THE FINANCE GHOST: Another swipe at Black Friday

We are now well into December, which means Black Friday is behind us — including all the spin-off attempts by retailers to attract attention, such as Black November and Cyber Monday for that matter. It’s all about the tinsel and Mariah Carey playlists as we wind down the year.

I made a point of being at a large upmarket local mall on the Saturday morning of Black Friday weekend. I also spoke to the cashiers at every store I visited. My observation of the mall and the consensus from cashiers showed that Black Friday seemed quieter than in 2023. I wrote about Black Friday retailer strategies in this column last week, while wondering whether my observations could be explained by a broader consumer spending issue, or perhaps an online vs in-store sales issue.

Logically, if Black Friday is all about finding the right deal, then online shopping makes the most sense. It’s much faster to compare prices from different vendors online than waste time by going to stores and fighting for stock on the shelf. Consumers can visit stores ahead of time to check out the products before waiting to see where the best online deal pops up on the day.

Combining what I observed at the mall with what I’ve heard in discussions with friends, a material shift in Black Friday shopping from in-store to online is a reasonable thesis. If true, it’s not a great outlook for upmarket mall owners who benefit from greater foot count during busy shopping times.

We know from more developed markets such as the US that a trend favouring e-commerce over in-store sales creates more demand for warehouses and logistics solutions, and less demand for retail space over time. We also know that this trend of online sales growth being faster than in-store growth has already been happening in South Africa, particularly in the aftermath of the pandemic, so there’s no reason that Black Friday wouldn’t be an even more concentrated version of the trend.

Data suggests the average in-store swipe was for a much smaller amount than last year, whereas online sales value was up 21% year on year

Of course, what would help most is if we had reliable data to prove or disprove the thesis. This is where it gets tricky locally.

Absa seems to have won the PR war by releasing an early announcement on Black Friday itself about a “record-breaking start” to the day. Talk about owning the narrative in the media! The release doesn’t go into any details on online vs in-store activity unfortunately, so this bullish stance doesn’t disprove my thesis and observations. I must also point out that if the measure is the volume of card payments, then the general shift from cash to card transactions in the past 12 months as the “unbanked” population becomes banked would influence the numbers.

Another important point is that if sales were really strong right at the start of the day, doesn’t that suggest online was a key driver? It’s a lot easier to quickly log on to your favourite online store at work during a coffee break than it is to get time off to go shopping.

We have far more useful data from BankservAfrica that tells a fascinating story. In-store card transaction volumes were up 10% year on year vs just 6% growth in 3D Secure online volumes, which sounds as if my thesis is relegated to the dustbin. But then we get to the value of transactions, which came in just 2% higher y/y for in-store sales. This suggests that the average in-store swipe was for a much smaller amount than last year, whereas online sales value was up 21% y/y, which tells us that the average purchase in online shopping was much higher than last year. Sure, the malls might have seen some action, but was it from people looking for deals on food and nappies, or those seeking TVs and appliances?

Perhaps US data can help us understand how higher-income South African shoppers are behaving. The Mastercard analysis of Black Friday in the US shows in-store sales growth of just 0.7%, and online growth of a meaty 14.6%. In that market, the shift is clear.

If consumers with deeper pockets are clicking rather than walking on Black Friday, that’s not good news for malls in higher-income areas. As for those in lower-income areas, it seems they may have had the benefit of the shift from informal to formal retail, with bargain-hunters coming in search of deals on essentials. Over the next decade, would you rather be exposed to malls targeting wealthy shoppers, or those next to busy taxi routes? Food for thought.