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Retailers diversify to get a slice of the R60.4b Black Friday and Festive Season Bonanza

20 Nov 2023

By Cash Connect | Research conducted by Bureau of Market Research (BMR), commissioned by Capital Connect

South African retailers are expected to adopt diversification strategies such as adding new product lines and new service offerings to win a bigger share of an expected R60.4 billion in retail spending over November and December*. This Black Friday and festive season consumer spending spree will enable retailers to make up some of the financial ground they have lost during a year of poor economic performance and weak consumer spending.

Capital Connect, a fintech that offers fast and flexible business funding to retailers in just 24 hours, found that among 150 prominent retail business owners, 87% have adopted a range of diversification strategies to grow their businesses. Nearly a third report that cash flow and access to capital is their biggest challenge—similar to the number that say running a retail business during load shedding is their second biggest challenge.



“Retail entrepreneurs are taking charge of their own destiny and finding ways to increase revenues and profits, even in a difficult year,” says Steven Heilbron, CEO of Capital Connect. “Innovative thinking, diversification and the ability to respond fast to volatile market conditions are all essential for survival and growth.”

Four in ten retailers in the survey reported that loadshedding was the factor that has impacted them the most this year, with significant numbers choosing high price inflation, a slowdown in consumer spending and rand-dollar volatility as the other major factors affecting their business.

Innovating in the face of economic pressure

But retailers are not allowing the grim economic reality to hold them back. The survey shows that more than half (55%) are adding new product ranges and 35% are branching out into new service offerings. “We especially see this in sectors where sales have slowed down, such as pharmaceutical and beauty stores as well as specialist food and beverage merchants,” says Heilbron.

“Retailers in these sector are adding groceries and essentials to their product line to capture more of the consumer’s non-discretionary spending. Tactics such as doorbuster deals on staples such as cooking oil, milk, sugar, detergents and toilet paper are an effective tactic for this market for retailers to get more wallet-share.”

Close to 35% of retailers said they are acquiring more businesses. This is a powerful means for retailers to diversify and grow revenue lines—for example, a general dealer buying a liquor franchise or a coffee shop—and move into new locations.

Shopper-tain ME to attract in-store traffic

Around 8% are introducing shopper-tainment for better in-store customer experiences. “Black Friday has a strong association with online shopping. But traditional retailers with bricks and mortar stores still make up the majority of Black Friday sales revenue. They can win business by turning the shopping event into a shopper-tainment occasion. They can hold product demos or workshops hosted by influencers or experts, offer live in-store performances, have pop-up shops and guest vendors, or use gamification to attract foot traffic, for example,” says Heilbron.

It’s not just consumers who are struggling in the current economy. Retailers are also battling to stay profitable. For many, adjusting their product mix to include more well-priced essentials and no-name brands is proving to be an effective way to keep revenues flowing in. Some are also using tactics such as premiumisation—developing deluxe offerings for more sophisticated and prosperous customers—to grow their businesses.

Heilbron says: “With consumer spending and confidence at low levels, retailers need to be adaptable and outsmart the competition. Fast access to business funding is the key to seizing opportunities. Fintech providers are making it easier for retailers to access the funds they need to grow, resolving the biggest challenge they face. With Capital Connect, you can apply for a business loan of up to R5 million from our app and the funds will be in your bank account within 24 hours.”

*Research conducted by the Bureau of Market Research (BMR), commissioned by Capital Connect

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