Ulana van Biljon, chief operating officer at Emira Property Fund
Black Friday has come to symbolise the kick-off of the holiday shopping period. Despite the earlier dates, the past two years have seen disappointing Black Friday spending. Savvy shoppers demand real value and great experiences, and many South Africans have been particularly cash-strapped.
A shortened shopping season but more consumer confidence
This year, fewer shopping days between Black Friday and Christmas Eve could signal lower sales over the festive period, even with a surge in shopping as consumers scramble to make purchases. However, consumers are feeling more confident about spending than in recent years, and some even have a little more to spend, which could result in bigger baskets balancing out the effects of the compressed timeline.
Factors contributing to this rise in confidence include a settling political landscape, the suspension of load shedding, a stabilising currency, improving inflation rates, a second local interest rate cut, and the first payouts from South Africa's new Two-Pot Retirement System.
Retailers adapt
General dealers like Game, Makro, Builders, and Jumbo Cash & Carry have already responded to this festive season’s time-crunch dynamic with month-long Black Friday promotions starting in early November.
These extended campaigns may actually work in consumers' favour, allowing them to feel more secure in their purchasing decisions as they have longer to evaluate deals and sales. That said, campaigns like Game’s, which notes “when it’s gone, it's gone”, send a clear message not to dither over purchasing decisions too long.
Interest rates and disposable income
Historically, when consumers perceive their financial situation as stable or improving, they're more likely to splurge during seasonal shopping peaks.
With last week’s announcement of a further 25bps interest rate cut resulting in interest rates being 50bps lower than this time last year, putting a bit more money in consumers' pockets, we can expect a positive impact on festive spending. The start of a downward interest rate cycle in September means consumers will have some more disposable income to allocate towards non-essential purchases.
Wage increases and year-end bonus payouts are expected to improve in 2024, adding to seasonal spending power. Yet, many companies remain under financial strain, with limited capacity to pay bonuses, instead opting for retail gift cards for their employees.
The two-pot effect
When it comes to the first payouts from the Two-Pot Retirement System, indications are that much of this will go to debt repayment and education-related spending. Still, it will also benefit retail as the easing of other financial pressures allows people to loosen their spending belts a little.
A focus on essentials
However, for the 2024 festive season overall, consumers will continue to remain cautious, focusing primarily on essentials. At Emira, recognising the increasing preference for an all-in-one shopping experience has led to a focus on providing exceptional shopper experiences and smooth journeys.
Buy-now-pay-later
The attractiveness of buy-now-pay-later (BNPL) options like Pay Just Now and Payflex will play a role in festive buying trends – online and in-store, offering consumers no-fee, interest-free repayment plans that are especially appealing to budget-conscious consumers.
The role of social media
Social media will have an immense influence on the choice of gifts and the season's most-wanted items, with platforms like TikTok, Facebook, and Instagram becoming virtual shop windows. Influencers have become modern-day advertisements that help retailers reach audiences in an authentic way.
Seamless shopping experiences
For shopping centres and retailers, the short season means a greater emphasis on providing seamless experiences. Ensuring ease throughout the shopping journey means customers can enjoy frictionless festive shopping outings.
Many price-conscious and time-pressed shoppers arrive at a shopping centre knowing what they want after comparing products and pricing online but still prefer the in-store purchasing experience. So, it’s important to make their shopping trip a good one.
All-in-one shopping
At Emira, our retail centres offer a variety of essential and unique retailers. One example is Wonderpark Shopping Centre in Pretoria, which is expanding its entertainment and leisure offering with the launch of Goldrush in November and a refurbished Play Area and Kiddies Club in time for December and the school holidays, surrounded by various restaurants and eateries. These amenities invite customers to linger longer, providing maximum value to their overall shopping experience.
A January boost?
Interestingly, the condensed festive season may actually lead to higher spending in January. Consumers may feel rushed, postponing certain purchases until the new year. The growth in the popularity of gift cards as presents means redemptions will occur in January, driving sales.
Back-to-school dash
Back-to-school shopping in January may also see a more pronounced trend than in the past, with both inland and coastal public schools, as well as most private schools, starting on the same day, 15 January 2025. This creates another potential time crunch, emphasising excellent seasonal planning to meet demand and quickly pivot from one retail season into another.
The stakes are high
The stakes are always high for retailers and shopping centres over the holiday season, and this year's condensed timelines intensify the pressure.
Shopping centres that deliver smooth, seamless, all-in-one experiences, with retailers offering trending products and services, various payment options, and great customer service, will be best positioned to benefit from the upside of the early improvement in consumer sentiment.
