South Africa, 22.12.2020

Disappointing growth for technical goods retail during Black Friday

South African consumers focused their spending on buys for the home such as refrigerators over the Black Friday promotional period this year and conducted careful online research before making their purchases. That’s according to consumer research and point of sale tracking data from GfK South Africa, which reflects subdued spending on Technical Consumer Goods for November 2020.

According to GfK’s data, sales fell 2 percent year-on-year in November 2020, across the washing machines, laptops, tablets, smartphones, PTV, routers and cooling product segments combined. Panel televisions, usually the star performer over the Black Friday period, showed a year-on-year revenue dip of 9 percent and a fall in unit sales of 26 percent. Smartphone and cellphone revenues, meanwhile, were flat and media tablet revenues and unit sales slipped 1 percent and 14 percent, respectively. 

Fridges posted 50 percent year-on-year growth in revenue and 21 percent growth in unit sales for November, following a 21 percent increase in unit sales and 42 percent uplift in revenue for October. Mobile computers, meanwhile, saw 17 percent growth in revenues and 21 percent decline in unit sales for November 2020, reflecting consumers trading up for devices with higher specifications.

“Retailers went all-in on the Black Friday month this year, expecting it to be better than 2019 and hoping to recoup some of the sales they lost during the hard lockdown period,” says Nicolet Pienaar, Head of Market Insights at GfK South Africa. “In most categories of the Technical Consumer Goods market, Black Friday did not meet their expectations in terms of unit sales. However, strong performance of premium products resulted in positive value growth in most categories.”

In an echo of the trend, we saw as the country emerged from lockdown, those consumers that opened their wallets spent mostly on home appliances such as cooling products, hot beverage makers and vacuum cleaners, she adds. “Many consumers were preparing for a December holiday ‘staycation’ and invested in products to work, play and clean at home,” says Pienaar.

Trading up for better value

During the Black Friday promotional week, many consumers that did spend money traded up for products with higher specifications after postponing big-ticket purchases earlier in the year. The value of the average purchase through traditional channels rose from R4,767 per item in 2019 to R5,627 this year, while the average value of an online purchase climbed from R3,753 in 2019 to R5,274 this year.

A trend of aspirational purchases can be observed across many key product categories during the week of Black Friday:

  • Sales of mid-range notebooks with Core i5 processors grew 141 percent compared to the previous week and gained 4.9 percent in market share.
  • Washer-dryers grew 141 percent and gained 4.9 percent in share compared to the week before, while larger 15kg machines grew 440 percent and gained 8.5 percent in share.
  • When compared to the previous week, 42” panel televisions screens grew 267 percent and gained 2.7 percent in share, while 55” screens grew 255 percent and gained 2.9 percent in share.
  • Side-by-side fridges grew 181 percent and gained 3.1 percent in share over the previous week, while fridges with capacity of 600l and above grew 160 percent and gained 1.7 percent in share.

Move towards online shopping accelerates

With an accelerated move towards online shopping and retailers stretching out Black Friday promotions for most of November, consumers spent more time researching each purchase. More than a third (34%) looked at reviews from other shoppers, 38 percent used price comparison websites, 19 percent visited consumer opinion websites and 30 percent looked at reviews from experts.

As expected, social distancing requirements and consumers’ higher adoption of ecommerce during lockdown helped to drive growth in online shopping for technical consumer goods. The online channel accounted for 14 percent of Technical Consumer Goods revenues in November 2020, up from 7 percent in November 2019.

Higher trust in digital channels helped lift the value of the average online purchase by around 40 percent. However, a strong online discounting culture still meant that the average value of an online technical goods purchase was lower than the average purchase in traditional retail for the Black Friday month.

“COVID-19 has left an imprint on the consumer’s pocket and emotions, with financial worries forcing them to re-evaluate their purchase decisions,” says Pienaar. “Not only were they looking for ultimate value, but they also needed reassurance that the deals were real. We expect the same mindset to continue throughout the Christmas shopping season in an atmosphere of low consumer confidence and economic uncertainty.”  

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