Publication: Supermarket & Retailer
Date: 2022-11-16
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Black Friday—which has evolved into a month-long frenzy of sales and specials—is one of the most important events on South Africa’s retail calendar. Yet with fierce competition and a cash-strapped consumer, retailers have to be nimble and innovative to get their share of billions of rand in Black Friday spending this November.
| Capital Connect
South African retailers are expected to generate around R17.3 billion in additional sales over the Black Friday promotional period. This represents growth of around 6.7% over the Black Friday period in 2021, according to research conducted by the Bureau of Market Research (BMR) on behalf of Capital Connect. And it’s not too late for retailers that don’t have plans to get their share of the Black Friday Sales pie.
However, competition will be particularly fierce, says Steve Heilbron, CEO of Capital Connect, a fintech that offers opportunity capital to South African retailers. With poor economic growth, high unemployment, load shedding and rising inflation, the Black Friday period this year is about consumers stocking up on essentials. They will be spoiled for choice as retailers fight for their rand.
“With many of the large retail chains and ecommerce platforms pumping millions of rands into advertising and promotions throughout November, it is not easy to stand out,” says Heilbron. “High inflation, low consumer confidence, a decline in discretionary income and continued supply chain disruption mean each retailer will need to be innovative to get attention.”
Here are several key trends shaping consumer behaviour, how they will affect Black Friday, and some of the ways retailers can respond:
- Bare necessities: Consumers are spending a growing portion of their income on basic household essentials due to inflation eroding disposable income. This Black Friday, retailers should try to add great deals on basic goods such as sunflower oil and washing powder to get customers through the doors this year and grow basket sizes.
- Buying down: South African households are opting for retailer-branded or less well known brands rather than premium brands to stretch their rand further. It’s important to offer a selection of affordable brands to appeal to the price-conscious shopper during the Black Friday period.
- General dealers are thriving: Increased spending on essentials means more of the consumer’s money is going to general dealers and less to specialist stores. Specialist stores may want to consider expanding their product range and running promotions to get customers through their doors.
- Loyalty points help pay the way: Consumers are looking at ways to get more value by taking advantage of loyalty and reward programmes. They are using loyalty points for part-payment and shopping at places where they get rewards when they swipe their cards. Retailers should look at how they can reward loyal customers during the Black Friday period rather than just chasing business from bargain hunters.
- Delayed gratification: Consumers are delaying spending as far as possible, deferring big-ticket purchases such as appliances and electronics as well as even delaying important but not urgent purchases like clothes. Many will be waiting for Black Friday deals, so it’s key for retailers to be top of mind when they pull the trigger. This may mean investing in promos and ads.
- Fuelling growth: With the fuel price at such high levels, many consumers are avoiding unnecessary trips to the shops. Some are looking to get as much shopping done per trip as they can. This is a great opportunity for brick-and-mortar retailers to grow basket sizes by targeting people with the right Black Friday offers. Omnichannel and online retailers will want to look at how they can turn free delivery into an advantage.
- Offline and online experiences: Turn shopping into an experience to persuade consumers to come out for the day. ‘Shoppertainment’— experiential shopping offerings that entertain and educate— can entice people into a shop. Customers also enjoy ‘phygital’ experiences that bridge the gap between online and offline to deliver an integrated, unique experience. A simple example is entering an in-store competition by scanning a QR code from your smartphone.
Continuous offers and promotions
“Some of the biggest winners will be retailers that offer continuous special offers and promotions throughout November and into early December, to make shopping more affordable,” says Heilbron. “Those that diversify their product offering as well as channels to market (for example, online shopping and click-and-collect services) will also do well.”
Getting the right product range in place and managing inventory levels will be of paramount importance this year, especially with volatile pricing and continued supply chain disruptions, says Heilbron. But this is complicated by the fact that we’ve seen so much disruption to business as usual over the most recent Black Friday and Festive Season periods.
Now is a good time to audit your inventory, consider how buying patterns have changed during a challenging year, and establish which products will be in highest demand. Whether you need to move fast to bulk-buy products at a discounted price, set up a new warehouse location, or establish a delivery fleet, fintech opportunity capital can help make it happen.
Companies like Capital Connect empower retail merchants with quick access to hassle-free funding so they never miss out on a retail opportunity. Retailers apply for a business loan from the Connected App, choose their desired loan amount of up to R5 million°, select their repayment period - and the funds will be in their bank account within 24 hours or less. Also be sure to check out Capital Connect’s stock calculator to plan for Black Friday at www.connected.co.za/stock