In light of the tough trading environment retailers experienced this year, the jury is out whether Black Friday will help ease the strain. Pictures: Leon Lestrade/Thobile Mathonsi
In light of the tough trading environment retailers experienced this year, the jury is out whether Black Friday will help ease the strain. Pictures: Leon Lestrade/Thobile Mathonsi

Can #BlackFriday help our retailers?

By Dineo Faku Time of article published Nov 23, 2017

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JOHANNESBURG - In light of the tough trading environment retailers have experienced this year, the jury is out whether the upcoming Black Friday will help ease the strain retailers are under with an uncertain outlook for 2018.

Political uncertainty, low economic growth coupled with low consumer confidence rattled the retail sector in 2017 and forecasting the year ahead is not that easy pending the outcome of the ANC elective conference to be held in Johannesburg next month.

Damon Buss, an analyst at Cape Town based Electus Fund Managers, said it was very difficult to say what 2018 had in store for the retail sector given the rating downgrade decisions due on Friday and the outcome of the ANC elective conference in December.

Rating agencies S&P Global Ratings and Moody's are expected to release their latest reviews on South Africa's debt ratings on Friday.

File picture: Philimon Bulawayo
Buss painted both a negative and positive picture of what the elective conference and possible rating downgrade would mean for the country’s retail sector.

“The good outcome will be that South Africa is not downgraded to junk and Cyril Ramaphosa wins. This should lead to a continual slow improvement for the retailers over 2018, although there is likely to be a short-term boost as confidence improves,” Buss said.
Buss, however, cautioned on the negative outcomes, that both S&P and Moodys downgrade South Africa to junk and Nkosazana Dlamini Zuma wins at the elective conference.

“This will likely lead to confidence deteriorating further, a significant weakening of the rand which will cause inflation to pick up and possibly resulting in rate hikes towards the end of 2018, which will all be very negative for retail spend,” he said.

Despite the tough environment in 2017, there were pockets of excellence particularly pharmacy retailers Dischem and Clicks, which surged by 44 percent and 35 percent in the year to date, respectively.

Buss said the surge was due to the defensiveness of their categories, space expansion and continued consolidation of the independents.
Africa’s biggest food retailer, Shoprite, was also a hot stock as it strengthened 26 percent in the year to date due to continued space rollout and offering the best value which resulted in them continuing to grow their market share.

So was fashion retailer Mr Price, which strengthened by 26 percent in the year to date.

“They (Mr Price) have got past the mistakes made in 2016 and refocused on their value offering, ” said Buss.

FILE - In this Wednesday, Oct. 26, 2016, file photo, a shopper, left, walks with a store associate in the toy section at Walmart in Teterboro, N.J. Walmart hopes to tempt shoppers with online deals before Black Friday. It’s beginning some online deals Thursday and plans to offer most of its Black Friday deals online starting at 12:01 a.m. on Thanksgiving. (AP Photo/Julio Cortez, File)
Gauteng based Combined Motor Holdings soared by 36 percent on the JSE in the year to date, which had grown volumes ahead of the market as consumers have been down trading to more value focussed vehicle brands, the core of CMH’s offering.

On the flip side of the coin, Investment group Brait plummeted 51 percent in the year to date due to the dismal performance of New Look in the UK.
Woolworths tanked 24 percent in the year to date amid the continued underperformance in clothing and general merchandise in South Africa and in David Jones in Australia.

South Africa's consumer confidence is currently at its worst level since 1982, according to the FNB/Bureau for Economic Research.

Edcon, South Africa’s biggest clothing retailer, has confirmed this. A company spokesperson said the consumer was grappling with the cost of education, credit, electricity and the uncertain political environment.

“Consumer confidence is low and as retailers we will not be expecting any favours this festive season. We are aware of the financial pressures facing our customers and we are striving to offer the right product at competitive prices with great service while ultimately providing exceptional value,” said the spokesperson.

He added the company had positioned its advertising and marketing efforts well, and introduced an enhanced thank U loyalty programme, “which we think will offset some of the negative market sentiment”.

Spar chief executive Graham O’ Connor said :“2017 was tough, consumer under pressure put strain the business. It will be slightly better in 2018, and lot depends on ANC’s policy conference in December.”


Retailers have intensified advertising ahead of Black Friday to promote entice shoppers on various specials of up to 80 percent off items.

Daniel Isaacs, an analyst at 36One Asset Management said the biggest risk was that Black Friday sales had come the expense of Christmas sales.

“The biggest issue with Black Friday last year was that sales sucked out December sales. Last year people spent their Christmas shopping budget on Black Friday and retailers sat with stock. I do not know how they will address the issue this year,” said Isaacs, adding the retail sector “was not healthy”.

Photo: AP/Wilfredo Lee
“Consumers are under a lot of pressure and it has not been a good year for retailers. Sentiment is not good and the political uncertainty ahead of the ANC’s elective conference in December,” he said.

Shoprite, said its stores countrywide would for the first time ever participate in Black Friday, the world’s biggest sales promotion.
“The decision to also introduce Black Friday to Shoprite’s 458 stores, in addition to the 202 Checkers stores, guarantees the country’s biggest ever Black Friday. The Black Friday trend had been gaining popularity around the world, and in 2014 Checkers became the first food retailer to introduce the country to deep-cut specials,"a company spokesperson said.

The company recognised that Black Friday is big.

"But it is only a single day of trading which signals the start of the Christmas shopping season. The next few weeks of trading leading up to Christmas have always been more important,” the spokesperson said.

TFG chief information officer, Brent Curry said that the group had conducted a Black Friday survey in May and the overwhelming positive sentiment response was attributed to massive savings in tough economic times, shoppers being able to purchase items that were normally unaffordable, and making discounted holiday shopping and gift shopping possible.

“TFG certainly expects a day of high excitement, great sales, long queues and many satisfied customers who go home with a bargain. We know that many of our shoppers are waiting in anticipation of the promotions on Black Friday, to do their holiday shopping. We expect to at least double our trade during this shopping event,” he said.
TFG also planned to offer a unique online position where it would have 13 sales in one place from midnight on Thursday 23 November until midnight on Monday 27 November via one platform

" That means you can shop 13 stores into one bag and check out once. It’s the most seamless online shopping experience available," Curry said.
Curry also said while worldwide retail was tough, but TFG's diversification had lessened its levels of risk and strengthened it adaptability as evidenced by continued acquisitions in 2017. TFG acquired Damsel in a Dress through its UK subsidiary, Phase-Eight, a UK-based premium womenswear brand, consisting mainly of occasion wear which has 34 outlets and an online presence.

TFG once reported a solid set of results, in the six months to September with revenue strengthening by 8.7 percent to R14.0 billion, of which retail turnover was up 9.2 percent to R12.5bn.

Meanwhile, online retailer, is anticipating sales growth of up to 100 percent this year in the upcoming Black Friday weekend, after achieving growth of more than 150 percent last year.

Loot chief executive Gary Hadfield said loot would be launching its biggest selection of Black Friday deals and offering up to 80 percent off on a selection of products across their 17 departments.

"We have done significant product buy-ins to ensure that the majority of sale items will be in stock at our regional warehouses. Our Black Friday sale will start just after midnight on the 24th and continue until midnight on the 27th."

Hadfield said they would be adding additional deals every day in this period.​


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