Love it or hate it, but Black Friday has become part of the South African retail scene. Last year, November sales shot up 7.2% compared to the previous three months and the discount days generated about R1.36-bn in extra FMCG retail sales, according to data tracking company Nielsen SA. And according to them big retailers who didn’t participate lost market share during 2017 – although it is not clear how they drew the correlation.
While smartphones, TVs and other expensive electronic equipment top the consumer shopping lists, sport, outdoor and lifestyle stores also had to make the decision: to discount or not to discount.
Sports Trader asked retailers serving these markets how they felt about the Black Friday/Cyber Monday practice. Just over half (56%) of the respondents in our survey had taken part in Black Friday sales in previous years.
More than half of them had a positive experience as the discounts helped them to get rid of old stock (54%), or it drew customers to their store who bought non-discount items (31%) and even better, earned them new customers who came back later (31%). For one of the respondents it was “a ray of light in the depressed economy because people bought stagnant higher-priced items.”
“On the day it was a great success and boosted the month,” reports another retailer who wishes to remain anonymous. He found that his customers seemed to be waiting for deals. “Further, it brought new customers into the store (lower LSM) while our traditional customers avoided malls and shopped online.”
“You’re damned if you do and damned if you don’t,” an independent footwear specialist summarises the experience of many. “Our stores did a full month’s turnover in ONE day! Not to say that November overall was any better in total, but it did bring new customers to the store. Did we make money on that day? Not much, but boy was it interesting!”
But on the flip side, some respondents are strongly opposed to the practice: “Nothing will motivate me to take part,” says a sport specialist.
More than a third of the respondents (38%) who did participate were not happy traders as they found that the Black Friday sales played havoc with their December sales, or they made a loss in November due to the discounts they offered.
“Black Friday is a scourge that kills Xmas turnover. Worse still, any turnover from Black Friday is either at a loss or vastly reduced margins,” says an independent sport store owner, who hasn’t participated in the sale frenzy – and is not planning to. He believes that it is not possible for smaller stores to compete with the huge discounts offered by the big stores.
This is also a reason given by half the retailers who are not planning on participating in Black Friday sales again – although two-thirds of them (67%) said it’s simply not worth the trouble. A smaller group (44%) believe that their margins are already small and that any more discounts will only result in losses, while the fear that it will negatively affect Christmas shopping also prevents retailers from committing to the sale days.
Yet, a retailer who said he believes the practice does not benefit retail as his December sales were down, will participate again because all his competitors do.
The majority of the respondents (66%) will join him. There is not a clear reason why these retailers will participate in Black Friday. Their reasons differ from “it’s a good way to clear shelves for new items for Xmas and Back to School” or “money is tight and it’s the only way to motivate customers to buy non-essentials” and to a lesser extent “because my competitors are participating”.
Retailers approach the sale day in various ways. An outdoor store, for example, last year “ran a Blackish weekend – in which everything was on a 10% discount, except sale items.”
Another footwear trader says they have decided to do Black Friday differently this year. “We bought stock in for Black Friday and have earmarked sale items that have not performed well during the year. We have also ordered stock for December delivery, so that we have fresh stock for Christmas.”
A department store colleague, however, has a different view: “I can see the sense of having a big sale to clear the shelves for new stock over Christmas. But sell new stock at a discount? It just doesn’t make any sense to me!”
While brick and mortar stores have the benefit of new customers visiting their stores, spare a thought for the online companies that participate. Not only do they have to hope that their websites will not buckle under the strain, they also have the added stress of hoping that couriers will deliver the ordered goods in a decent time. For example, online fashion retailer Runway Sales last year had 10 000 shoppers on their site before 11am and on that day their sales were triple their previous highest sales.
To lighten the load on the 23rd, many of the bigger retailers have declared November a month of many discounts, spread across several days.