Black Friday affects logistics

THE INCREASING acceptance of “Black Friday” among retailers and consumers is changing seasonal patterns in South Africa and the logistics value chain.

Black Friday got its name in the US. It was the day after Thanksgiving Thursday, when families would visit the malls for specials similar to Harrod’s in the UK and their New Year specials.

The reason why it was called “black” was not that it was bad, but rather that it was good, as that was the day when retailers swung from being in the red to being in the black – in other words, they started to make profits. Although Black Friday has been a retail phenomenon in the US for decades, it was only last year that it started to have a marked impact in South Africa.

This is reflected in the real retail sales data from Statistics SA, which showed that in November 2016 there was only a 1.8 percent year-on-year (y/y) increase, but in November 2017 this shot up to an 8.1 percent y/y surge as more retailers offered Black Friday specials.

This is starting to affect the whole value chain as importers now have to stock up ahead of November rather than in December for the Christmas season. So the number of full containers imported now peaks in September rather than November, which was the normal seasonal pattern prior to 2017.

That means that manufacturers must also adjust their production schedules, so now the peak production month is September, rather than October.

This is reflected in the Chinese foreign trade data as China is the so-called “factory of the world”. In October, Chinese exports grew by 15.6 percent y/y after a 14.5 percent y/y rise in September following a

9.8 percent y/y gain in August. This was despite the imposition of US tariffs on a host of Chinese goods as the trade war between the US and China escalated.

Part of those increased exports made its way to South Africa as full containers imported into Durban surged by 29.5 percent y/y in October.

This was nonetheless 3.4 percent less than the number imported in September.

Part of the reason for the high y/y increase in October was because port operations were disrupted in October 2017 thanks to storms.

That did not take place this year, so Durban could handle more than 106 000 full containers imported compared with some 82 000 a year ago.

Now, because of the surge in imports in September rather than November, the seasonal adjustment factor will “overstate” the current account deficit in the third quarter and correspondingly “understate” it in the fourth quarter.