Signs point to a happy ending for South Africa in 2024

Black Friday sales are expected to reflect the renewed economic optimism as the country rebounds following the 2024 national elections.

This Black Friday is also set to highlight massive shopping shifts, such as online vs in-store spending trends and the impact of the move from single-day deals to ‘Black November’ promotions.

“In the ongoing showdown between online and in-store retail sales, BankservAfrica’s online card authentication service, 3D-Secure1 reflected continued online sales growth in 2024 with steady year-on-year increases,” said Solly Bellingan, Head of Marketing and Acting Head of Cash Services at BankservAfrica.

“With a booming e-commerce sector offering competitive deals, shoppers can conveniently hunt for bargains from home. Our findings from last year show Black Friday activity peaked during the first and final hours.”

The South African economy is set to see a ‘tale of two halves’ in 2024, with several recent developments expected to boost Black Friday and November sales.

“The unexpected election outcome resulting in the formation of the Government of National Unity has indeed propelled the economy to a better medium-term growth trajectory,” said Elize Kruger, Independent Economist.

“Improved confidence levels among businesses and consumers, and a renewed focus on structural reform measures could push economic growth to higher levels.”

Consumer spending is expected to increase in November, especially for Black Friday and Cyber Monday, driven by several factors, such as:

• Fuel Prices: A cumulative R4.21 per litre drop in the petrol price since June and a cumulative drop of R3.63/l for diesel since April.

• Interest rate cuts: Following the 25bps prime interest rate cut in September, a further 25bps cut occured in the November meeting.

• Cooling inflation pressures: Consumer inflation has moderated notably during the past 12 months, from 5.5% in November 2023 to 2.8% in October.

2024 may also deliver the best salary performance in four years.

“Due to the better performing economic environment, companies have been able to pay better salaries so far in 2024, with real take-home pay having improved by 2.2% in the first nine months of 2024, compared to the full-year average in 2023,” said Kruger.

“In nominal terms, take-home pay has risen by 6.3% year-to-date compared to the full year 2023.”

In addition, Stats SA said that 294,000 jobs were created in Q3 2024.

There is also the potential that a portion of the two-pot retirement withdrawals could boost retail spending in November. Data from SARS shows that over R30 billion.

The BER/FNB Consumer Confidence Index rose to -5 in Q3 2024 from -16 last year. Growing confidence in consumers’ finances and the economy’s improved prospects as well as the pent-up demand could drive up purchases, especially for durable goods.

“While the economic environment has improved considerably compared to a year earlier, households remain heavily indebted and are still on the backfoot after some years of strain,” said Kruger.

“Consumers will likely remain price-sensitive during this shopping period. Black Friday could be an opportunity to stock up on attractive deals, partly in anticipation of the festive season.”

“Having said that, given the more favourable macro environment, bigger ticket items such as appliances are likely to be more in demand, unlike the last few years.”

An analysis of retail sales trends between December—a traditionally strong sales month—and November shows that growth has increasingly shifted toward November in recent years. This trend peaked in 2019 when the November monthly retail sales growth beat December.

Since then, and partly due to the disruption created by the Covid-19 pandemic, the trend has fizzled out. In December 2023, retail sales were far higher than in November.

“With strong sales growth expected this year, driven by a fundamental improvement in the ability and willingness of consumers to spend, both November and December should be positive retail months in South Africa,” said Kruger.

BankservAfrica expects a 7-12% cash supply growth rate for November, which will mark a return to the pre-Covid levels, observed in 2019.  This will be dependent on the impact of the two-pot retirement cash withdrawals.

“Expectations are high for this year’s Black Friday and November retail sales. Taking place just before the busy, month-end payday weekend will add an interesting dynamic to consumer spending trends,” said Bellingan.

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