Joan Muller Property writer & columnist
Consumers shop for Black Friday specials in November last year. Picture: Gallo Images /Sunday Times /Esa Alexander
Consumers shop for Black Friday specials in November last year. Picture: Gallo Images /Sunday Times /Esa Alexander

Retailers around the world, including in SA, are no doubt betting on Covid-weary consumers to go big on next week’s Black Friday sales. We can certainly all do with a spot of early Christmas retail therapy. Black Friday promotions may well go a long way to help battered brands recover the losses recorded during the months of brick-and-mortar store shutdowns.

Last week’s Alibaba Singles’ Day online shopping blitz underscores just how quickly the Chinese have regained their propensity for bargain hunting. The Chinese tech conglomerate raked in a record-breaking $75bn in sales, 26% up on its 2019 Singles’ Day earnings. In this CNN Business report, Xiaofeng Wang, an analyst with market research firm Forrester, says Chinese consumers’ purchase behaviour has returned to pre-pandemic levels, if not higher. China reported positive economic growth for the second quarter in a row last month, underlining how quickly the world’s second-largest economy has recovered from the pandemic.

Meanwhile, UK retailers are apparently spending millions of pounds to expand website and e-commerce capacity in the run-up to Black Friday and Christmas shopping sprees, traditionally the industry’s busiest time of the year. According to this article in yesterday’s Financial Times, retailers in the UK now face their biggest test since March. It’s do or die for those retailers that haven’t yet upgraded their ability to sell online, given that many stores across England will be forced to remain wholly or partially closed for the next three weeks. The British Retail Consortium estimates that the current lockdown is costing £2bn a week in lost sales.

Grocer Marks & Spencer has raised its online capacity by 45% compared to last year, hiring another 1,000 staff and improving IT processes. Further increases are planned for the coming weeks.

But the industry relies on an army of delivery and warehouse workers to fulfil orders, who may not be able to cope with increased volumes. As Frank Proud, director of consultancy Apex Insight, puts it: “Constraints may emerge at the distribution hubs through which orders are routed before being dispatched for ‘last mile’ delivery. Given many parcel carriers were already running at a peak level, to have another peak on top of that is probably going to be a stretch.”

SA retailers may face the same distribution and delivery snags in the next few weeks if we see a surge in e-commerce sales. However, there’s mixed views on the extent that SA consumers will opt for online shopping. Nashil Chotoki, retail asset manager for Redefine Properties, one of the JSE’s largest mall owners, says while Covid-19 has accelerated online sales, of groceries in particular, most online platforms are still operating at a loss. “While online sales are growing, we do not anticipate the SA market to reach levels being seen in developed countries in the foreseeable future, mainly due to cost, access to the internet and logistics.”

Chotoki believes brick-and-mortar Black Friday sales are also likely to be muted this year due to the pandemic. He says social distancing and mask wearing measures, as well as the limitations on how many people are allowed inside stores at any one time, will impede promotion-led sales in malls.

“Retailers are likely to run fewer discounting promotions compared to last year’s door-busting deals as they cannot afford the reduction in margin after the series of Covid-19 lockdowns.” However, there is an upside: we could see an extended promotion period in SA to encourage shoppers to part more readily with their money. “We expect to see a Black November or even a Black December,” says Chotoki.

Some analysts believe SA’s Black Friday sales could top festive season sales for first time this year. Debbie Law, retail sector head at Rand Merchant Bank, argues that the pandemic has already brought about a “seismic” change in SA consumers’ shopping habits. She has a compelling argument on why online shopping will be a significant contributor to this year’s Black Friday sales.

“Lockdown has introduced more new online shoppers in the past six months alone than in the past few years. Retailers are investing significantly in upgrading their online platforms or establishing them for those who didn’t have this channel in place,” she says. She notes that in the past, with the exception of one or two subsectors, the retail sector has seen a relatively even split between Black Friday and festive season sales. “But it’s more than likely to be different this year,” she says. Retailers have been trying to lure consumers with specials since the beginning of the month, which Law says may encourage constrained customers to do festive season shopping around Black Friday rather than waiting for December sales.

Similarly, FNB transaction volumes between Black Friday and Cyber Monday (November 27 to 30) are expected to increase by 10%. The bank’s e-commerce merchant base has already grown by 26%. Read more about that in this report.

On that note, let’s hope retailers are willing to offer much deeper discounts than the usual “20% off” scenario. If they don’t, they will no doubt have a hard time to convince cash-strapped consumers to open already thin wallets.

This is a roundup of the best Covid-19 news from the web, brought to you in today’s FM lockdown newsletter.

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