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Even for the big retailers, the benefits of Black Friday season are tenuous

Jon Cherry
By Jon Cherry
27 Nov 2024
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Large retail systems are, by design, optimised to accommodate a steady flow of appropriately behaved customers. Sharp spikes in customer demand, like during Black Friday, put unmanageable amounts of stress on these systems and the people who operate them.

It’s that time of the year when cynical observers wait and see if the Takealot site will crash under a stampede of bargain-hunting shoppers eager to get their hands on a slightly discounted pack of Pampers nappies.

Yes, the 12th local edition of America’s most perplexing retail export, Black Friday, is here, in case you hadn’t noticed.

For shoppers who were on the lookout for an air fryer produced by a brand nobody has heard of, it’s the most magical time of the year.

But for retailers there are real challenges as an influx of people they have never seen before, or will ever see again, come browsing around for “the buying mistakes” that were made throughout the year.

The festive season is, for obvious reasons, the most important period of the year for the retail industry. Those that can secure and stock up on merchandise that is in high demand and can move large volumes of that stock at full price, win the year.

If this can also be achieved without spending too much on festive season promotional campaigns and with minimal stock returns in January, bells ring in the North Pole and prizes are awarded to that company’s CEO by Santa himself.

Black Friday doesn’t naturally create the conditions for this ideal to be achieved.

In fact, it might be the very reason that the industry is becoming so dominated by a few big players, who through their sheer financial might, are crowding out malls and making it almost impossible for smaller brands to gain access to the local market.

Race to the bottom?


Even for the big guys, the benefits of Black Friday season are tenuous.

Large retail systems are, by design, optimised to accommodate a steady flow of appropriately behaved customers. Sharp spikes in customer demand, like during Black Friday, put unmanageable amounts of stress on these systems and the people who operate them.
There does appear to be a rather one-dimensional approach by most retailers to Black Friday. It is often used to clear old stock rather than an invitation to act creatively in response to the opportunity.

To solve this issue, many South African retailers have now opted to spread the excitement of the annual occasion out over the whole of November. The downside of this is that the whole point of Black Friday – the artificial generation of a massive wave of consumer demand for things people desperately want to buy that sets the run-up to Christmas – has been significantly diluted.

Coupled with the reality that there is no strategic advantage for a business to take part in Black Friday because every competitor is doing the exact same thing and most of what ends up being sold generates lower margin as a reward, one must wonder if participation is worth the hassle?

Curious as to what affect Black Friday has had on the annual pattern of local consumer behaviour over the years, I found this slightly dated but still enlightening graphic courtesy of Stats SA, that shows how the growth of the Black Friday phenomenon has boosted retail activity in November, mainly at the expense of trade in December.

What’s not often acknowledged, and is highlighted clearly in the graph, is that Black Friday has also negatively affected retail sales in September and October too.

Black Friday

According to Stats SA:

“The coloured slices in the chart represent 2019 data, with the black-bordered slices representing 2011. If the entire sector is considered, what is immediately clear is the rise in November’s contribution to annual sales, driven mainly by Black Friday. In 2011, November accounted for 8.8% of annual sales, rising to 9.6% in 2019. December, April, September and October lost noticeable ground over this period.”

What are the alternatives?


From the perspective of an observer of the South African phenomenon, there does appear to be a rather one-dimensional approach by most retailers to Black Friday.

The occasion is often used to clear old stock rather than an invitation to act creatively in response to the opportunity.

In the US this kind of laziness happens too, but there are some brands that do come up with ways to make Black Friday their own.

Outdoor retailers like Patagonia and REI, for example, famously don’t participate in Black Friday. Instead, they spend money on telling their customers to rather take the day off and enjoy some time outside in nature.
A prudent approach is to balance the opportunity of a short-term promotional window with longer-term brand-building aspirations.

Patagonia goes so far as to give their staff the entire weekend off so that they can spend time doing what really matters most. These brave moves benefit their brands in the long term through the building of demonstrable trust with the people who shop at these stores.

Another clothing brand, Everlane, has created a Black Friday Fund. Proceeds from its Black Friday sale goes to a fund that directly improves the well-being of the company’s factory workers as well as environmental clean-up programmes. Since 2014 it has secured more than $1.3-million for these projects.

Instead of discounting its brand by going on sale, Apple offers gift vouchers to customers who buy products during Black Friday. These can be redeemed for future purchases of Apple products.

In 2017, McDonald’s “accidentally” tweeted a Black Friday-related message that appeared to be a mistake. The message, posted on its account first thing on the Friday after Thanksgiving, read: “Black Friday **** Need copy and link****.”  It got the attention it deserved by commentators eager to point out the social media faux pas, which is exactly what was intended by McDonald’s, which enjoyed an excessive share of voice in the marketplace on that occasion.

Holding a long-term perspective


Let’s not be under any delusion that being a retailer in South Africa is, by any stretch of the imagination, easy. However, a prudent approach to hold in mind when looking to the future of Black Friday is to balance the opportunity of a short-term promotional window with longer-term brand-building aspirations.

Read more: Black Friday survival guide — how to make the most of your shopping experience

Some retail brands might feel like they have a gun against their head and have no other option than to join the promotional frenzy. But as our economic relationship with this American import matures, hopefully alternative, more strategically confident futures do emerge that better serve a sustainable cadence of retail growth in the country.

The sector is a vital driver of the economy and really shouldn’t be held to ransom by some unchallenged, out-of-context pageantry that may be putting it at unnecessary risk. DM

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