South Africans opened their wallets on Black Friday despite Omicron ordeal
The picture of retail sales this year offers one great contrast overall. There is a growing divergence between booming consumer spending and falling consumer confidence.
Consumers in South Africa opened their wallets on Black Friday to participate in retail therapy on a day when the world was rattled by news of the troubling new Omicron Covid-19 variant.
The discovery and spread of a new variant would ordinarily keep consumers away from the tills at shopping malls for fear of contracting the contagious virus. However, that did not stop consumers from shopping up a storm – in-store and online – on Black Friday.
Initial figures from two leading banks suggest that consumers were shopping in greater numbers than last year – but not at the levels seen before the start of the pandemic.
FNB and Standard Bank tracked the number of card transactions that ran through their systems on this year’s Black Friday, which fell a day after payday for many consumers in SA.
FNB says spending on the “big discount day” increased by 19% year on year at its speed points. The bank’s cardholders made purchases of about R2.5-billion on Black Friday, an increase of 15% compared with 2020.
Standard Bank also saw similar transaction patterns on its systems. According to the bank, total card transactions for Black Friday increased by 17% compared with the same period last year.
Individual retailers are yet to publish their Black Friday sales figures.
Although Standard Bank didn’t put a rand value to total transactions on Black Friday, individual shopping patterns of its customers indicate that the day is still a drawcard for consumers. For example, a Standard Bank customer spent R450,010 in one transaction on Black Friday this year, while another managed to rack up 79 transactions during the shopping frenzy.
Both banks say November was a good month for retail sales, indicating that many consumers were shopping even before the start of Black Friday. FNB CEO Jacques Celliers says the bank saw heightened shopping activity beyond Black Friday, with transactions in November up 25% compared with the same month in 2020.
Global supply chain issues
Many consumers used Black Friday to finish their holiday shopping earlier than usual, worried that growing global supply chain problems could make some gifts hard to find and delay e-commerce deliveries.
The pandemic has made it increasingly difficult for SA retailers to access international markets and source consumer goods because factories closed under strict lockdown regulations. Many factories are still trying to ramp up production to pre-Covid levels but are struggling to do so in the face of rising demand for products, especially in Asia and the US. There have also been efficiency issues at ports, resulting in shipping containers piling up in North America and not arriving at harbours on time.
In the face of increasing unemployment and the rising cost of living (fuel, electricity, food), consumer spending should, in theory, remain in the doldrums – especially during a pandemic that shows few signs of being brought under control.
So, how can the divergence between booming consumer spending and falling consumer and business confidence be explained?
FNB’s team of economists says consumer spending patterns – during Black Friday and the pandemic in general – indicate that the financial situation of households has improved. Many consumers are now back on full salaries after being forced to take pay cuts during the early days of the pandemic. And consumers are tired of being housebound because of lockdown regulations and want to go out to shopping malls.
The latter probably explains why consumers spent less money online during this year’s Black Friday. According to PayU SA, which tracks everything from late-night shopping patterns to payment methods, the average online shopping basket size dropped 22% to R784.99 year on year.
“The good news is that the online shopping landscape has changed for the better – more South Africans are buying more products – but Covid has dented the basket size,” says Karen Nadasen, CEO of PayU SA and chair of the Ecommerce Forum of SA.
The total online spend was up just 6% year on year. However, online transactions rose 30% so far this year, indicating that more consumers are embracing e-commerce platforms.
Black Friday shopping stats (Source: PayU SA):
- Average shopping basket size: R1,002 in 2020; R785 in 2021.
- Growth/decline in the category of goods that consumers bought (year-on-year % change): Fashion and electronics grew by 19%, beauty declined by 31% and health declined by 34%.
- Most money spent in an hour: R30-million in 2020; R17-million in 2021.
- Online shopping performance in 2021 (year-on-year % change): total online spend is up 6%; total online transactions are up 30%.
- South Africa has the highest internet penetration on the continent. At least 37% of the population participates in e-commerce. BM/DM
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