New sales data shows that shoppers in South Africa have undertaken some big shifts since the onset of the Covid-19 pandemic in March 2020 – including where they shop and what they buy.
This is according to NielsenIQ’s Market Track. The data comprises more than 10,000 branded retail outlets and more than 143,000 independent stores across South Africa’s nine provinces.
One of the biggest shifts seen is that local consumers are still going into stores less often, which points to curtailed lockdown shopping occasions despite the removal of restrictions, said NielsenIQ South Africa managing director Ged Nooy.
“The reality is that South Africans are shopping at fewer retailers but spending more per trip, with the average value of the South African shopping basket increasing by R131 since April 2020.
“Despite a steady increase in value per buyer over the past two years, volume is not rising at the same rate, as consumers are forced to pay more and stretch their products. It will therefore be interesting to see how consumers react in the next month amidst a global perfect storm of inflationary pressures.”
A McKinsey Global Consumer Sentiment Survey for 2021 found that around a third of shoppers in South Africa reported substituting branded products with cheaper alternatives.
Shoppers described their personal economic situation as stretched. Even among the most affluent respondents – with household income above R500,000 per annum, only 28% said they were doing fine or ‘very well’.
As a result, 32% of shoppers in South Africa report substituting branded products with cheaper alternatives, such as more affordable brands or private labels.
NielsenIQ measures inflation monthly and calculates it based on the difference between rand value sales growth compared to unit sales growth. This quite simply shows how much more consumers are spending in terms of rands paid per pack than they were the month before, the group said.
Based on this data, of the top 20 categories in product categories cooking oil has experienced 36% inflation over the last month with value sales of cooking oil up 43% in the last month. Other product categories experiencing high inflationary impacts on price are frozen chicken (+16%), and laundry detergents (+11%).
It is also important to appreciate that these increases were before the latest hefty fuel price increases in June 2022.
“Based on the current record-high petrol price, manufacturers will not be able to absorb the effects of the perfect storm of increasing input costs as they have before and we can expect to see a rapid onset of inflationary impacts on prices,” Nooy said.
Food manufacturer, Tiger Brands is reported as saying that it expects basic food items to “go through the roof” in the next six months. The listed company expects inflation for bread, maize meal and baking flour to rise by between 15% and 20%.
“We are acutely feeling the full impact of the global supply chain squeeze and related inflationary pressures in the level of cost increases coming through. We expect the challenging economic climate to remain with pressure on the consumer likely to intensify,” it said.
A globally unique phenomenon in the local retail sector is the ripple effects of the successive and unprecedented liquor bans during 2020 and 2021 on the local market. This has resulted in rapid increases in sales figures for liquor brands since the suspension of these bans and a period of apparent rapid growth as sales returned to normal, said NielsenIQ ‘s Nooy.
“What we see now is a stabilisation of this rapid recovery, given that April 2022 is the first month that alcoholic beverage sales growth has slowed down compared to the same period in 2021. However, sales within this sector have not returned to pre-Covid levels or exceeded previous levels, and we are not quite back to pre-ban level liquor sales with them lagging pre lockdown levels slightly.”
South Africa faced complete alcohol sales bans on four separate occasions since the end of March 2020 as part of the country’s Covid lockdown restrictions.
Nooy added that the palate of South African liquor consumers has perhaps been changed for good due to lack of access during the country’s liquor bans. For example, gin sales have now surpassed vodka sales.
“In addition, while beer is undoubtedly still the largest liquor category in terms of sales, consumption patterns around this alcoholic beverage have changed with a continuation of the trend toward larger ‘long lasting’ bottles that consumers resorted to when supply was scarce.”
Growthpoint Properties, which has a portfolio of malls including V&A Waterfront in Cape Town, said in a trading update earlier this week, that signs of recovery are evident in the retail sector, with its shopping centres reporting turnover growth. Smaller neighbourhood and convenience centres are outperforming bigger malls.
Footfalls are generally nearing previous levels, which aligns with overall industry trends, given that people have changed the way they shop with increased basket sizes, it said.
Property sector strategist at FNB Commercial Property Finance, John Loos, said in a recent note that super-regional centres look to be closing the performance gap between themselves and the smaller community and neighbourhood centres.
Growthpoint said that the growth of online on-demand shopping is driving business through our malls, positively impacting trading densities’