Even with a weak economy and global supply chain constraints, retailers are expecting strong sales from Black Friday specials this November and are generally optimistic about festive season trade.
The Black Friday retail concept has entrenched itself locally in recent years, with retailers extending the discount period to several weeks to maximise sales, and combining the November sales with December specials.
Protea Capital Management analyst Richard Cheesman said that even though Black Friday, which this year falls on November 26 in SA, and discounts throughout this month from retailers may pull forward some of what is traditionally spent in December, he is optimistic the overall festive period could be better than expected.
“My observations are that the consumer is more back to normal than one might have thought, so we might have a pleasant surprise with retail spend over the festive period,” said Cheesman.
“I have noticed traffic statistics have really picked up, which could be indicative of market conditions normalising more than they have since Covid started.”
My observations are that the consumer is more back to normal ... so we might have a pleasant surprise with retail spend over the festive period
— Protea Capital Management analyst Richard Cheesman
Makwe Masilela, head of Makwe Fund Managers, said retail sales over the festive period, including November and December, may not be too far off pre-Covid levels, depending on specific retail categories.
“Will we get back to 2019 levels? If you look at food, it will continue to do well because remember, more than 50% of people’s income is spent on food. Electronics may not be that great, unless those Black Friday specials are so huge they force people to think they can’t let this bargain go.”
Casparus Treurnicht, research analyst and portfolio manager at Gryphon Asset Management, said he believes Black Friday is going to get “bigger as our growing, poorer middle class and lower LSM pool become more desperate for specials”.
He said the fourth wave of the pandemic may also only materialise in January, which could “buy our retailers even more time”.
The government has also grown its wage bill “against all previous indications, which means that we might see a better period lying ahead”. But this is a short-term fillip for retailers, he said, as in the longer term SA's prospects may be poorer, with limited economic growth.
Sasfin Wealth senior equity analyst Alec Abraham said he believes the festive season into December will be relatively muted, with “pent-up demand on one hand, but job losses and fading pandemic support on the other”.
Foschini-owner TFG, though, is optimistic, with CEO Anthony Thunstrom saying the group is expecting a big Black Friday and “to get to levels of trade similar to 2019”.
He said TFG achieved a record Black Friday of about R515m turnover on the day in 2019. In 2020, with Covid-19 restrictions in place, Black Friday was spread over two weeks to “alleviate pressure in the store environment”, achieving about R379m over the period.
Thunstrom said that even though global supply chain disruptions are being experienced by all retailers, the group’s local supply chain, with more than 70% of apparel sourced locally, has cushioned it.
Spar's marketing executive Mike Prentice said the group is less exposed than competitors to global supply chains because it procures more than 95% of its goods from suppliers based in SA.
He said the group’s Black Friday deals, which will run from November 24 to 28, will be focused on discounts on everyday essentials as “consumers are under pressure”.
Woolworths said that even though “there have been some challenges on imported products with late deliveries”, it has ensured it “will have good availability ahead of the peak”.
The group, whose promotions are running from October 22 to December 5, said it is optimistic about having a “good Christmas” as it has used its experience from last year and the impact of Covid-19 to plan for its peak season trade.
Massmart, which owns Makro, Game and Builders, is “well prepared”, saying that its buyers work up to 12 months in advance to “secure the necessary products to meet our Black November and festive season trading requirements”. It said it isn’t anticipating “significant supply chain issues”.
The group will announce new Black Friday deals each week during November for Game and Makro, with Builders joining this promotion for the first time.
Shoprite, which plans for the event at least six months in advance, said Shoprite and Checkers supermarkets have “brought in millions of products to give customers a variety of options to consider, including 45% more toy stock than last year”.
On global supply chain constraints, Shoprite said it “continues to monitor the situation and remains in daily contact with factories, suppliers and other relevant stakeholders to adequately manage the flow of goods and product distribution”.
Pick n Pay's group executive of marketing Andrew Mills said: “We only import a small percentage of goods and most of our products are locally made.”
Online retailers Takealot and Superbalist did not respond to requests for comment.
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