McKinsey & Company has collected data from 21 to 24 April 2020, measuring consumers’ behaviour and spending patterns over lockdown, and their expectations for the future as the economic impact of Covid-19 continues to unfold.
The survey found that 81% of South Africans said they are either uncertain or pessimistic about the country’s economic recovery after Covid-19, compared to 72% in March.
This is a trend that began pre-Covid-19, McKinsey said, which mirrored the grim economy landscape that has deteriorated with the pandemic.
The state of the economy, public health and uncertainty about the duration of the situation are top concerns at 83%, 80% and 80% respectively, whilst Covid-19’s impact on future events is of least concern at 50%.
The vast majority of South Africans, at 89%, said they believe the personal and financial implications of Covid-19 will last beyond two months, whilst 22% believe it will last for more than a year.
More than 60% of South Africans said they have experienced a loss of income during the crisis and expect to cut back aggressively on spending in all categories except groceries and home entertainment, with 65% refraining from making purchases they would otherwise make, due to uncertainty about the economy.
Consumers expect to decrease spending across all categories
However, these concerns also existed pre-Covid-19 based on the 2019 McKinsey’s Global Consumer Sentiment Survey, an annual survey taken by more than 20,000 people across 19 markets, where almost half of all respondents in South Africa (48 percent) said they are living pay-cheque to pay-cheque, the highest value of all countries surveyed.
Though South Africa is at an earlier stage in the Covid-19 crisis than many other markets, it has exacerbated the consumers’ concerns, McKinsey said.
South Africans are not shifting to online channels as rapidly as other markets due to the shutdown in e-commerce, but they are trying new stores and new brands, the survey found. An increase in online shopping is only expected for online entertainment such as Netflix.
Looking beyond Covid-19, consumers expect to decrease their in-person activities such as travel, going to malls, movies and concerts by around 20%. Consumers say they expect their online shopping behavior to increase only by 7%, according to the report’s findings.
Consumers’ online grocery shopping behaviour is only expected to increase by 7% relative to pre-crisis levels, but non-grocery online shopping and working from home are expected to increase by around 20%, McKinsey said.