been able to pay better salaries so far in 2024, with real take-home pay having improved by 2.2% in the first nine months of 2024, compared to the full-year average in 2023. In nominal terms, take-home pay has risen by 6.3% year-to-date compared to the full year 2023,” says Kruger. Furthermore, according to Stats SA, 294 000 jobs were created in the third quarter.
- There is the potential that a portion of the two-pot retirement withdrawals could boost retail spending as soon as November. Recent data from the South African Revenue Service indicated that by the end of October, 1.7 million individuals applied for nearly R30 billion in withdrawals. The BER/FNB Consumer Confidence Index rose to -5 in Q3 2024 from -16 last year. Growing confidence in their finances and the economy’s prospects combined with pent-up demand could drive up purchases, particularly for durable goods.
- “While the economic environment has improved considerably compared to a year earlier, households remain heavily indebted and are still on the backfoot after some years of strain. Consumers will likely remain price-sensitive during this shopping period. Black Friday could be an opportunity to stock up on attractive deals, partly in anticipation of the festive season,” comments Kruger. “Having said that, given the more favourable macro environment, bigger ticket items such as appliances are likely to be more in demand, unlike the last few years.”
- An analysis of retail sales trends between December—a traditionally strong sales month—and November shows that growth has increasingly shifted toward November in recent years. This trend peaked in 2019 when the November monthly retail sales growth surpassed December (see Graph 1). However, since then, and partly due to the distortion created by the Covid-19 pandemic, the trend has fizzled out. In December 2023, retail sales were notably higher than in November.
“With strong sales growth expected this year, driven by a fundamental improvement in the ability and willingness of consumers to spend, both November and December should be positive retail months in South Africa,” says Kruger.
As the Cash Independent Administrator2, BankservAfrica forecasts a 7-12% cash supply growth rate for November, which will mark a return to the pre-Covid levels, observed in 2019. This will be dependent on the impact of the two-pot retirement cash withdrawals.
“Expectations are high for this year’s Black Friday and November retail sales. Taking place just before the busy, month-end payday weekend will add an interesting dynamic to consumer spending trends,” ends Bellingan.