Billions of rand in sales – and market share – at stake …

Forget next week – Checkers and Pick n Pay are going head-to-head with aggressive ‘early’ Black Friday promotions ahead of the actual day on 25 November.

Both supermarket chains launched a wave of promotions on Thursday in an effort to shift some of the demand away from their now peak-trading weekend of the year.

Pick n Pay promises discounts of “up to 65%” at its supermarkets (including its new brand QualiSave) and hypers as well as online. It says selected deals will be available on Pick n Pay Asap.

At Checkers, this weekend’s deals – with savings of “up to 50%” – are only available on its Sixty60 delivery service (it has its ‘normal’ weekly specials running in-store).

Deals at both are heavily reliant on each’s loyalty programme which allows the retailers to gather detailed shopping data from their customers (some of which they share in an aggregate, anonymised way with suppliers).

For Checkers, the Sixty60 specials are only available to customers with a linked Xtra Savings card in the app.

Black is the new ching-ching

At stake is billions of rand of sales.

NielsenIQ says more than R4 billion was sold on discount deals during Black Friday last year, with this accounting for more than half of all FMCG sales.

Its sub-Sahara Africa analytics director Kobus Eksteen says basket sales during Black Friday week in 2021 were “23% higher than the average of all other month-end weeks in 2021″ and “the percentage of volume sold on promotion was 55% higher”.

The two retailers have been battling hard for market share in both the middle- and (increasingly) upper-income segments. Checkers continues to gain market share, but a recently resurgent Pick n Pay has turned this into a fair fight.

Both will be betting that they’ll be able to attract new shoppers (or, at the very least, turn occasional customers into more regular ones) based on the attractiveness of their promotions over the next 10 days.

Interestingly, Pick n Pay is leaning heavily into Black Friday positioning at its Boxer unit, which targets lower-income consumers. It too is running an ‘early’ promotion this weekend.

Shoprite isn’t, but Usave is – although it is not positioned as an early Black Friday sale. (Woolworths has been running ‘Black Friday’ specials since the beginning of the month, but in its Food business these have been limited to two products a week.)

Pick n Pay says Black Friday itself has become its “single largest trading day with R800 million in sales” on the day last year.

With retail turnover of R94.5 billion in South Africa last year, this equates to more than three times the average daily sales across the group.

Good time to stock up

The discounts on staples and groceries will be of some relief to under-pressure consumers who have faced sharply higher food and energy prices this year.

The vast majority of the deals – both this weekend and next – are bulk, requiring customers to buy two, three or even four of a product.

This extends to categories such as liquor as well.

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For certain products, there is “extreme price sensitivity” says NielsenIQ’s Eksteen. Examples of this include coffee creamer, rice, washing power, instant coffee and whiskey.

In 2021, more than 75% of the volumes of these products was sold ‘on deal’ during the peak trading week.

Suppliers such as Tiger Brands, AVI, RCL Foods, Libstar and PepsiCo will be happy to sacrifice margins as this will be made up in volume over this period. Instead of a food producer making 5% on X volume of rice, it would happily slash that to 1% for 6X the volume.

Eksteen says consumers’ appetite for promotions may be even stronger this year, which is good news for companies that are desperate for underlying volume growth in a high inflation environment.

What’s hot

Air fryers are hot property again this year, with both Checkers and Pick n Pay heroing their offers this weekend.

Checkers has its Platinum (house brand) 4.3 litre product for R849, while PnP is offering a five litre Goldair air fryer for R999. Both will almost certainly have ‘proper’ Black Friday deals on air fryers next week.

General merchandise as a whole has struggled in recent years, but supermarkets continue to muscle in on this category, particularly with household appliances.

Promotional activity such as Black Friday allows food retailers to make an acceptable margin on these products (typically higher than on most food) without the need to keep stock year-round.

Pick n Pay’s new Home online shop is offering an extra 10% back to Smart Shopper customers on all of their orders, which they can spend on groceries at PnP.

Checkers, which was the first retailer to launch Black Friday in South Africa in 2014, promises “discounts of up to 50% this Black Friday”.

Its best-selling deals last year included Omo Auto washing power, Jacobs instant coffee, Coca-Cola and Phillips air fryers.

Both Pick n Pay and Checkers will reveal their Black Friday deals next week.

Listen as PayU SA CEO Karen Nadasen chats to Rofhiwa Madzena about consumer behaviour on Black Friday last year:

This article originally appeared on Moneyweb and was republished with permission.
Read the original article here.

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