By Ina Opperman
When Black Friday rolls around on Friday this week, many consumers will be ready to spend responsibly it seems.
On Black Friday, 70% of financially-distressed consumers will focus on hunting for deals that will put more food on the table and help families to stock up on necessities like toiletries, electronics and other tech items.
The survey conducted on behalf of Debt Rescue shows that, while inflation and record-high living costs spiked consumer demand for great deals, 85% of working South Africans plan to spend less this year than in previous years, pointing to a reduction in disposable income.
And despite economic challenges, a significant 83% of consumers intend to participate in Black Friday, while 89% are willing to spend up to R3 000 for the right deals.
The survey was conducted among just under 2 800 participants between the ages of 25 and 65 to understand consumer engagement, spending patterns and overall sentiment regarding the value and authenticity of Black Friday promotions.
The findings reveal insightful behaviours and trends predominantly among single, employed South Africans in the age bracket of 30 to 45 years, who also bear financial responsibility for dependents.
“Insights from the survey reflect a practical stance among consumers toward spending wisely amid economic fluctuations. This shift suggests a heightened focus on value, with consumers eager to maximise their financial resources through strategic purchasing, with 80% of the respondents saying they will check prices and stick to a shopping list,” Neil Roets, CEO of Debt Rescue, says.
“The fact that most South Africans are prioritising necessities is concerning and reflects the dire financial state of households that are hanging on by a thin thread.
“This is very similar to the trend that shaped Black Friday in 2022 and has in fact shaped the trend of this retail phenomenon over the preceding two years, with people carefully considering every cent before committing to a sale.”
What the Black Friday wish lists show
Frederik Zietsman, CEO of Takealot, says it appears that many consumers wait for sales such as Black Friday to buy big ticket items.
“Consumers are not buying big ticket items, such as fridges and televisions, in favour of deals on alternative power solutions and essential groceries.”
He says there is evidence of this in the “wish lists” shoppers compile on Takealot, with lists favouring grocery perishables including such items as tomato sauce and two-minute noodles, as well as cleaning products, such as dishwashing liquid.
John Loos, senior economist at FNB, says Black Friday, which also happens to fall on a day before most people get paid, will not set off any fireworks this year due to rising interest rates that resulted in high costs of servicing debt, poor income growth and slow gross domestic product (GDP) growth.
“It is not a wildly exciting time for consumers. What is also questionable is how much retailers can give in terms of good discounts. Retailers have also been under pressure in recent years and are suffering high inflation on the prices of their products as well as high operating costs.”
Family needs and household essentials
Roets says Black Friday promotions have to resonate with value-conscious shoppers who prioritise practical spending and significant discounts as they navigate the pressures of inflation and escalating interest rates.
“With many consumers having children to support, there will likely be an emphasis on purchases that cater for family needs or household essentials. Retailers would do well to keep this in mind.
“While I understand the need of South Africans to stock up on essential goods while these are marked down over the Black Friday promotional period, consumers would be wise to keep a tight rein on their spending over the festive season, to avoid heading into the New Year in even more debt.”
Roets warns that all indications are that South African consumers are in for another tough year in 2024, with no expected decreases in terms of interest rates and electricity prices, while substantial tax hikes are expected to be announced when the finance minister makes his budget speech in February.”
“Unless people plan carefully and rein in their finances over the holiday season, my concern is that more and more people will fall into a deep hole of debt they cannot easily climb out of.”
Click here to read the full article.