By Miguel Da Silva
2022 has again been a tough year for South Africa’s SMEs and the hard truth is that things could well get tougher in 2023. In a year where small business owners faced a litany of challenges and with no respite in sight from climbing interest rates, high inflation and the fuel price hikes, they need support now more than ever.
Despite this hardship there were a number of green shoots and the news from the markets is that this year’s Black Friday and Cyber Monday saw consumer confidence bounce back, particularly in the retail sector. Single transactions worth hundreds of thousands of rands changed hands, while at least two supremely confident customers spent over a million rand across the four-day period.
Physical retailers and online stores offered substantial discounts on a range of products and services during this year's big shopping event, while, according to BankservAfrica, an automated clearing house that operates an interbank payment infrastructure for the big four banks in SA, says 2022 marked the return of the Black Friday bumper spend, as midnight and intra-day deals exceeded the 2021 figures. Online selling was the big winner, tracking significantly higher growth.
It is also significant that Takealot.com experienced a record-breaking Black Friday, featuring 33% growth year-on-year in Gross Merchandise Value (GMV) as well as more than 3 million visits on the day. The GMV has surpassed any other Black Friday in performance history.
Now, with masks off and all eyes on the anticipated spending bonanza that is the traditional Festive Season, it makes sense for small businesses in the retail and hospitality sectors to make the most of this trading to set themselves up for a good start to 2023.
Alternative funder Retail Capital, a division of TymeBank, has been on the forefront of SME trends for the past few years, observing the change in trading patterns from Covid, through the various lockdown levels up to the recent trade spikes for Black Friday.
Now’s the time for all retailers to take advantage of the consumer sentiment and festive trade opportunities to end the year on a strong note.
The traditional festive season shopping period can present a quick, but big opportunity for smaller retailers to benefit from the year-end shopping spree.
Sell on Social
First off, they need to take note of the shift in shopper behaviour when planning their festive season campaigns. SMEs can capitalise on the new streams of online purchasing and invest in social selling, with its low barriers to entry and cost. Building in strong campaigns on their social commerce platforms like Facebook and Instagram is non-negotiable right now, as these account for a whopping 48% of online purchases, and, given around 30-million South Africans, or half of the population, use social media, this is no small number.
Ramp up marketing and advertising – especially on social media platforms
Take advantage of the festive shopping season and people scrolling for presents, to ramp up marketing efforts. One can increase ad spend on social media platforms where it’s more affordable to ensure your brand is top of mind for your target audiences. Your online presence and physical store experience need to be sleek, attractive and as easy as possible for consumers to purchase products.
Preparation is everything
It's vital to carve out a clear communication strategy, utilising cost-effective platforms and ensuring your offer is impactful enough to stand out from the crowd. Create irresistible offers, build in value-add elements and create a buzz around promotions and competitions, by offering great prizes.
Earn, Learn and Grow
The festive season presents an exceptional opportunity for small businesses to earn, learn and grow.
Be prepared to take reasonable risks that could spark growth within your business. To do this, it’s important to believe you will succeed - but also to have a plan in place in the event of failure. Ensuring that you have some financial backup behind you, is simply the smart thing to do. With business funding now far more accessible than ever, it is possible to minimise risks. As long as the enterprise has a good track record and a trading / turnover footprint, a range of options are available.
Our small businesses are vital to the growth of our economy. They are resilient and innovative. We need to give them every support possible to succeed. Support your local small businesses this festive season. That way all South Africans can ensure that they make the most of the year-end increased consumer appetite this year.
Miguel Da Silva is the MD of Retail Capital
BUSINESS REPORT