Black Friday kicks off in the US - CNBC Africa

Black Friday kicks off in the US

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Black Friday. PHOTO: Getty Images

Despite the ominous name, Black Friday (which is the day after Thanksgiving), tends to kick off the start of the holiday shopping season in the United States. It is so named because sales over the three-day weekend can bring in enough customers to lift many retailers out of the red and into the black for the year.

Trading is expected to be light this week, likely amplifying volatility, with financial markets closed for the Thanksgiving holiday. Markets will also close early tomorrow. 

In recent years, many retailers try to lure customers through their doors by opening extremely early and offering promotional sales to kick off the holiday shopping season.

The day is similar to Boxing Day which is observed in many Commonwealth nations. Black Friday is not a federal holiday, but California and some other states recognise ‘The day after Thanksgiving’ as a holiday for state government employees. 

"I have some concerns about discretionary spending for low-end consumers, though the high-end segment looks pretty good," said Mike Tonkin, an analyst at Saxo Capital. 

Black Friday may be an American concept, but its influence has filtered down to South Africa, with several local retailers offering specials to coincide with the day.  In SA, some local retailers have jumped on the Black Friday bandwagon, offering their own discounts – although not to the same degree as seen from retailers in the US. 

Local online retailer Takealot.com offered its first Black Friday special, including discounts on selected products and free delivery for all orders placed on Friday.

Other local retailers, including DionWired, Incredible Connection and Esquire, have also started with festive season offers directed at the public. 

Black Friday’s online retail spend in the States exceeded 1 billion US dollars last year, raking in 12 percent of what South Africa makes online in a year – in one day.

This is according to a report by data tracking firm ComScore, which shows that in the past holiday season-to-date, 13.7 billion US dollars has been spent online, marking a 16 percent increase compared to the same period last year. Black Friday saw 1.042 billion US dollars in online sales, making it the heaviest online spending day to date in 2012 and representing a 26 percent increase versus Black Friday 2011. 

"Investors are focused on the outcome of Black Friday. If headlines start showing positive figures as early as next week, we may see more rises in the market on hopes that US consumption is strong,’’ said Tonkin. 

Locally, South African consumers are not immune to pressures felt by the international economy and this is affecting spending. Earlier in the month, the Consumer Goods Council of South Africa urged consumers to be disciplined when shopping and to do research to ensure they were getting good quality at the best price. 

The council's chief executive, Gwarega Mangozhe said, "South Africans by nature are very resilient, thus the level of economic crisis that the global economy is undergoing requires significant levels of discipline from a spending perspective”. He added that, “The rising levels of indebtedness, rising levels of debt and pressure on disposable income, puts consumers under significant pressure."

The increase in the consumer price index by 5.5 percent year-on-year in October from a six percent year-on-year increase in September has seen citizens who are already in debt spending more of their money on essential goods. 

Irrespective of whether consumers can spend like they did during pre-2008, retailers have developed new ways to catch bargain-seeking shoppers, and avoid the holiday season being less forgiving to the sector.

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