SA consumers most worried about price hikes, struggling to save – Deloitte survey

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South African consumers are concerned about balances on their credit cards, ability to repay debt and blitzes in their savings accounts.
South African consumers are concerned about balances on their credit cards, ability to repay debt and blitzes in their savings accounts.
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  • A Deloitte survey found that  South African consumers experienced financial pressure from price hikes and debt.
  • The survey found that 68% of South African consumers' wallets get directed towards non-discretionary spending, compared to a global average of 65%.
  • It found 86% of South Africans are concerned that prices for goods and services they purchase are going up, compared to global average of 68%.

South African consumers over the past year have felt great pressure on their finances and are the most concerned consumer market in the world about the escalation of prices in the near future, according to a survey conducted by auditing firm Deloitte.

The survey was released on Wednesday morning by way of virtual webinar. The survey's data speaks in great part to the impact of the pandemic on the finances of South African households as well as other general economic pressures.

Another trend the survey noted was a willingness to spend by South Africans - particularly more on experiences than on mere products. Deloitte has been tracking data globally for over a year including at least 1 000 consumers a month in each of the markets across income earning brackets.

Deloitte consulting consumer industry leader Rodger George said the Deloitte survey found South Africans' comfort with being outside the home and social activities have improved since the beginning of the pandemic.

However, the willingness to spend has not recovered at quite the same levels, pointing to pressure on South African consumers' income, he said.

"If a fourth wave [reaches] SA, the confidence will drop again, people will stay at home and do [fewer] social activities and if that wave subsides, we will see that confidence start to come back," said George.

He said South African consumers were concerned about balances on their credit cards, ability to repay debt and blitzes in their savings accounts.

Higher levels of concern in SA

"Consumers are financially strapped. If you compare middle-income consumers with other middle-income markets, there are higher levels of concern about the ability to honour debts and this shows [that] consumers' finances are strapped," George said.

He said while consumers in South Africa generally expect things to improve in three years, more than one in three South African consumers live beyond their means and rely on credit to stretch their income, especially as prices rise.

"Up to 78% or more people are spending all of more than their earnings - 34% use a credit card, [and] 86% are concerned that prices for goods and services they purchase are going up, compared to global average of 68%. Out of all the consumers globally, South Africans are most concerned that prices will go up," George said.

He added that online shopping in South Africa showed a behavioural shift as just before the Covid-19 pandemic; only 12% of South African consumers were buying groceries online and by the third wave it grew to 60%. This is expected to have double-digit growth in the next five years.

He said 68% of South African consumers' wallets get directed towards less discretionary spending, compared to a global average of 65%. Internet connections and data are now being considered non-discretionary and more essential and the majority of discretionary spending goes towards entertainment and travel.

"The SA consumer has expressed a keen interest in saving, but will typically spend as much on saving as they do on takeout. Thirty-five percent of consumers would like to buy a new vehicle. This part of the survey was done at the end of October 2019, before the virus was discovered," he said.

George said the survey "does not make for a great spending season for retailers in December", but that people generally feel safer about going on with their business and spending.

"Retailers are in for a hard time. They will have to be smarter about how they package their products. They may have to look at smaller gift packages and focus more on customer experience. But the way the data is looking, it's going to be a tough Christmas for all," he said.

George said the data on South African consumers for the past year showed that South African consumers' mindset shifted towards well-being, pursuit of purpose as well as activity and earning more.

"We stepped back and asked where South African consumers a year ago and where are they now? There has definitely been a greater introspection on balance and wellbeing with a focus on gaining more income," said George.

George said while the South African consumers' mindset was shifting towards saving more and "spending on experiences rather than things" since the pandemic began, South Africans experienced pressure both financially and professionally.

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