Sales double on #BlackFriday compared to regular shopping days
The retail bonanza of Black Friday has traditionally been the start of the Christmas shopping season in the US. The day occurs on the fourth Friday of November following Thanksgiving Thursday. The ‘black’ refers to turning a profit, that is, retailers making profits as opposed to being in the ‘red’.
Black Friday has been a North American shopping event since the middle of the previous century. Starting in Philadelphia in the 1950s, city authorities referred to Black Friday as the day that scores of shoppers swamped Philadelphia’s shops after Thanksgiving and ahead of the annual Army-Navy football game held during the subsequent weekend.
South African retailers Takealot and Checkers both claim to have debuted the concept of Black Friday in South Africa in 2012 and 2014, respectively. Takealot is generally regarded as the local pioneer of online Black Friday, with Checkers being the first to do so in brick-and-mortar format.
Irrespective of its domestic origins, Black Friday is a cash cow for local retailers. BankservAfrica (the continent’s largest automated payments clearing house) recorded R2.5 billion worth of transactions on Black Friday in 2o17. The 4.7 million card transactions that it cleared on Friday were double the daily average.
In line with this data, Nielsen found that Black Friday resulted in a sales boost of more than R1.3 billion in the fast-moving consumer goods (FMCG) sector On a broader scale, data from Facebook indicates that Black Friday is the busiest online shopping day in South Africa. Survey data shows that nearly nine out of 10 South Africans know what Black Friday is.
Black Friday is different from other seasonal sales that aim to sell old stock: this promotion is about selling high volumes of in-demand products. As a result, market and consumer information company GfK South Africa again expects good growth in Black Friday retail sales this year.
As of Monday, November 19th, local digital marketing specialists Nichemarket were listing confirmed Black Friday promotions by 278 goods and services companies across 26 spending categories.
Internet and social media insights
Black Friday has become a mega shopping phenomenon over the past two years and PwC Strategy& expects continued growth in interest during the week of BlackFriday 2018.
In order to understand the social media exposure and reach (also referred to as views) of the shopping bonanza, PwC Strategy& conducted a high-level analysis of tweets over the period November 14th-20th. The analysis of several hashtags related to Black Friday found that Twitter’s reaches increased from 2.4 million views on November 12th to 47.2 million on the 20th of the month.
The trending themes are, unsurprisingly, captured in keywords such as “amazing deals”, “Black Friday tips”, “mall” and “surprises”. With these positive enforcements seeing as much combined exposure as the official #BlackFriday tag, the event could be interpreted as generating much anticipation and happiness amongst social media users and customers.
Social media analysis can look beyond the volume and themes of tweets and consider this sentiment. According to the tweet analysis, some 67% of Twitter sentiment towards Black Friday was positive over the period. This is in line with a survey by global discount website Picodi.com finding that nearly two out of three South Africans will be taking part in Black Friday this year.
Only 5% of tweets were negative, with the remaining 28% classified as neutral. An example of a more downbeat – yet very valuable in the local context – the message was a tweet from the South African National Police Service (SAPS) indicating a higher threat of crime during the day. Indeed, many websites[ offering tips about how to make the most of Black Friday warn consumers about the risk of exploitation by criminals and unscrupulous retailers.
#BlackFriday will be different this year; morphing into Black November
Some 54.6% of South Africans took part in Black Friday last year, with the Picodi.com survey finding that 66.5% will be taking part this year. Respondents indicated that they are planning to spend on average R1,654 on their Black Friday purchases in 2018.
Some 64.4% of survey respondents indicated that they will be buying at both online and in brick-and-mortar stores this year, compared with just 39.6% in 2017. This reflects a diversification trend in client activity that has resulted in South African online retail growing by 25% in 2017 with a forecast rise of 25% in 2018 as well.
In order to benefit from changing buying patterns, retailers are extending their Black Friday offerings to a week or more leading up to the day and the days thereafter, including the ensuing weekend leading up to Cyber Monday.
Retailers are also responding to the fact that Black Friday generally occurs ahead of private sector payday on the 25th. While salaries are likely to be paid out on the 23rd this year due to the 25th falling on a Sunday, this is the exception. (Black Friday falls on the 23rd this year – the earliest since 2012.)
It has been suggested that South African retailers should collectively reschedule Black Friday to after the 25th. However, this is unlikely to happen, as local companies would risk losing business to international Black Friday promotions that would continue on the day after Thanksgiving.
The expanding of the day into a long weekend and, in some cases, weeks-long sales have seen Black Friday morph into what PwC consumer experts have referred to as ‘Black November’.Furthermore, a larger number of shopping days during the month has seen Black November shift holiday shopping earlier.
Nonetheless, Black Friday is also seen as an opportunity to stimulate sales in December. The November event drives visits and footfall at online and brick-and-mortar shops that expose consumers to the products available in these facilities. Retailers have the opportunity to use this traffic for advertising and to keep consumer conversations going heading into the Christmas shopping season.
Black November – as opposed to a singular day – allows for improved logistics management as the demand for stocking and delivering products is spread over a longer period. Some retailers have been working since February this year to get their processes in order for Black Friday 2018.
There has also been an associated increase in port traffic as retailers increase their international purchases earlier in the calendar year. Container volumes, which previously peaked in November, are now expected to have peaked in September already.
For companies of all sizes, the risk of website downtime, stock shortages, and a lack of capacity at call centers are real risks this week. Retailers are challenged by short-term needs – getting customers in and out – with long-term reputational challenges of service delivery falling short. This has seen companies step up their customer service activity leading up to Black Friday.
The earlier preparation and launch of Black Friday deals are also reflected in online interest. Google Trends data indicates that up until 2016, online searches in South Africa for “Black Friday” were limited to the month of November. There was increased interest from October 2017, while this year’s online interest started in September already.
Behavioral economics helps explain consumer indulgences on Black Friday
Ever wondered why South African consumers discover their inner shopping maniac on Black Friday? According to PwC’s Strategy& behavioral economists, rational decision-making abilities are at their weakest on Black Friday, as marketers can easily leverage consumers’ cognitive make-up to get them to spend more.
Behavioral economics can help us understand how context can drive our purchasing decisions. By understanding the cognitive fallacies that can trigger financial decisions during Black Friday, behavioral economics can empower consumers to make wiser financial decisions.
The following is a list of the top behavioral traps that consumers should be wary of as they navigate the frenzy of the upcoming Black Friday sales:
- Framing: Globally, retailers have generated a hype around the Black Friday phenomenon. Although Black Friday is relatively new in South Africa, local interest is at all-time highs. Framed as a once-a-year sale, we view it as an extraordinary event and associate it with extreme price cuts. However, Black Friday is arguably just another seasonal sale and its status as an exceptional event should not compel us to make purchasing decisions that we would otherwise not have made.
- Scarcity and loss aversion: Panic spreads when shoppers fear they may miss out on the best sales deals. Retailers commonly spark consumers’ interest by highlighting limited stocks available for a limited time only, which raises the perceived value of these goods – after all, rarity and value are deeply intertwined. While the sense of scarcity can further trigger the need to act, we should look out whether we would truly miss out, or are captured by the rush of the chase.
- Herding:Wefind comfort in fitting in with the actions of others, which has its roots in our own evolution.However, the actions of others can also drive us to irrational behaviour. With many South Africans wholeheartedly buying into the craze of Black Friday, we feel we should join in. Marketers welcome the crowds on Black Friday, since crowds attract more crowds. Few shoppers feel guilty buying a 50% off toaster when the customers next to them have flat screen TVs in their carts. When our peers are doing it, the painful experience of parting with money becomes an act of social cohesion.
- The halo effect: One exceptionally good sales deal can create the perception that all of the retailer’s deals are also steals by association. This phenomenon – termed the ‘halo effect’ – means consumers will have difficulty viewing the deals on Black Friday in a nuanced way, where some may be highly discounted, but others may not. A retailer baiting with one or two exceptional discounts may not offer uniformly discounted products and consumers should weigh each purchasing decision with equal scepticism.
- Confirmation bias: As consumers, we are likely to factor out any additional costs associated with our shopping trip on Black Friday, including transport and parking costs, time and effort. As we buy into the idea of Black Friday, we want to believe we are truly making savvy money decisions. Thus, we are likely to count only the per-item savings to confirm this belief, rather than considering whether going out of our way for the shopping excursion is truly worth our while.
- Initial pain: It hurts to spend an initial R50, but it is much easier to spend a further R10, R20, or even another R100 after that initial purchase. The amount of pain we experience decreases with every extra rand after the initial payment, paving the way for excessive spending on things we would otherwise not purchase on Black Friday
- Sunk cost fallacy: Once we have started to invest, we tend to struggle to close out investments that prove unprofitable. On Black Friday, if we have already made the initial upfront investment of getting up before sunrise, driving to the mall, finding parking and waiting in line for the store to open, we will be inclined to buy more than we initially came for. No matter the upfront investment, it remains helpful to consider at each point whether the purchase is worthwhile and whether it brings us closer to our longer-term financial objectives.
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