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Black Friday has more than R4bn in discount deals this year

Black Friday has more than R4bn in discount deals this year

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Retailers, which have seen profit margins, footfall and trading hours shortened from load shedding and an increasingly financially strapped consumer, are banking on good Black Friday sales to help meet their financial targets for the year.

With more than R4 billion of discount deals being offered to local consumers on the day, it has become bigger than Christmas for retailers.

As an example of just how important the day has become to retailers, listed clothing group The Foschini Group had this to say in its last results: “As always, the second half of the financial year is heavily dependent on Black Friday and Christmas trade, which will largely determine performance for the full year.”

The group said it expects the trading environment and consumer confidence to remain under pressure, worsened by lost footfall due to load shedding in South Africa.

With the arrival of the Black Friday promotion frenzy, much of which is already out there in advertising and online, consumer data company NielsenIQ analysed the dominance of this shopping phenomenon, and found that Black Friday has become bigger than the traditional festive season purchase week in December 2021.

In fact, during Black Friday, more than half the volume of all fast-moving consumer goods (FMCG) products, is sold on promotion, equating to a whopping R4bn sold on discount deals.

NielsenIQ Sub-Sahara Africa Analytics director Kobus Eksteen said last year’s Black Friday week had surpassed the biggest festive season sales week.

FMCG basket sales on Black Friday in 2021 were 23% higher than the average of all other month-end weeks that year, and the percentage of volume sold on promotion was 55% higher, said Eksteen.

NielsenIQ also found that the Black Friday week and the week immediately thereafter increased their lead over the two key December month-end weeks, from 2% larger in 2020 to 6% larger in 2021, suggesting that sales were possibly being pulled forward, from December into November.

A search through the websites of South Africa’s largest retailers reveals many of them have already launched their promotions.

Pick n Pay, for instance, said Black Friday was its biggest shopping day, with R800 million in sales last year on the day, and it is intending to deliver “its biggest and strongest Black Friday deals” on Friday.

Based on customer research, “we expect customers to be hunting for even more value as they remain under pressure after a tough year. Many will have a Black Friday shopping list and our detailed knowledge of their needs means we can deliver personalised deals and massive savings on their most sought-after items,” said the group’s marketing executive, Andrew Mills. The group is again running early Black Friday specials in stores and online.

HiFi Corporation, an electronic and audio visual store chain in the Pepkor stable, for example, already has countless products offering discounts of up to 60%, sometimes amounting to thousands of rand on some products, listed on its website as part of its Black Tag Sale on Black Friday.

Shoprite Group, the biggest grocery store chain, said all their systems were ready ahead of the “retail extravaganza”, and new and existing IT systems and technology would aim to give customers “a more personalised and frictionless Black Friday shopping experience”. Systems were also optimised to ensure its IT systems could handle the surge in shopper numbers during big campaigns such as on Black Friday.

“With hundreds of thousands of kilometres of network cable, over 500 000 pieces of equipment and 30 000 till lanes in our stores, we are always proactive about keeping it all in working order all the time, not just during Black Friday,” said Shoprite’s head of IT Commercial and Service Operations, Richard Page.

Shoprite has several digital channels, including browsing sites for Shoprite and Checkers, eCommerce websites for LiquorShop and Petshop Science and the Checkers Sixty60 app. The app has already offered up to 50% off certain products in a pre-Black Friday that ends on Sunday.

Shoprite has also put in alternative power solutions to ensure all stores operate fully during load shedding. All Shoprite and Checkers supermarkets have diesel generators. In some locations, the generators are used together with solar power to help cut down on diesel use. Stores also have UPS (Uninterruptible Power Supply) equipment to keep tills going during power outages.

Shoprite’s Checkers was the retailer to launch Black Friday in 2014, and it will offer discounts of up to 50% on Friday.

Its top selling deals from last year included everything from Omo Auto, Jacobs Instant Coffee and Coca-Cola to Philips Air Fryers. Customers can look forward to great deals on grocery, toys, top appliance brands, tech, wine and more – both in store and online.

NielsenIQ said last year that certain products across the entire retail sector took their promotions to the max. For example, 89% of coffee creamer volume was sold on promotion, 75% of rice, 86% of washing powder, 74% of instant coffee and 66% of whisky volumes were sold on deal.

Eksteen said this unfortunately meant certain brands were now so reliant on Black Friday sales to achieve their targets that if they were to stop their Black Friday promotions it would have a significant negative impact on their annual performance.

It’s also not only brands that are displaying a heavy reliance on the volume of sales achieved through promotions.

“The emergence of ‘promo only shoppers’ has resulted in these shoppers having a permanently altered perception of price point changes and extreme price sensitivity,” said Eksteen. He said local shoppers were notoriously price-obsessed, which had seen South Africa continuously ranked in the top five most price-sensitive countries in the world.

Of the more than R300bn in basket sales measured by NielsenIQ to the end of September 2022, more than 32.2%, or R97bn, of all FMCG products were sold on promotion.

He said consumers’ appetite for promotions might be even stronger this year. This was due to increased inflationary pressures and shoppers’ desire for value-for-money deals that offer them relief from food inflation, and the buffeting effects of other soaring cost-of-living items such as fuel.

BUSINESS REPORT

Original Article

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