Love it or hate it, Black Friday – as American as corn dogs and Halloween – is here to stay. And judging by international trends, it’s only going to become more deeply entrenched in our retail landscape.
Consumer appetite for Black Friday deals has not diminished and after a tough year, many of us are being swept up by the thrill and frenzy of the bargain hunt. TransUnion has just released a report showing that consumer spending patterns are biting them badly – months, if not years, down the line.
The credit bureau compared new account openings made during the week of Black Friday last year with the same week a month before and found startling results.
Debt burden
Calling the results “eye-opening”, TransUnion Africa chief executive Lee Naik said: “We found that people were more likely to take out loans and increase their spending limits during Black Friday period, to the tune of a 37% increase in new accounts and a 21% increase in total credit limits for new credit cards, clothing and retail revolving accounts.”
Consumers are also not factoring in the interest on their credit card purchases: if they did, they would think twice about buying a “sale” item with interest rates of almost 28% tagged on. Most of the growth came in Black Friday spending from higher-risk loans: a 49% increase in retail instalment accounts (furniture and electronics) and a 30% increase in retail revolving accounts (normally used for electronics, homeware and general appliances).
The problem comes after the madness has worn off. “Our data found that six months on, just over half of new retail revolving accounts taken out during Black Friday 2018 were more than one month in arrears.”
But while this suggests an increased appetite for credit and even some reckless lending in the run-up to the splurge fest, the National Credit Regulator (NCR) says a seasonal upswing in expenditure towards the end of the year is typical. Ngoako Mabeba, NCR manager of statistics and research, says: “The fourth quarter, incorporating the December period and Black Friday, is generally a high peak period for all types of credit.
This peak is generally followed by a dip in the first quarter, which includes January. Credit extension has averaged more than R130 billion per quarter in the last five quarters.”
Go big or go home
A PwC survey indicates that consumers are planning to spend big on Black Friday/Cyber Monday this year – it expects consumers to spend 36% more this year than last year. On average, they spend R3812 during the sales. Most consumers (85%) said they intend to buy something or would consider it if there is a “good enough” deal.
Six out of 10 consumers who are planning to spend the same or more than last year are trying to take advantage of savings on offer, while 43% of these shoppers hope more retailers will have deals this year. Saving on Christmas spending is another key factor.
The survey found that online purchases are gaining rapidly on in-store buying, even though most consumers prefer walking into a brick-and-mortar store. PwC says last year’s Black Friday saw retail sales increase by 1952% in South Africa, compared with an ordinary shopping day, and 2571% compared with an ordinary Friday, ranking South Africa in the top five globally.
Millenial and Generation Z shoppers (aged 18-34) intend to make 51.5% of their purchases through online channels and voice recognition services, while those shoppers in the age bracket 35-54 intend to make 51.9% of their purchases through the same avenues. In contrast, consumers older than 55 will spend only 35% of their shopping efforts online or via voice recognition services.
Finder.com says South African consumers spent a record R2.9bn last year, and expects that to jump 30% this year – with e-commerce playing a major part, which is why it’s vital to stay alert while shopping online.
Risky business
Banking Ombudsman Reana Steyn has warned that consumers must be aware that the increased hype around sales and quick bargains increases the risk of fraud – especially when transacting online or with bank cards.
“The reason is simple: everyone, including the fraudsters, are looking for the deal of a lifetime during the Black Friday and the Cyber Monday bonanza,” Steyn says. OBS statistics show that last year, there were 404594 online transactions recorded on Black Friday (up by 55% from 2017) in South Africa.
Cyber Monday saw online transactions increasing by 36% from 129458 in 2017 to 176595 in 2018. Steyn said his office received a 238% increase in the number of credit card fraud complaints over the November period last year.
Online shopping tips
Thomas Pays, CEO of automated payment solution Ozow offers these online shopping safety tips:
◆Shop with popular e-commerce retailers.
◆Trustworthy sites like Takealot are able to handle large volumes of transactions through a safe automated process.
◆Do not trust non-secure checkouts.
◆Checkout security is imperative as it is the most vulnerable point for cyberhackers to attack. A good encrypted checkout should always have a small padlock icon next to the site’s URL in your browser.
◆Move away from mobile shopping.
◆Though convenient, shopping online via your mobile device introduces many new security issues. Cyberhackers use abbreviated URLs on social media, and once clicked on, you have no idea where it’s directing you to.
◆Don’t divulge unnecessary personal information.
◆When filling in your personal details for checkout, do not save your credit card details, ensure that they are cleared from the site and you are logged out of the site properly.
◆Use a secure payment solution.
◆By selecting secure payment platforms like Ozow at checkout, consumers no longer need to rely on a credit or debit card. Users can complete their purchases using their online savings and cheque accounts. All you need is a bank account linked your online banking profile.