[TOP STORY] Retailers are spreading it out to try and grab consumer wallets

Amanda Bullock / November 21,2022

 

SIMON BROWN: I’m chatting now with Isana Cordier. She’s sector head of consumer goods and services at Absa CIB. Isana, I appreciate the early morning time. I want to get to Black Friday in a moment.

Before we do, the latest BankservAfrica Economic Transactions Index. You make the point in the note that you put out that it really has been a year of two halves. It started really strong and, perhaps no real surprise, weakening as the year moved on.

ISANA CORDIER: Definitely. Good morning. Yes. We are seeing a little bit of strain on consumers in the last couple of months. It’s looking like things are slowing down and, like the bureau has indicated, the credit bureau TransUnion also released some indication that there is more work coming through, a slower unemployment rate. But the cost of living has really gone up, and interest rates; there is pressure on fuel and load shedding [for] small businesses. So there’s a lot of pressure on the economy [that] you have to take into consideration in the system at the moment.

SIMON BROWN: And we are moving to Black Friday. I think the key point there – and I think everyone out there listening has become aware of this – is that we talk about Black Friday, but you call it ‘Black November’. I’ve been seeing specials at least for 10 days, maybe two weeks. The retailers really are spreading it out in an attempt to try and grab consumer wallets.

ISANA CORDIER: Definitely. Pre-Covid I think it was a very similar strategy for all retailers. We saw not a lot of sales before Black Friday, and then we saw really long queues on Black Friday, and then we went into a Cyber Monday, which was your online kind of sales. [There has been] a totally different strategy in the last couple of years.

This year we see different retailers adopting different strategies, some going for the big queues. Massmart has come out and said they’re going to extend shopping hours, really planning for the big spend. But a lot of the retailers [have been] building up the online spending for the last couple of weeks already. Pick n Pay released a note yesterday on LinkedIn saying that they will deliver within one hour of your shopping online. So big promises and a lot of pressure, I think, on consumer wallets as to where to spend their money.

SIMON BROWN: Maybe I’m looking in the wrong places, or maybe it’s going to start happening tomorrow – you mentioned Makro. I’m seeing a lot more specials on consumer staples, toilet paper, washing powder, rather than sort of the big-ticket items such as TVs and fridges. Is that a trend you’re spotting or are the big tickets going to be a sort of tomorrow and maybe a Cyber Monday story?

ISANA CORDIER: Yeah, I think you’re right in that it’s going towards the grocery spend a lot, especially the build-up. I think the reason for that is the retailers are also aware of the pressure on the consumer’s wallets, and I think it’s going to probably, hopefully, also be a good spending time for consumers to rather use a ‘saving’ mindset than a ‘spending’ mindset. So really a looking at your consumables, your groceries, where I can buy up to save, rather than impulsive buying on, like you say, big-ticket items – although those will be in the system. I think tomorrow we will see quite a few of those coming through for Black Friday, specifically. But definitely the lead up to that has been very grocery orientated, in my opinion.

SIMON BROWN: And that then makes me think that between the retailers and the consumers, taking the BankservAfrica data into account, we are kind of being smart about it. I always look at this Black Friday and think, ooh, we all going to go and buy stuff we don’t need, and have a hangover. But actually retailers are positioning themselves cleverly and consumers are responding smartly in tough conditions.

ISANA CORDIER: Yes. We would urge consumers to continue to do that, and not fall prey to overspending and, like you say, have that hangover the next day of, oh, I bumped my credit card up.

The other thing I think we need to realise is you don’t always know the sources of spending. We don’t know what they’re using to spend. Are they using excess cash or are they going to [use debt] in their spending patterns? Definitely our recommendation to consumers is be wise with your money. Look for things that you know you’re going to save over the longer term, and look at Black Friday and this period as rather an opportunity to save than an opportunity to go and splurge and spend on big-ticket items.

Also be very vigilant around fraud. We are seeing such a huge upsurge in fraud at the moment, and the forces are just right online. They’re waiting for people who are gullible. They tell you to click on things and ‘yes, you’ve won’, or you can ‘get a saving’ or ‘there’s a package’. So please, consumers, be vigilant, don’t click on things. And don’t just open anything that you don’t [know as to] ……5:18 the source.

SIMON BROWN: Yes, that’s a good point. I got two SMSes yesterday about packages that are waiting for me now. Neither of them are particularly true, and some of the emails I’m getting are looking suspect. We’ll leave it there.

Isana Cordier, sector head of consumer goods and services at Absa CIB, I appreciate the early morning insight.

Category: