A man's hand holds out a bundle South African Rand bills, offering them to someone unseen, Image: Getty Images
Black Friday approaches, South Africans are looking forward to massive deals and discounts – both instore and online.
However, while the excitement of pre-holiday shopping can be tempting, they are cautioned to consider the financial landscape before diving into impulse purchases.
According to research commissioned by fintech Capital Connect and conducted by the Bureau of Market Research, South Africa will generate R88 billion this Black Friday.
“Various factors will influence spending patterns this year, and people should be mindful of the long-term impact on their finances,” advises James Williams, Chief Marketing Officer at short-term online lender, Wonga.
“Impulse purchases can impact people’s ability to save for education, retirement or emergencies, so it is best to have a set spending budget before diving into this year’s Black Friday deals.”
Here are five factors that will drive Black Friday and what you should keep in mind before hitting the checkout button:
South Africans have access to their retirement savings under the new "two-pot" system.
This reform allows for a portion of retirement funds to be accessed before retirement, potentially providing a boost to cash flow but taking away from their future.
People should be mindful of using their hard earned income or savings on Black Friday deals for non-essential items.
Williams urges caution, “Using these funds for non-essential purchases could jeopardise long-term financial security. Think carefully about the long-term impact on your retirement before considering a Black Friday splurge.”
For many people, a December bonus or 13th cheque are a welcome financial boost.
These lump sums can be tempting to spend on big-ticket items or holiday gifts, however Williams advises people to budget wisely.
While it’s easy to treat the bonus as "extra" income, it's important to prioritise savings or debt repayments.
With the recent US election results, the global financial landscape is set to experience volatility, which could impact the value of the South African Rand.
While exchange rate fluctuations may affect the cost of imported goods, there’s another factor to consider: South Africa’s changes to the tax regime for online orders, particularly from Chinese retailers like Shein and Temu.
The South African Revenue Service (SARS) has announced plans to impose higher taxes on imports, especially clothing, from these platforms starting in 2024.
This shift could significantly increase the cost of goods purchased from Shein and Temu, adding up to 45% in import duties plus 15% VAT on clothing orders.
Currently, there’s confusion surrounding the exact thresholds and how taxes will be applied, but consumers may soon face more transparent and higher fees on these products.
For now, shoppers should be cautious when buying from these sites, as tax rates on small parcels vary widely, and SARS has yet to clarify exactly how it will implement these changes.
In the meantime, the rand's fluctuating value may also play a role in the final price tag. With these factors in play, it’s advisable to stay informed about both exchange rate trends and the evolving tax regulations before making online purchases from international retailers.
Recent interest rate cuts by the South African Reserve Bank have sparked renewed optimism among many people. Lower borrowing costs may encourage spending, particularly using credit.
However, Willams warns against relying on credit for impulse purchases. “While lower interest rates make borrowing more attractive, they can also lead to higher debt levels if not managed responsibly.
It is essential to assess your financial situation before making any major purchases,” he explains.
Fluctuating petrol prices will undoubtedly affect peoples' overall spending power during Black Friday 2024. The recent increase in fuel costs have once again put pressure on household budgets and could make it more difficult for some consumers to indulge in non-essential shopping.
With the holiday season approaching, it is important to factor in the rising cost of living including electricity, transport and travel expenses before committing to Black Friday spending.
“While Black Friday may offer incredible deals, we encourage people to make responsible, well-informed decisions,” cautions Williams. “It’s easy to be swept up in the excitement, but unplanned purchases can lead to regret down the line and can affect your financial situation going forward.”
“Before adding items to your cart, take a moment to assess whether the purchase is truly necessary, and whether or not it aligns with your long-term financial goals,” he concludes.
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