While Black Friday sales surpassed 2020 levels, they still don't match 2019
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Listen to Isana Cordier, Sector Head: Consumer Goods and Services at Absa Corporate and Investment Bank in conversation with Bruce Whitfield about this year's Black Friday trends:
To the casual eye, Black Friday 2021 appears to have surpassed the pitfalls of 2020 and become resurgent across all metrics.
Growth across a number of transactions, turnover and the number of cards used to transact- is all too clear.
However, when considering the ever-present threat the global pandemic poses; coupled with the looming threat of a new variant and fourth wave – this year's Black Friday can be seen as rather subdued. Despite this and with retailers continuing to offer prolonged deals throughout the month of November and early December 2021, spending has shown the adaptability and prudent nature of South African consumers as they continue to adopt digital payment channels that provide not only safety and security in the face of the pandemic, but as they change their spending behaviours in anticipation of turbulent times which might lie ahead.
The shape of Black Friday has significantly changed... In South Africa, it really is becoming a crescendo than a one-day event. It seems we have a whole month of discounts and people shopping for the whole of November up to this day that we dub "Black Friday" but (it was) not as great as 2019.Isana Cordier, Consumer Goods and Services Sector Head – Absa Corporate and Investment Bank
The difference and the interesting thing that we saw is that the increase is really in the Card Not Present space, where the card presence space which is where the physical acquiring in stores are actually down. So, it tells you that people are definitely adopting different shopping habits.Isana Cordier, Consumer Goods and Services Sector Head – Absa Corporate and Investment Bank
There are three key factors that affected spending behaviour on Black Friday:
The South African Reserve Bank decision to adjust interest rates upward by 25bps just before Black Friday weekend, can be seen as an ominous spend deterrent to already distressed consumers.
The potential of the long-speculated fourth wave also saw consumers and retailers adjust their spending behaviour and offerings to compensate accordingly as spending attributed toward groceries and non-perishable items were significantly higher this year- meaning that although transaction volumes were higher by a magnitude of almost 1 million transactions compared to 2020, spend went to smaller ticket items.
Finally, the decision by many large retailers to offer deals throughout the ‘Black November’ period saw spend disperse as consumers were more cautious to pick the deals which suited them. This, fortunately, meant that spend for the entire period was higher than the same period in 2020. Retailers, therefore, dictated the flow of spend more rigorously now than before.
If we look at the day compared to 2020, yes we were definitely up. We saw in our acquiring space which is... the actual terminals where we accept payments on behalf of our retailers – that there was indeed a 20% increase compared to 2020 but if we look at 2019 in that channel, we see a 17.5% decrease compared to 2019.Isana Cordier, Consumer Goods and Services Sector Head – Absa Corporate and Investment Bank
On the day performance across the Absa Payment Acceptance network observed a 20% increase compared with 2020 which saw spend reaching over R3.6bn and 17.5% shy of the record-breaking 2019 performance. Transaction volumes were also only down 5.6% when compared to 2019 however increasing year on year relative to 2020 by 17.8%.
Whilst this growth shows that economic activity is returning to pre-COVID levels, ticket sizes were only marginally higher at R545 in 2021 when compared to R535 in 2020.
This further demonstrates the tendency of consumers to buy more whilst being conservative in nature and also the type of deals that were prevalent during Black Friday.
On the day, spend by Absa customers rebounded by 10.7% on turnover and 7.8% on volume when compared to the on the day performance of 2020 with over 2.1 million card customers swiping or clicking. Despite payment spend only increasing by 10.7%, the composition of transaction methods saw Card Not Present for both Debit & Credit increase by 28% and Contactless increasing by 112%.
Normal purchases were displaced downwards by 26%, showing a marked change in consumer behaviour in favour of digital acceptance methods. This growth continues from previous years. Interestingly enough, cash volumes are down 6% compared to the ‘Black November’ period further cementing the consumer behaviour change as a result of the global pandemic.
When you look at that method of payment it really speaks to digital purchases, so it speaks to e-commerce and online shopping and that has significantly increased but at the cost (obviously) of physical channels decreasing.Isana Cordier, Consumer Goods and Services Sector Head – Absa Corporate and Investment Bank
We've also seen a reduction in our cash volumes, so we measured it in terms of withdrawals at ATMs - which normally goes up quite high.Isana Cordier, Consumer Goods and Services Sector Head – Absa Corporate and Investment Bank
In summary, South African consumers have shown the resilience of their spending power in the resurgence of much desired spend lost in 2020 to COVID- opting to migrate their traditionally cash-heavy usage in favour of digital payment platforms and methods in a bid to stay safe during these trying times.
Even though they were able to rebound to similar pre-pandemic levels, consumer sentiment is still rather mixed with regard to Black Friday with many opting to remain financially sensible rather than splurge in the face of an uncertain future.
For data-driven insights that match foresight with sustainable possibilities, re-visit our Absa Insights page regularly to listen to thought-provoking conversations with Absa Corporate and Investment Banking sector experts in the Absa Insights podcast series.