South African retailers are gearing up for what could be a record-breaking Black Friday, with expectations that consumers may splurge more than R26 billion during the shopping extravaganza. The Bureau of Market Research (BMR) suggests a significant increase, estimating a surge of around R7 billion compared to the previous year.
The BMR’s findings indicate a notable shift toward online sales, with 15% of transactions occurring online last year. This trend is expected to continue, reflecting the evolving landscape of consumer habits.
According to research conducted by BMR on behalf of retailer finance provider Capital Connect, Black Friday spending is projected to escalate from R19 billion in 2022 to an impressive R26.6 billion this year. This surge is reflective of South Africa’s consumer-driven economy, constituting nearly 64% of the country’s Gross Domestic Product (GDP) attributed to private final consumption in 2022, as noted by PricewaterhouseCoopers (PWC).
Despite the optimistic outlook, concerns loom over the economic landscape. Professor Irrshad Kaseeram from the University of Zululand’s Economics Department points out that households are facing financial challenges due to high interest payments. The prime lending rate, which averaged 7.25% during the 2020/21 Covid-19 period, has risen to 11.75%, expected to persist until June 2024. Kaseeram warns that any Black Friday-related purchases and festive season spending could lead to increased debt burdens and a surge in debt counselling applications.
Economist Dawie Roodt echoes these concerns, emphasizing a growing trend of South African consumers grappling with debt-related issues. As consumers face increased financial distress, there is a potential dampening effect on total consumption, expenditure, and overall spending during the Black Friday and festive season period.
As South African retailers prepare for a potentially lucrative Black Friday, the economic concerns raised by experts highlight the delicate balance between consumer enthusiasm and the broader financial challenges faced by households. The evolving nature of consumer spending patterns and the economic climate will undoubtedly shape the outcome of this year’s Black Friday, leaving retailers and consumers alike on edge as they navigate the complex economic landscape.