Consumers may tighten spending this Black Friday

AS consumers gear up for Black Friday deals next week, local economist Dr Brian Mazorodze predicts spending could be subdued owing to the current economic climate and the rising cost of living.

The University of Zululand economist said consumers would 'likely prioritise spending on essential items that maximise value given the squeezed budgets'.

He said, although Black Friday is good for business, particularly as the economy emerges from the Covid-19 pandemic, it will also benefit poor households that will be able to save with discounts.

“Black Friday presents an opportunity for businesses to regain their feet and improve their financial health.

“Excess inventory emanating from the sluggish growth in consumer spending since the onset of the pandemic is likely to see retailers that do not usually participate in Black Friday, do so with heavy discounts this year in a bid to clear books.

“For consumers, it is a period of relief and an ideal time to shop in advance for the festive season,” said Dr Mazorodze.

He said, while it is a 'short-lived boost in economic activity’, Black Friday could provide much-needed employment.

“The desire to maximise sales turnover might also see firms hire additional part-time staff, particularly low-skilled workers which is welcome, given how Covid-19 has thrown many out of jobs," he said.

“However, the share of final consumption expenditure on GDP in KZN ranges from 30 to 38%, while the manufacturing sector from which textile, clothing, leather and other retail shops belong, accounts for 18 – 30% of GDP.

"So the consumption boost could have moderate to sizeable effects on the local economy, which we should typically see in the region’s relatively high growth in the fourth quarter."

While consumers are expected to turn up at shopping malls in their numbers, Mazorodze says a smaller turnout will, however, be confirmation that consumers are still ‘rattled by the combined effects of an economic crisis post-Covid'.

He said businesses will, therefore, need to do more to ensure a high return on advertising expenditure to draw in customers.