Welcome to our newsletter that provides commentary on major themes emerging from the Insights' dashboards. This month, we dissect November's Black Friday spending frenzy... 

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Black Friday has come and gone. The spending jamboree helps make November the second most important month in the retail calendar after December. In a handful of categories, it’s the 

most

 important month of the year. 

With that in mind, it’s valuable to know which retailers are doing better than others, since they’re all competing for their share of consumers’ year-end spending.

We begin with a top-down view, looking at user spending by category, before focusing on the winners and losers during the month of Black Friday and two other significant observations that make November an even more noteworthy month for South African retail.

Despite the November spending frenzy, the rate of annual spending growth by 22seven users in most retail categories is unchanged compared to last month. For example, spending in the Grocery, Pharmacy Retail and Eating Out categories grew at mid-single-digit rates, while the amount spent on Apparel was relatively unchanged compared to last year. 

The most significant change in growth occurred in the Home category, which captures user spending at ~100 retailers across sub-categories spanning General Merchandise, Furniture & Homeware and DIY & Garden. User spending in these more discretionary categories has been in decline throughout 2023, but the rate of decline nearly halved during November. This improvement was mostly driven by better performance in the Furniture & Home sub-category.

Growth in spending by category (22seven users)

Do the drugs still work?How alternative data can help identify growth opportunities in the retail pharmacy market.

We argued 

last year

 that a retailer’s Black Friday performance should actually be measured across the entire month of November because so much promotional activity takes place in the weeks leading up to the actual day (24 November this year).

The chart below shows the year-on-year growth for different retailers in November across the Grocery, Apparel, Home and Pharmacy categories. Boxer delivered the strongest improvement in the Grocery category, while spending at its big brother Pick n Pay declined compared to last November. 22seven user spending at Pharmacy retailer Dis-Chem increased faster than spending at Clicks.

The standout performer in Apparel was Shein (see the next section for more detail) while spending across the rest of the category increased at modest rates. 

In the most discretionary category, Home, which includes electronics and furniture retailers where Black Friday discounts on big-ticket items can be more persuasive, @Home delivered a very strong performance. Spending at Takealot also increased – off a very high base in 2022 – to achieve its highest ever share of total spending in the category.

Annual growth in spending by category and retailer: November 2023

For the first time, 22seven users spent more at Shein in November than at MRP Apparel (excluding acquired brands), making Shein the second-largest apparel retailer after TFG among all users. Last year, the Chinese retailer’s market share peaked in November; this year its spending share increased by a further 15%. This is an astounding performance, considering Shein hardly existed in South Africa before 2021.

As we’ve outlined in past research, 22seven users typically experiment with local online retailers before jumping east to Shein. While the total number of users who spend at Shein is still relatively small (it ranks 8

 by this metric, despite the number of shoppers having increased ~50% over the past year), those shoppers spend a lot on each purchase ( ~R1 350) thereby crowding out spending at other apparel retailers.

We don’t know if Shein is worth 

$90bn

, but we have repeatedly noted that investors in South African apparel retailers should pay attention. For example, over the six years of data that Insights has access to, Truworths achieved its lowest share of 22seven user spending in November 2023. And, as we established in 

The Road to Shein

, new Shein customers tend to spend less at Truworths in the transactions immediately preceding their first Shein purchase… 

Shein catapults into second place in November

The September relaunch of asap! – Pick n Pay’s on-demand grocery service – has presumably achieved its first goal: to grow faster than the competition. For the first time in a year, during November, 22seven user spending on asap! increased at a faster rate than user spending on Checkers Sixty60. 

Although Sixty60 is still 6.4x larger than asap! among 22seven users, readers will be aware that Insights has attributed much of Checkers’ market share gains to Sixty60’s success at shifting customer loyalty in the grocery sector. 

A competitor arrives in on-demand…

We look forward to digging into the data next year to better understand the factors driving asap!’s surge. And more importantly, to see if improved performance in this area translates into improved spending growth at Pick n Pay stores. 

Until then, thank you for your support during 2023 and we wish you a festive break full of laughter and good memories.

The 22seven Insights dashboards offer investors and retailers a detailed, real-time view of the aggregated spending decisions of more than 50,000 actual consumers across South Africa. 

Insights tracks spending across seven major categories such as Food, Apparel, and Home. Every major category is further segmented into sub-categories, and a specific dashboard is available for each one. We have updated and expanded the dashboards and we’ll continue to do so over the next few months. 

The dashboards provide a market overview that includes changes in market share for each retailer, as well as an estimate of growth in user spending. Users are segmented into six income brackets that allow for detailed tracking. In addition, the dashboards include five years of historic information and other metrics, such as average transaction value and median monthly spend per user. 

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