PwC focus on the economic consequences of Black Friday and

understanding consumer behaviour – 21 November 2018

Understanding #BlackFriday and South African

consumer behaviour

Key points

 Card transactions cleared on Black Friday 2017 were double the daily average.
 Nine out of 10 South Africans know what Black Friday is.
 Black Friday’s local Twitter reach increased from 2.4 million on November 12th to 47.2
million on the 20th.
 Trending themes include “amazing deals”, “Black Friday tips”, “mall” and “surprises”.
 67% of Twitter sentiment towards Black Friday is positive.
 Promotions are starting earlier and lasting longer, morphing into ‘Black November’.
 Retail planning and imports are shifting earlier to accommodate both Black Friday and
December shopping.
 A longer promotional period is reflected in increased online interest in Black Friday.
 Household budgets are being pressured by the recession, record-high fuel prices and a
recent rise in inflation and value-added tax.
 On a positive note, consumer confidence, the unemployment rate, interest rates and
retail sales have improved compared to Black Friday 2017.
 Rational decision-making abilities are at their weakest on Black Friday.
 Behavioural economics can empower consumers to make wiser financial decisions.
 PwC Strategy&’s behavioural economists explain seven behavioural traps that consumers
should be wary of: framing, scarcity and loss aversion, herding, the halo effect,
confirmation bias, initial pain, and the sunk cost fallacy.

Sales double on #BlackFriday compared to regular shopping days

The retail bonanza of Black Friday has traditionally been the start of the Christmas shopping
season in the US. The day occurs on the fourth Friday of November following Thanksgiving
Thursday. The ‘black’ refers to turning a profit, that is, retailers making profits as opposed to
being in the ‘red’.
Black Friday has been a North American shopping event since the middle of the previous
century. Starting in Philadelphia in the 1950s, city authorities referred to Black Friday as the day
that scores of shoppers swamped Philadelphia’s shops after Thanksgiving and ahead of the
annual Army-Navy football game held during the subsequent weekend.1
South African retailers Takealot2 and Checkers3 both claim to have debuted the concept of Black
Friday in South Africa in 2012 and 2014, respectively. Takealot is generally regarded as the local
pioneer of online Black Friday, with Checkers being the first to do so in brick-and-mortar
format.
Irrespective of its domestic origins, Black Friday is a cash cow for local retailers. BankservAfrica
(the continent’s largest automated payments clearing house) recorded R2.5 billion worth of
transactions on Black Friday in 2o17. The 4.7 million card transactions that it cleared on the
Friday were double the daily average.4
In line with this data, Nielsen found that Black Friday resulted in a sales boost of more than R1.3
billion in the fast moving consumer goods (FMCG) sector.5 On a broader scale, data from
Facebook indicates that Black Friday is the busiest online shopping day in South Africa.6 Survey
data shows that nearly nine out of 10 South Africans know what Black Friday is.7
Black Friday is different from other seasonal sales that aim to sell old stock: this promotion is
about selling high volumes of in-demand products.8 As a result, market and consumer
information company GfK South Africa again expects good growth in Black Friday retail sales
this year.9
As of Monday, November 19th, local digital marketing specialists Nichemarket were listing
confirmed Black Friday promotions by 278 goods and services companies across 26 spending
categories.10
Internet and social media insights (title & content = work in progress)
The accompanied graph indicates that online interest in Black Friday was still limited by 2014
before picking up notably in 2015. It has become a mega shopping phenomenon over the past
two years11 and PwC Strategy& expects continued growth in interest during the week of
BlackFriday 2018.
Graph: Continued increase in online interest about Black Friday amongst South Africans
(bottom = no internet searches, top = peak online interest) Expected peak interest
on #BlackFriday 2018
Online interest in ‘Black Friday’

2013 2014 2015 2016 2017 2018

Source: PwC Strategy& calculations based on Google Trends data12

In order to understand the social media exposure and reach (also referred to as views) of the
shopping bonanza, PwC Strategy& conducted a high-level analysis of tweets over the period
November 14th-20th. The analysis of several hashtags related to Black Friday found that Twitter
reach increased from 2.4 million views on November 12th to 47.2 million on the 20th of the
month.
The trending themes are, unsurprisingly, captured in key words such as “amazing deals”, “Black
Friday tips”, “mall” and “surprises”. With these positive enforcements seeing as much combined
exposure as the official #BlackFriday tag, the event could be interpreted as generating much
anticipation and happiness amongst social media users and customers.
Social media analysis can look beyond the volume and themes of tweets and consider this
sentiment. According to the tweet analysis, some 67% of Twitter sentiment towards Black Friday
was positive over the period. This is in line with a survey by global discount website Picodi.com
finding that nearly two out of three South Africans will be taking part in Black Friday this year.13
Graph: Positive South African sentiment on Twitter towards Black Friday
 Negative
5%

Neutral
28%

Positive
67%

Source: PwC Strategy& calculations based on Twitter data

Only 5% of tweets were negative, with the remaining 28% classified as neutral. An example of a
more downbeat – yet very valuable in the local context – message was a tweet from the South
African National Police Service (SAPS) indicating a higher threat of crime during the day.
Indeed, many websites14 offering tips about how to make the most of Black Friday warns
consumers about the risk of exploitation by criminals and unscrupulous retailers.
#BlackFriday will be different this year; morphing into Black November
Some 54.6% of South Africans took part in Black Friday last year, with the Picodi.com survey
finding that 66.5% will be taking part this year. Respondents indicated that they are planning to
spend on average R1,654 on their Black Friday purchases in 2018.15
Some 64.4% of survey respondents indicated that they will be buying at both online and in
brick-and-mortar stores this year, compared with just 39.6% in 2017.16 This reflects a
diversification trend in client activity that has resulted in South African online retail growing by
25% in 2017 with a forecast rise of 25% in 2018 as well.17
In order to benefit from changing buying patterns, retailers are extending their Black Friday
offerings to a week or more leading up to the day and the days thereafter, including the ensuing
weekend leading up to Cyber Monday.18
Retailers are also responding to the fact that Black Friday generally occurs ahead of private
sector payday on the 25th. While salaries are likely to be paid out on the 23rd this year due to the
25th falling on a Sunday, this is the exception. (Black Friday falls on the 23rd this year – the
earliest since 2012.)
It has been suggested that South African retailers should collectively reschedule Black Friday to
after the 25th. However, this is unlikely to happen, as local companies would risk losing business
to international Black Friday promotions that would continue on the day after Thanksgiving.19
The expanding of the day into a long weekend and, in some cases, weeks-long sales has seen
Black Friday morph into what PwC consumer experts have referred to as ‘Black November’.20
Furthermore, a larger number of shopping days during the month has seen Black November
shift holiday shopping earlier.21
Nonetheless, Black Friday is also seen as an opportunity to stimulate sales in December. The
November event drives visits and footfall at online and brick-and-mortar shops that exposes
consumers to the products available in these facilities. Retailers have the opportunity to use this
traffic for advertising and to keep consumer conversations going heading into the Christmas
shopping season.22
Black November – as opposed to a singular day - allows for improved logistics management as
the demand for stocking and delivering products is spread over a longer period. Some retailers
have been working since February this year to get their processes in order for Black Friday
2018.23
There has also been an associated increase in port traffic as retailers increase their international
purchases earlier in the calendar year. Container volumes, which previously peaked in
November, is now expected to have peaked in September already.24
For companies of all sizes, the risk of website downtime, stock shortages and a lack of capacity at
call centres are real risks this week. Retailers are challenged by short-term needs – getting
customers in and out – with long-term reputational challenges of service delivery falls short.
This has seen companies step up their customer service activity leading up to Black Friday.25
The earlier preparation and launch of Black Friday deals is also reflected in online interest.
Google Trends data indicates that up until 2016, online searches in South Africa for “Black
Friday” were limited to the month of November. There was increased interest from October
2017, while this year’s online interest started in September already.
Are South African consumers in a better financial position compared to 2017?
Wallet squeeze have seen South African consumers growing increasingly sensitive to prices and
promotions over the past several years.26 However, this has also made shoppers more
susceptible to large price discounts on non-essential products.
Does the local economic climate allow for South African consumers to indulge in Black Friday
promotions? What is the state of household finances in this regard? There are both negative and
positive considerations in this regard.
On the negative side, the most recent gross domestic product (GDP) data indicates that the
South African economy was in a recession during the first half of 2018.27 Higher frequency data
also suggests that private sector activity also deteriorated during the third quarter of the year.28
South African consumers are also currently experiencing record-high fuel prices. The retail
petrol price increased by a cumulative R3.32/litre during the April–October period29 as a result
of higher internal product prices and a weaker exchange rate.
Partly as a result of higher fuel prices, headline consumer price inflation has increased from
3.8% year-on-year (y-o-y) in March to 4.9% y-o-y in August and September.30 Around 0.6
percentage points of this increase was associated with an increase in value-added tax (VAT) in
April this year.31
On a positive note, the narrowly defined unemployment rate is currently below the 14-year high
levels seen in 2017. Despite the recession, total employment increased by 1.2% y-o-y during the
third quarter of 2018. (Admittedly, this was driven by job growth in the informal sector.)32
Consumer confidence returned to net positive territory this year after four years in net negative
territory. The recovery this year is linked to the appointment of a new national president, a cut
in interest rates, better rains in the drought-stricken Western Cape, significant wage increases
for public servants, and a slowdown in food price inflation.33
A 25 basis points cut in interest rates during March34 and deflation in the price of imports
(excluding crude petroleum)35 have also benefitted consumers at the retail level. Inflation
adjusted retail sales increased by an average of 1.5% y-o-y during the third quarter. Sales of
household furniture, appliances and equipment increased by a significant 9.1% y-o-y, suggesting
improved consumer spending activity.36
Despite these positive factors, financial planners and savings experts are warning South African
consumers to not indulge in the allure of mega discounts – especially when such purchases are
made on credit. According to the National Credit Regulator (NCR), four out of 10 credit active
consumers are in poor standing – i.e. accounts are three or more months in arrears.37
Macroeconomic evidence suggests a mixed picture for South African consumers. With both
positive and negative developments over the past 12 months affecting the broader economy, it is
up to individual households to evaluate their financial capabilities in the face of heavy Black
Friday discounts.
Some might even suggest using available funds to invest, rather than spend. Listed retail shares
generally rise on Black Friday. And unlike equity trading in major markets like the USA and
Japan being limited on Black Friday,38 the Johannesburg Stock Exchange (JSE) has a normal
trading day.
Behavioural economics helps explain consumer indulgences on Black Friday
Ever wondered why South African consumers discover their inner shopping maniac on Black
Friday? According to PwC’s Strategy& behavioural economists, rational decision-making
abilities are at their weakest on Black Friday, as marketers can easily leverage consumers’
cognitive make-up to get them to spend more.
Behavioural economics can help us understand how context can drive our purchasing decisions.
By understanding the cognitive fallacies that can trigger financial decisions during Black Friday,
behavioural economics can empower consumers to make wiser financial decisions.
The following is a list of the top behavioural traps that consumers should be wary of as they
navigate the frenzy of the upcoming Black Friday sales:
1. Framing: Globally, retailers have generated a hype around the Black Friday
phenomenon. Although Black Friday is relatively new in South Africa, local interest is at
all-time highs. Framed as a once-a-year sale, we view it as an extraordinary event and
associate it with extreme price cuts. However, Black Friday is arguably just another
seasonal sale and its status as an exceptional event should not compel us to make
purchasing decisions that we would otherwise not have made.
 2. Scarcity and loss aversion: Panic spreads when shoppers fear they may miss out on the
best sales deals. Retailers commonly spark consumers’ interest by highlighting limited
stocks available for a limited time only, which raises the perceived value of these goods -
after all, rarity and value are deeply intertwined. While the sense of scarcity can further
trigger the need to act, we should look out whether we would truly miss out, or are
captured by the rush of the chase.
3. Herding: We find comfort in fitting in with the actions of others, which has its roots in
our own evolution. However, the actions of others can also drive us to irrational
behaviour. With many South Africans wholeheartedly buying into the craze of Black
Friday, we feel we should join in. Marketers welcome the crowds on Black Friday, since
crowds attract more crowds. Few shoppers feel guilty buying a 50% off toaster when the
customers next to them have flat screen TVs in their carts. When our peers are doing it,
the painful experience of parting with money becomes an act of social cohesion.
4. The halo effect: One exceptionally good sales deal can create the perception that all of
the retailer’s deals are also steals by association. This phenomenon - termed the ‘halo
effect’ - means consumers will have difficulty viewing the deals on Black Friday in a
nuanced way, where some may be highly discounted, but others may not. A retailer
baiting with one or two exceptional discounts may not offer uniformly discounted
products and consumers should weigh each purchasing decision with equal scepticism.
5. Confirmation bias: As consumers, we are likely to factor out any additional costs
associated with our shopping trip on Black Friday, including transport and parking costs,
time and effort. As we buy into the idea of Black Friday, we want to believe we are truly
making savvy money decisions. Thus, we are likely to count only the per-item savings to
confirm this belief, rather than considering whether going out of our way for the
shopping excursion is truly worth our while.
6. Initial pain: It hurts to spend an initial R50, but it is much easier to spend a further R10,
R20, or even another R100 after that initial purchase. The amount of pain we experience
decreases with every extra rand after the initial payment, paving the way for excessive
spending on things we would otherwise not purchase on Black Friday
7. Sunk cost fallacy: Once we have started to invest, we tend to struggle to close out
investments that prove unprofitable. On Black Friday, if we have already made the initial
upfront investment of getting up before sunrise, driving to the mall, finding parking and
waiting in line for the store to open, we will be inclined to buy more than we initially
came for. No matter the upfront investment, it remains helpful to consider at each point
whether the purchase is worthwhile and whether it brings us closer to our longer-term
financial objectives.
The Black Friday sales frenzy can trigger our deepest emotional and cognitive responses and can
lead us down a path of unnecessary spending. However, consumers can use insights from
behavioural economics to empower them to make decisions that align with their individual
financial goals. By pausing to consider the factors above and our true consumption needs, we
are better prepared to make the most of what Black Friday has to offer.
Article by PwC Strategy& economists Lullu Krugel, Christie Viljoen & Maura
Feddersen with contributions from Nina Kirsten and Genevieve Frydman
_______________________________________________________________________________

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in
158 countries with over 250,000 people who are committed to delivering quality in assurance, advisory
and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC has a presence in 34 Africa countries with an office footprint covering 66 offices. With a single Africa
leadership team and more than 400 partners and 9000 professionals across Africa, we serve some of the
continent’s largest businesses across all industries.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal
entity. Please see www.pwc.com/structure for further details.

© 2018 PwC. All rights reserved

About Strategy&

Strategy& is PwC’s integrated strategy consulting offering, focused on uniting strategy and execution to deliver
immediate impact and lasting value. Strategy& South Africa works with the continent’s leading businesses,
governments, and organisations to create and deliver essential advantage by building capabilities and successfully
navigating through critical junctures in their business.

We help clients lead transformational change, create new organizational models, capture value from their
customer and channel strategies, increase the effectiveness of their supply chains and assets, and integrate security
into their strategy to ensure the resilience of their business

Strategy&’s economists have extensive experience and knowledge across a range of sectors and African market
areas. We offer a range of comprehensive and integrated client offerings including economic and regulatory impact
assessments, market entry analyses, IFRS 9 reporting, behavioural economic interventions, Bayesian network
modelling, as well as economic and political scenario planning.

Media contacts

Bontle Mnisi: Account Executive, Change the Conversation, South Africa

Office: + 27 11 083 7735 or mobile: 076 2283796
Email: bontle@changetc.co.za
OR
Sanchia Temkin: Head of Media Relations, PwC South Africa
Office: + 27 11 797 4470
Email: sanchia.temkin@pwc.com

References
11 https://www.moneyweb.co.za/news/south-africa/black-friday-americas-most-revered-export/
2 https://www.businessinsider.co.za/black-friday-south-africa-best-discount-deals-2018-10
3 https://businesstech.co.za/news/finance/144397/like-it-or-not-black-friday-is-officially-a-thing-in-south-africa-

heres-why/
4 https://it-online.co.za/2017/12/07/bankservs-black-friday-stats/
5 https://www.businessinsider.co.za/things-you-didnt-know-about-black-friday-in-south-africa-including-the-

surprising-top-selling-products-2018-10
6 https://businesstech.co.za/news/finance/144397/like-it-or-not-black-friday-is-officially-a-thing-in-south-africa-

heres-why/
7 https://black-friday.global/en-za/
8 https://businesstech.co.za/news/technology/279161/two-things-to-look-out-for-on-black-friday-2018/
9 https://businesstech.co.za/news/technology/279161/two-things-to-look-out-for-on-black-friday-2018/
10 https://www.nichemarket.co.za/blog/black-friday-sales-south-africa/
11 https://www.moneyweb.co.za/moneyweb-radio/wallet-squeeze-boosts-black-friday-phenomenon-in-sa/
12 https://trends.google.com/trends/explore?date=today%205-y&geo=ZA&q=black%20friday
13 https://black-friday.global/en-za/
14 https://businesstech.co.za/news/lifestyle/282231/9-important-tips-to-get-the-most-out-of-black-friday-2018/
15 https://black-friday.global/en-za/
16 https://black-friday.global/en-za/
17 https://www.businessinsider.co.za/5-things-you-need-to-know-in-sa-business-and-online-retail-in-sa-2018-11
18 https://businesstech.co.za/news/lifestyle/277605/5-things-you-can-expect-from-black-friday-2018-in-south-

africa/
19 https://www.businessinsider.co.za/a-late-payday-wont-affect-black-friday-deals-heres-why-2018-11
20 https://www.pwc.com/us/en/industries/retail-and-consumer-products/2018-holiday-outlook.html
21 https://www.comscore.com/Insights/Blog/Its-Official-Retail-Spending-Is-Shifting-Earlier-in-the-Holiday-Season
22 https://www.pwc.ie/media-centre/press-release/2018/irish-consumers-gear-up-for-black-friday-cyber-

monday.html
23 https://www.iol.co.za/business-report/economy/blackfriday-impacts-seasonal-retail-patterns-18114379
24 https://www.iol.co.za/business-report/economy/blackfriday-impacts-seasonal-retail-patterns-18114379
25 https://www.iol.co.za/business-report/opinion/blackfriday-will-your-business-handle-the-demand-18183090
26 https://www.moneyweb.co.za/moneyweb-radio/wallet-squeeze-boosts-black-friday-phenomenon-in-sa/
27 http://www.statssa.gov.za/publications/P0441/P04412ndQuarter2018.pdf
28

https://corporateandinvestment.standardbank.com/standimg/cib/About%20us/Static%20files/2018/SEPT2018ZA_
PMI_ENG_1810_LITE.pdf
29 http://www.cefgroup.co.za/wp-content/uploads/2013/10/Press-Release-02-Nov-2018-Change-7-Nov-2018.pdf
30 http://www.statssa.gov.za/publications/P0141/P0141September2018.pdf
31

https://www.resbank.co.za/Lists/News%20and%20Publications/Attachments/8367/Monetary%20Policy%20Comm
ittee%20Statement%20March%202018%20.pdf
32 http://www.statssa.gov.za/publications/P0211/P02113rdQuarter2018.pdf
33 https://www.ber.ac.za/BER%20Documents/BER-press-release/?doctypeid=1068&year=2018#9199
34

https://www.resbank.co.za/Lists/News%20and%20Publications/Attachments/8367/Monetary%20Policy%20Comm
ittee%20Statement%20March%202018%20.pdf
35 http://www.statssa.gov.za/publications/P01427/P01427August2018.pdf
36 http://www.statssa.gov.za/publications/P62421/P62421September2018.pdf
37 https://www.iol.co.za/news/south-africa/gauteng/consumerwatch-how-to-avoid-black-friday-buyers-remorse-

18176403
38 https://www.exchangerates.org.uk/news/23604/foreign-exchange-money-transfer-week-ahead-data-light-

markets-gear-up-for-thanksgiving-black-friday.html