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Study reveals effects of recovery roller coaster on South African consumers
By our News Team | 2022
An environment of uncertainty is changing the way consumers think and how they go about their shopping, researchers find.
Two-thirds of South African consumers remain convinced of the long-term effects of the pandemic and believe the country will only be free of its direct impacts during 2023.
This is the highest percentage amongst the 16 countries surveyed in the newly released NielsenIQ 2022 South African Consumer Outlook Study, which has revealed a substantially altered picture of local consumers. The report has significant implications in light of consumers’ changed priorities and is important in terms of evaluating how these will affect their spending habits and product choices.
“The last two years have been a roller coaster as consumers have looked for signs of recovery and hoped that they could move on with their lives,” says NielsenIQ South Africa MD, Ged Nooy.
“But for many, as they look ahead, they still face an environment of uncertainty. Looking at how consumers plan to approach the world as they begin to re-engage, it becomes clear that the majority realise that Covid is likely to continue to impact the way they navigate their daily lives.”
Photo courtesy of NielsenIQ
The ‘homebound economy’ is here to stay
Delving deeper, 41% of SA consumers (vs. 47% globally) said they would live with some caution if Covid continues to impact the country in the next 12 months. An additional 41% said they would be more vigilant (vs. 33% globally) and will go so far as avoiding certain settings, while only 14% said they will carry on their lives without fear of Covid.
Nooy comments; “In this environment, the majority of consumers realise that the carefree life of pre-Covid is a thing of the past and, moving forward, they are constantly reviewing and evaluating associated risks, [making] lifestyle choices and arming themselves accordingly with various precautions.
“On the plus side, this is good for the FMCG environment, as consumers will continue to curtail their movement and won’t be spending money on entertaining or local or overseas holidays – the ‘homebound economy’ is here to stay!”
The other factor that was less evident two years ago, when Covid first hit, was the inflationary environment consumers have been confronted with in the last six months.
With many having felt employment and financial losses due to Covid – and government support systems having dried up – consumers have fewer savings and less flexibility in their discretionary wallets to deal with higher prices, the study says.
Consumers are therefore feeling the pinch of higher prices, with 70% (vs. 56% globally) saying their weekly shop costs more than it did six months ago – the third highest number in the world. It’s therefore no surprise that eight out of 10 consumers say they have significantly changed their shopping habits because of the pandemic
Smart shoppers and their strategies
In light of this, the NielsenIQ study asked which strategies South African consumers were deploying to manage their household grocery spend. The most popular strategy, which a third of consumers are deploying, is monitoring the cost of overall basket spend. This points to consumers budgeting ahead of their shopping trip to better manage spend and reflects a highly cautious mindset.
The second highest (26%) are selecting the lowest-priced product regardless of brand. This indicates that brand loyalty is being eroded and that consumers are not averse to switching brands, while the third highest percentage are buying larger packs, as opposed to looking to downsize to manage their expenses.
Looking to the future, it’s clear that a nimble mindset will be key to keeping up with consumer needs and sentiment through super-charged change, the study says.
“Agility will be critical. Retailers and brands that consider different trajectories and recovery scenarios will be better placed to address consumers changing priorities, states of cautiousness, and increasingly constrained wallets. They must ensure their offerings can morph and resonate with how the landscape will continue to evolve in the years to come,” Nooy states.
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