R88 billion Black Friday boost for South Africa’s economy
South Africa’s wholesale, retail and fuel sectors are expected to generate over R88 billion in additional economic value for the South African economy during November 2024 amid growing consumer interest in Black Friday sales.
This is according to research commissioned by fintech Capital Connect and conducted by the Bureau of Market Research.
Their study showed that retailers in South Africa will generate R22 billion in additional direct revenues due to Black Friday this year and R28 billion in indirect economic impact.
The wholesale sector will also gain additional sales of R32.1 billion, while an additional R6.2 billion in fuel sales will be generated.
The study shows that consumer interest in Black Friday looks higher in 2024 than in the past three years (2021 to 2023).
This is expected to drive retail sales for November 2024 to roughly R136 billion, up 17.3% in nominal terms from the R116.1 billion recorded in November 2023.
“The positive outlook for Black Friday 2024 indicates that the tide is turning for South African retailers after a long period of economic and retail stagnation,” said Steven Heilbron, CEO of Capital Connect, which is part of Nasdaq and JSE-listed Lesaka Technologies.
“Among the factors that have helped to improve the economic outlook include vastly reduced load shedding, the introduction of the Two-Pot Retirement System, an interest rate cut, and lower inflation.
“Innovative retailers with the right product mix and promotions will benefit from the resulting rise in consumer confidence.”
Black Friday sales will be a welcome boost for retailers that have faced a challenging year. However, the formal retail sector is expected to show real growth of only 1.4% for 2024.
The analysis shows that additional sales for retail subsectors (direct impact) during Black Friday 2024 will be as follows:
- General dealers: R10.5 billion
- Textiles, clothing and footwear retailers: R5.6 billion
- Household furniture, appliances and equipment retailers: R1.8 billion
- Hardware, paint and glass stores: R1.5 billion
- Food, beverages and tobacco in specialised stores: R278 million
- Pharmaceutical and medical goods stores: No significant gains.
- All other retailers: R2.4 billion (Those that do not fall into any one strict sub-category, i.e. second-hand stores)
Consumers not going after luxuries
Total Black Friday direct sales are estimated to hit R22.08 billion, but most gains are expected from consumers buying necessities rather than luxuries.
With the heightened level of goods delivered to retailers and consumers, the wholesale sector, a major supplier to retailers, and fuel sales will be two major beneficiaries of Black Friday.
Notably, Black Friday sets the tone for December, with the lines now blurred between November promotions and the festive season.
The study’s data shows that total retail sales are forecasted to be 19% higher than in November and 48% higher than in December compared to the first 10 months of the year on average.
“The last two months of the year are an opportunity for agile, forward-thinking retailers to grow by outsmarting their competitors.
“They need to move fast to seize opportunities, with a particularly tight focus on getting in the right stock at the right price to offer promotions that increase foot traffic and basket size.”
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