Black Friday Tailwinds: Rate Cuts, BNPL and Clothing Retail Giants

Interest rates are the price of borrowing money set by a country’s central bank, in South Africa’s case, the South African Reserve Bank (SARB). When the policy (or repo) rate is lower, commercial banks can lend more cheaply, which typically reduces the cost of home loans, credit card debt and business loans. 

Cheaper credit lowers the burden of carrying debt and can lift disposable income or consumers’ willingness to borrow. That usually increases household spending, especially on big-ticket or discretionary items, and this flow-through is one reason lower interest rates often support stronger retail sales ahead of major seasonal events.

Interest-rate cuts and market sentiment

The SARB’s Monetary Policy Committee reduced the policy rate by 25 basis points to 6.75% in November 2025, a move that immediately shifted market pricing and improved sentiment toward domestic assets. Commentators and market reports highlighted a constructive market response, including firmer bond and equity flows following the decision.

A supportive backdrop for retailers

The central bank noted that the easing reflects an improved inflation outlook under the new inflation target, and several market updates described the cut as a potential tailwind for consumer-facing sectors heading into the festive season. This lower-rate backdrop is supportive for listed retailers: cheaper credit and a modest lift in consumer confidence generally help increase basket sizes and improve online conversion rates during Black Friday and the December trading period.

Retail performance, dividends and valuations

Investors commonly monitor names such as Pepkor (which owns brands across apparel, furniture and electronics), Woolworths, Truworths, Mr Price and TFG (The Foschini Group) as potential beneficiaries of stronger seasonal spending. 

Several apparel-focused counters have traded materially lower year to date; Truworths, TFG and Mr Price are examples of retailers whose share prices have fallen by large double-digit percentages. Market coverage attributes much of this weakness to intensifying competition and margin pressure across the apparel sector.

 Source: Google Finance, as of 24 November 2025. Each investment carries its own risk. Past performance does not indicate future returns.

When a retailer’s share price has declined sharply while operating profits and dividend payouts remain meaningful, some investors may see Black Friday as a “two-way” opportunity: the promotional cycle that boosts sales can also provide attractive entry points to accumulate shares at valuations closer to current earnings or at higher dividend yields. A lower share price typically reduces the price-to-earnings ratio and, where dividends are consistent, may increase the dividend yield. 

Dividend yields across the sector vary meaningfully, with Truworths offering around 8%, Mr Price and TFG near 4%, and Woolworths and Pepkor closer to 2%, which may influence investor appetite during periods of market weakness.

Strong seasonal earnings or higher dividends can help re-rate a stock, but investors should still consider cash-flow sustainability, inventory risk and competitive dynamics.

Expansion and acquisitions as growth levers

One of the ways retailers are pursuing market share is through expansion, both organic and acquisitive. Pepkor, for example, has completed its acquisition of Legit, Swagga, Style and Boardmans from Retailability, adding hundreds of stores and strengthening its speciality and adult-wear offering. 

These acquisitions can accelerate footprint growth, broaden product ranges and unlock cross-selling opportunities, and, when combined with group-level financial services, can increase average spend per customer.

BNPL adoption and its impact on festive sales

A second, increasingly important lever is payment flexibility. Absa expects buy now, pay later (BNPL) services to lift Black Friday e-commerce sales, noting that while last year’s performance was softer, BNPL remains popular among younger and non-credit customers seeking short-term, flexible repayment options.

Pepkor continues to expand BNPL usage across its brands, with Ackermans, CODE, Bradlows, Sleepmasters, Incredible Connection and HiFi Corp already offering BNPL at online checkout. Most recently acquired brands also support BNPL online and in-store. Woolworths also accepts the BNPL payment option via Payflex

TFG launched Bash in 2023 to unify its online brands into a single omnichannel platform and has enabled Payflex across its digital checkouts. Broader BNPL adoption generally improves online conversion rates and raises average order values, meaning a widespread rollout ahead of Black Friday could meaningfully lift sales if consumer demand holds up.

FYI - While Payflex is not listed or owned by a listed company, PayJustNow is owned by a JSE-listed company, Weaver Fintech.

Conclusion

A modest interest-rate cut may encourage consumers to spend more, and a seasonal surge in promotional activity during Black Friday and the festive period could amplify that effect. Retailers that combine scale (including acquisitions), a relevant product mix and frictionless payment solutions such as BNPL or instalment plans may be well positioned to capture that upside. 

This does not eliminate risks. Competition from grocery retailers such as Pick n Pay and Shoprite (both expanding further into apparel, with Pick n Pay also offering BNPL), promotional margin pressure and the usual macroeconomic uncertainties remain significant.

Still, the combination of lower rates, rising BNPL adoption and ongoing strategic consolidation could provide a plausible setup for a stronger retail season and a potential catalyst for improved retail-share performance, assuming execution holds steady.

Sources – EasyEquities.

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