Debt counselling experts and economists have warned consumers to be cautious when spending on Black Friday specials and to avoid getting into unnecessary debt.
The US shopping phenomenon, which takes place on November 29, has taken off in South Africa in recent years. The Mercury’s sister newspaper Business Report said earlier this month that research conducted by the Bureau of Market Research (BER) for fintech Capital Connect stated that retailers in South Africa will generate R22 billion in additional direct revenues because of Black Friday sales this year.
Experts have acknowledged that consumers might have a bit more money in their pockets due to an improvement in the South African economy but advised that they should spend the extra cash on essentials.
Neil Roets, CEO of Debt Rescue, a debt counselling company, said that they urged South Africans to approach Black Friday with caution.
“While the promise of massive discounts can be enticing, it’s important to remember that overspending during these sales can lead to financial strain, especially in the current economic climate where many are already struggling.”
Roets added that before making any purchases, consumers should compile a list of items they genuinely need.
“Stick to this plan and avoid impulse buying, no matter how tempting the deals may appear. It’s also crucial to compare prices and ensure that the discounts are genuine.”
Roets said that indebted consumers should avoid using credit to fund Black Friday purchases.
“Instead, focus on paying off existing debt and avoid unnecessary expenses.
Remember, the savings from Black Friday deals are not worth the long-term financial burden of high-interest debt, which nullifies the savings.”
Benay Sager, executive head of debt management company DebtBusters, said despite the financial climate looking better due to an improved economy, consumers were still feeling the impact of salaries that are not in line with the increases in living expenses.
“The latest Q3 Debt Index shows that consumers still need to borrow to make ends meet, needing about 66% of their take-home pay for repaying their debt on a monthly basis. We also saw that on average, interest rates on unsecured loans, particularly personal loans, have shot up to 26.7% per annum. This is the highest we’ve seen in the last eight years.”
Sager said the cost of borrowing has gone up significantly for the consumer.
“What that means for consumers going into the season with lots of retail offers, such as Black Friday and the festive period, is that they should be very cautious of where they spend their money and if they decide to use credit, to know what the cost and impact would be going forward.”
Waldo Krugell, an economics professor at North West University, said that consumers have had some relief with the lower fuel price and small cut in interest rates, but most consumers are still stretching their income to make ends meet.
“My advice is to look for bargains on those things that you need. A bit of market research beforehand is important.”
Economist Dawie Roodt said people get swept up in the spending frenzy and falsely believe items are much cheaper.
“Consumers just tend to buy everything. Make sure that you have budgeted for Black Friday with extra money, make sure it’s a bargain and compare prices and don’t fall for the slogan that this is a once-off deal.”
Johann Els, the group chief economist at Old Mutual, said: “In my opinion, the Black Friday deals are not special and just overpriced items being reduced.
Rather focus on buying essential items like school items for 2025.”