Do Black Friday sales take away from Xmas sales?

As South Africa joins the USA and many parts of the world in the hype around Black Friday and Cyber Monday in November, are retailers not short-changing themselves by running with early specials only to then find themselves with empty tills in the weeks leading up to the festive season?

The push-pull factor facing consumers who, on the one hand, have had a torrid past few years of getting very little for their hard-earned cash, and capitalizing on the bargains that Black Friday and Cyber Monday offer, makes for a very tumultuous trading period.

The conundrum comes in when consumers have maxed out on Black Friday and Cyber Monday to buy that special ticket item at the end of November and then, as the festive season approaches and festivities are planned, the budget is blown and there is nothing left for that festive feast at Xmas, let alone stocking the bare cupboards for the new year or buying school supplies in those long lean days of January.

But doesn’t that just mean that retailers get some sales in early and then lose out just before Xmas as consumers run out of cash?

According to research commissioned by Capital Connect, part of Nasdaq and JSE-listed Lesaka Technologies, the Black Friday 2024 shopping season in the wholesale, retail and fuel sectors is projected to generate more than R88bn in additional economic value for the economy as a whole during November 2024 amid surging consumer interest in Black Friday sales.

The study shows that retailers in South Africa will generate R22bn in additional direct revenues as a result of Black Friday sales this year, as well as generate R28bn in indirect economic impact. In this same period, the wholesale sector is projected to gain additional sales of R32.1bn, while an additional R6.2bn in fuel sales will be generated.

The study finds that consumer interest in Black Friday looks to be higher in 2024 than any of the past three years (2021 to 2023). This boost is expected to help drive total retail sales for November 2024 to approximately R136bn, up 17.3% in nominal terms from the R116.1bn recorded in November 2023. Total retail sales during 2024 are forecasted to be R1.45tn, which is a 5.7% improvement in nominal terms on total retail sales of R1.37tn during 2023.

According to Steven Heilbron, CEO of Capital Connect, the positive outlook for Black Friday 2024 indicates that the tide is turning for South African retailers after a long period of economic and retail stagnation. “Among the factors that have helped to improve the economic outlook include vastly reduced load shedding, the introduction of the two-pot retirement system, an interest rate cut, and lower inflation. Innovative retailers with the right product mix and promotions will benefit from the resulting rise in consumer confidence.”

Where does Black Friday originate?

The same way we have adopted other Americanisms like Halloween, Black Friday is another retail event that has now taken root in South Africa, although not as intensely as in the US. It traditionally takes place on the fourth Friday in November (and the day after Thanksgiving in the USA) which happens to fall abnormally late in the month this year. Black Friday is considered as the biggest shopping holiday of the year and always falls on the 4th Friday in November but this year falls on November 29th. The biggest stores start with sales as early as the week before Black Friday whilst others simply use the whole of November to drum up sales.

The history of ‘Black Friday’ refers to the day after Thanksgiving Thursday in the USA in November when workers in the 1950s often called in sick on the day after Thanksgiving in order to score a four-day week-end. They would descend on Philadelphia’s downtown streets on the Friday to pick up bargains and retailers, trying to avoid going into the red with poor sales as the year drew to a close, saw the opportunity to go into ‘the black’ on that one day as shoppers spent their money on discounted goods.

Black Friday traditionally marks the start of the Christmas and festive retail trading season in the USA but South Africa only cottoned on to the Black Friday craze about ten years ago and instead of following that tradition of just using that one day to capitalise on the Friday frenzy, where all night queues stretch for blocks to be the first to get fantastic deals on big-ticket items, retailers in South Africa somehow seemed to have not got the memo that said ‘bargains to be had only on Black Friday’.

In true South African style, retailers, not satisfied with just concentrating on that one day to sell those big-ticket items, start out with pre-Black Friday specials, month-long specials and then post Black Friday specials that carry on right through the festive season.