South Africa’s Black Friday lost its shine

South Africa saw a very muted Black Friday in 2023 as the country’s macroeconomic environment and logistics crisis weighed on retailers’ ability to offer significant discounts ahead of the festive season. 

Portfolio manager at 36ONE Evan Walker told 702 that Black Friday is no longer the aspirational purchase it was a few years ago. 

This is, to a large extent, due to the country’s macroeconomic issues that affect consumer’s wallets.

These issues include the fact that the country has likely reached the peak of its interest rate cycle, faces high food inflation, and has experienced intense load-shedding in 2023. 

“But, the retailers also shot themselves in the foot. Many of them start the Black Friday discount three weeks in advance,” he said.

This has made Black Friday lose its allure “of that one big special day when you knew you could get something good at a good price”. 

Previously, this day drove a lot of volume for the retailers, but it has now lost its allure.

According to data from Ozow, both value and volumes were down on Black Friday 2023 compared to 2022.

Aside from the tough economic environment, Walker said South Africa’s constrained logistics also played a role.

“We’re going to see very constrained imports coming through our ports this year. So I think the retailers are sitting in this predicament where they’re not going to have enough stock for the Christmas season,” he said.

“So why should they go ahead and discount when stock is running low in certain categories and a month late coming through the ports, given the shambles those are in?”

“They’ve still got to make money. So I think, to a large extent, this ports issue also compounds it, and retail is not offering the extent of the discounts.“

Walker’s comments come after recent news that a maritime gridlock at South Africa’s ports has kept nearly 100 vessels waiting to dock as Transnet struggles with breakdowns and bad weather.

This backlog results in direct costs of R98 million ($5.2 million) a day when congestion surcharges are added.

However, Walker said South Africa could see a Black Friday rebound again.

“I don’t think we’re over it. I think it’s something that is entrenched. I think that, as I said, the retailers have spread themselves a little bit thin on all sorts of matters this year, and we could see a comeback,” he said. 

“It’s all very much related to the macroeconomic environment and just what the retailers can do at that macro level, given obviously the impetus in the economy at that point and just how they spend the season.”

“This was an exceptionally bad year given obviously load-shedding – retailers have had everything thrown at them, and why throw out a margin when you haven’t got the stock?”