Online shopping soars as Black Friday spending rises despite economic strain
Cape Town - Black Friday 2024 proved to be a mixed bag for both consumers and retailers, with early reports indicating that the weekend was a success, although spending patterns reflect South Africa’s ongoing economic challenges.
Economist Ulrich Joubert commented that, while it’s still difficult to track exact spending, early data suggests that Black Friday Weekend was successful.
Notably, Capitec Bank, which boasts the largest customer base in the country, reported a 27% increase in spending compared to last year.
"Capitec mentioned that the money spent by their clients increased by 27% compared to a year ago. Now, that's quite a hefty increase… it tells us that yes, there was a lot of money available to spend," Joubert explained.
He noted that spending during the weekend was largely focused on groceries, fuel, telecommunications, home improvements, clothing, and beverages.
However, consumers showed caution when it came to big-ticket items, which Joubert attributed to the ongoing economic constraints South Africans are facing.
"People were careful not to spend on very big items. I think people are still careful in how they spend their money… those with the ability to spend on big items were also careful not to spend too much," said Joubert.
South Africa’s economic challenges, including high interest rates, weak growth, and high unemployment, were likely contributing factors.
Despite these constraints, the surge in spending suggests that some consumers are still finding ways to indulge, albeit with more restraint.
One of the most notable trends this year was the significant growth in online shopping. Joubert observed that many consumers opted for the convenience of online purchases over the traditional in-store Black Friday rush.
"The image of Black Friday is long queues and battling for products, so it makes sense that many people spent money on online products," he said.
Joubert predicts that this shift towards e-commerce will continue in the years ahead. "Online business is increasing and perhaps taking away some transactions from the shops around the corner."
Despite concerns about high debt levels, Joubert said, "It seems to have been a good weekend for retailers and I hope that consumers are still happy with the margins they got during this weekend."
Massmart, which operates Makro, Game, and Builders, also reported significant gains during its month-long Black Friday promotion.
Andrew Stein, Vice President for Marketing at Massmart, told Weekend Argus that foot traffic at their stores had been strong, with consumers showing more interest in essential items than in luxury goods.
"Makro app downloads doubled in November alone, showcasing the consumer appetite for savings this Black Friday and exceeding expectations. We have seen interesting trends this year for Black Friday, with shoppers prioritising savings on essentials like cooking oil, nappies, and soft drinks specifically," Stein said.
"Appliances and home improvement items like air fryers and air conditioners sold out fast."
The shift towards essential items aligns with broader consumer caution, as South Africans continue to balance household budgets amidst economic uncertainty.
First National Bank (FNB) also had a strong showing this Black Friday, with spending exceeding last year’s record by surpassing R3.2 billion in purchases.
Year-on-year spending increased by 11%, with more than R5.4 billion processed on FNB Speedpoint devices.
"Overall, 20 million card transactions were processed by FNB with a maximum of 690 transactions per second," said FNB CEO of Card, Senzo Nsibande.
"This year we saw strong volumes and value spent, despite the slow start on Friday morning."
Nsibande highlighted a notable shift in consumer preferences. "The most popular spend categories included groceries, clothing, and entertainment. The most growth was seen in the travel category with 15.4% and clothing with 11.4% compared to last year."
FNB also reported a surge in online spending, with 23% of all purchases made online, and a particularly high 42% of credit card purchases conducted via digital channels, a 17% increase from the previous year.
"In line with the anticipated significant shift towards digital payments, we’ve seen a strong preference for safer and more convenient payments, with virtual card, online spend, and digital wallets all seeing substantial increases," Nsibande said.
One of the standout transactions recorded by FNB was a massive R780,000 purchase made at Cartier Boutique.
Despite the generally positive sales figures, economist Dawie Roodt pointed out that Black Friday’s impact seems to be diminishing slightly in recent years.
"My impression is that this year's Black Friday sales were a bit underwhelming," Roodt remarked.
"One thing I noted was that I've seen some of these sales popping up long before Black Friday, and, obviously, the retailers that are in the market first, they get the first sales."
Roodt suggested that retailers have stretched out Black Friday sales over a longer period, which may dilute the urgency and excitement of the traditional shopping event.
"They’re stretching Black Friday further and away from the actual Black Friday, and this might cause it to lose its impact."
tracy-lynn.ruiters@inl.co.za