The countdown to Black Friday is officially on. With some 10 days to go until the biggest shopping day of the year, consumers have their wish lists at the ready and retailers are scrambling to ensure their stock levels are sufficient and that every aspect of the customer experience is optimised for shopping satisfaction.
Though a North American invention, South Africans too have been associating the last Friday of November with great deals and deep discounts for a while now. And every year retailers become better at capitalising in this spending frenzy.
It is around this time that we also see a surge in the number of media articles that caution against spending too much on Black Friday, reminding us that something is only a great deal if you need it, and that constraint now can make all the difference come Janu-worry.
There are two sides to this situation – retail income has been under pressure for some time now and naturally they are keen to participate in any initiative that can drive sales and boost revenue. On the other hand, we know consumer income is under severe pressure at the moment, thanks to the ongoing impact of the pandemic and the high unemployment rate. What’s more, DebtBusters reports the average debt-to-income ratio in South Africa is at the highest level ever.
Needs, wants & the irresistible lure of a good deal
Black Friday deals are specifically packaged to be irresistible, to convince us that we simply cannot live without X product and Y service – it’s something that advertising has perfected over the years. Add the allure of a great/competitive price and all the articles in the world about personal financial austerity simply aren’t going to make a difference.
Plus – it is important to acknowledge – thousands of consumers hold out for Black Friday to hopefully get a significant discount on things they really need. There is no denying that needs arise and that those needs, be it a new fridge, home office furniture or a laptop for a child starting high school, need to be met.
In too many cases where needs need to be met, we know consumers have little option but to turn to high-interest credit, payday loans or costly hire purchase. Because even with the Black Friday discount, thousands of consumers still battle to afford the things they need.
An alternative model – plus flexibility
Instead of waiting for Black Friday and still going into debt, is this not an opportune time to consider alternative retail models that work to both alleviate the pressure on consumers, and help retailers expand their value proposition.
Enter subscriptions, a business model that allows consumers to rent things on a flexible basis, rather than purchase outright. Subscription models prioritise access over ownership, and has expanded to include consumer items such as furniture, appliances, electronics and even clothing, jewellery and leisure equipment.
Subscription services, of which Teljoy’s rent-to-own model is an example, view goods as a service, something that is valued for its usage opposed to the ownership thereof. It’s a model that eliminates the need for large upfront payments, but instead allows the customer to pay for the item on a flexible monthly basis.
A global trend – with a great business case
The subscription economy is gaining traction globally as more, particularly, younger consumers dismiss ownership in favour of access and the convenience and flexibility associated with it. In fact, this growing aversion to ownership has been described as the “growing population of consumers who are willing to pay good money for the privilege of not having to own something”.
The business case for retailers to offer goods as a service is gaining ground too.
Already in mid-2020 a Deloitte article notes that subscription-based businesses are proving to be among the most resilient, with research suggesting that 80% of companies are sustaining or growing their subscriber base.
Black Friday probably isn’t going anywhere anytime soon, but it can be leveraged as an opportunity to rethink current retail and ownership models and how they can be retrofitted to better meet the needs of consumers going forward.