Retailers hoping Christmas came early on Black Friday
BLACK Friday has become synonymous with discounted offers, and retailers preparing for a slow Christmas will have used the day to drive sales.
Keith McLachlan, a fund manager at AlphaWealth, said discount days increased sales and provided cash flow and working capital.
“So if you have a weak Christmas, which everyone is expecting, then you have a lot of inventory that hasn’t been moved,” said McLachlan. This meant that your cash flow looked terrible.
“If you can sell inventory before [Christmas] and convert it into cash, then your liquidity, solvency and your cash-flow metrics look a lot better in that reporting period, even though [sales] may be discounted. It may not be as profitable from an accounting perspective [but] it will be cash generative and will make those ratios look very good.”
And so, behold Black Friday, one of the biggest events on the global retail calendar.
The concept was born in the US, marking the day after Thanksgiving, and was put onto South Africa’s retail calendar by the Shoprite Group in 2014.
Sébastien Delsemme, a consultant analyst at Kantar Retail, describes the day as “an ideal delineation of the holiday shift”.
On Black Friday last year, Shoprite’s Checkers brand served more than one million customers and sold four million 2-litre bottles of Coke, enough liquid to fill more than three Olympic-sized swimming pools, in one day, a spokeswoman said.
A Massmart spokeswoman said Black Friday had become a topof-mind campaign for many consumers.
“We select best-value lines to appeal to these consumer expectations, which are particularly high given the current economic climate.”
This year has been a difficult one for local retailers, which have had to battle high food inflation, a lack of disposable income and poor credit sales.
Data from Nielsen shows that consumer confidence has improved by nine points but is still below the benchmark level of 100, indicating that although South Africans were not yet displaying positive sentiment, confidence had improved considerably, said Bryan Sun, Nielsen’s country head for South Africa.
Improved consumer confidence could have a significant impact on the success of Black Friday and seasonal spend, he said.
South African retailers have the opportunity on Black Friday to bring sales forward, but “we cannot predict whether there will be incremental sales”, Sun said.
“Consumers continue to implement saving strategies in areas such as fashion and apparel, and out-of-home dining and entertainment,” he said.
Bricks-and-mortar retailers are not the only ones profiting from discount days. E-commerce giant Alibaba, which promotes Singles Day in China on November 11, said prior to this year’s event that it expected sales to reach $20-billion (about R283-billion) this year — a 40% year-on-year surge.
Julie-Anne Walsh, chief marketing officer at Takealot, said that on Black Friday in 2015, “we saw a 227% spike in website traffic to the site and a significant 260% annual increase in orders”.
She added: “We’re fortunate not to have seen such a slowdown this year and anticipate that this upward trend will also shine through across our Blue Dot Sale weekend. We expect to sell around 300% more items than we would do on an average Friday in November.”
We expect to sell around 300% more items than on an average November Friday