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Black Friday gives November retail sales a much-needed boost

Black Friday helped bolster retail sales in November, with sales up 2.6% year-on-year, according to Statistics South Africa.

Stats SA on Wednesday released the retail sales data, which showed a notable improvement compared to October's figures of 0.3%. At the time, analysts had said consumers might have been holding off on shopping in an anticipation of Black Friday, on November 28, 2019.

Black Friday is a retail event, adopted from the US. It kicks off one day after the US Thanksgiving holiday and many retailers use the opportunity to mark the beginning of festive season shopping by trading at discounted prices.

Among the main contributors to the 2.6% annual increase were general dealers (these are retail traders of non-specialised stores) with sales up 3.2%; retailers in textiles, clothing, footwear and leather goods with sales up 2.7%; and food, beverage and tobacco retailers with sales up 6.2%.

Increasing sales were observed across retail categories except for pharmaceuticals, cosmetic and toiletries, noted Siphamandla Mkhwanazi, senior FNB economist.

The seasonally adjusted retail trade sales increased by 3.1% in November 2019, compared to October 2019. "This followed month-on-month changes of 0.1% in October 2019 and 0.7% in September 2019. In the three months ended November 2019, seasonally adjusted retail trade sales increased by 1.2% compared with the previous three months," the report read.

Mkhwanazi said the increase in seasonally adjusted sales can be attributed to Black Friday discounts. Households have become more price-sensitive and are more inclined to buy goods on special, Mkhwanazi said.

"Furthermore, it is possible that consumers used the opportunity to frontload their customary Christmas shopping, which could suggest relatively subdued shopping activity in December," he added.

Overall, there is still a "muted demand environment" in the retail sector – as is reflected in "persistently low" retail inflation figures (which for the year-to-date stands at 2.6%), compared to headline inflation levels (which stands at 4.2% for the same period).

"This demonstrates retailers' continued inability to pass on price increases amid intensified bargain hunting by consumers," Mkhwanazi said.

It is expected that retail sales might have picked up moderately over the festive season as consumers took advantage of discounted prices.

Investec economist Lara Hodes noted that the retail sector still remains under pressure. "Any significant and sustained pick-up in household consumption expenditure in the near-term is unlikely," she said.  

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