SA consumers wise up after a year of food, fuel and electricity price hikes

The behaviour of South African consumers changed this year: they are less confident and less loyal, switching to other brands in search of better deals. They have also changed the way they shop.

During the fourth quarter of the year, consumer confidence increased marginally but stayed low with a consumer confidence level of -9, equal to the first quarter and the time just before the pandemic hit last year, according to the FNB/BER Consumer Confidence Index.

The Deloitte State of the Consumer Tracker shows 86% of South Africans worry about rising prices, putting them in fourth place of most financially anxious consumers in 23 countries surveyed – but one in four local consumers are still optimistic about their long-term financial situation.

The financial positions of households of employed people improved during the year and consumers are less pessimistic, as demonstrated by the fact that they feel it is an appropriate time to buy durable goods such as vehicles, furniture, household appliances and electronic goods, according to the latest BankServ index.

ALSO READ: South Africans waste more food than ever, while food security declines

The nominal average BankservAfrica take-home pay reached R15,794 in September, and in real terms, the average salary was R13,047. It is no wonder that consumers worry about increasing food prices.

According to the Pietermaritzburg Dignity and Justice group that conducts a monthly household affordability survey, more expensive food means women in poor communities spend most of their purse on the core food needed to keep hunger at bay.

There has been a distinct drop in diversity on the plate for these communities. The women who do the price surveys said they eat whatever they have. They fill their plates with white starches, sugar, salt and oil but over time their children need good quality meat protein, sugar beans, dairy, eggs, calcium, vegetables, fruit, vitamins, minerals and fibre.

The Deloitte survey further showed South Africans are placing more emphasis on introspection, wellbeing, purpose and experiences, while also intending to save more. Consumers are placing more value on time than ever before and saving for the future.

After initially choosing online shopping during the first lockdown, this year has shown that people now prefer a mix of online and physical store shopping. South Africa has an estimated 38.19 million internet users who spend over 10 hours per day online and 90.2% of them have searched for a product or service to buy, according to the second ODOmeter Index published by local e-tailer, OneDayOnly.

Now that lockdown levels are less strict, 33% of respondents are still primarily shopping online, while the majority (61%) are splitting their shopping between online and in-store. Only 6% have started shopping predominantly in-store again.

The pandemic also changed how consumers feel about service providers. A recent Consulta survey on the telecom industry indicated customers are now increasingly becoming less loyal as they search for better value because they believe they pay far too much for what they actually get.

High prices

This year consumers battled with high food and fuel prices and a higher repo rate with the same salaries they earned last year. Add to that the high price of electricity, the cost of alternative energy for load shedding, higher transport costs and it’s the perfect storm to destroy what is left of consumer finances in SA.

The National Credit Regulator found in a recent study that most consumers (23%) have credit card debt that increased due to late or missed payments for unsecured credit transactions.

Covid changed the way we see risk and insurance significantly this year. Our driving behaviour has also changed and we are more concerned about health insurance.

inao@citizen.co.za