Yet, despite this expansion of the consumer pool, private consumption in South Africa has been growing at a fairly subdued annual rate of 2.8% over the past five years and a mere 1.6% in the past year\u2014slower than Africa\u2019s other major economies.<\/p>\n
To buy what they need, many South Africans have had to dig into savings or make purchases on credit as a result of higher prices – inflation has averaged 5.4% over the past five years, edging up to 6.4% in 2016 – and low real growth in wages (averaging 1.3% in the past five years).<\/p>\n
A survey of 1,000 local consumers found that most are concerned about their financial prospects and thus hold back on spending. Almost 70% of respondents said they worry about imminent job loss. More than half said they are living paycheck to paycheck.<\/p>\n
The survey responses brought to light a set of four behavioral shifts among consumers.<\/p>\n 1. They proactively search for savings<\/strong><\/p>\n Consumers are reducing their spending in a variety of ways. Three quarters of respondents agreed that they\u2019re \u201cincreasingly looking for ways to save money.\u201d<\/p>\n More than half said they are tightening their belts by comparing prices, seeking out sales and promotions, delaying purchases, and shopping at several stores to find better deals.<\/p>\n In addition, they\u2019re changing their eating habits\u2014in particular, eating at home instead of dining out and cooking from scratch more often.<\/p>\n \u00a02. They are brand loyal\u2014but only if the price is right<\/strong><\/p>\n Three out of every four South African survey respondents said they\u2019ve modified their buying behavior when it comes to their favorite brands.<\/p>\n Many haven\u2019t abandoned their preferred brands but are shopping around to find retailers that sell these brands at lower prices.<\/p>\n Some are also purchasing in smaller quantities, waiting until the brands are on sale, or buying only with discount coupons<\/p>\n \u00a03. Once they trade down, they might not go back<\/strong><\/p>\n In the survey, 21% of consumers, compared with only 12% of consumers globally, reported trading down\u2014that is, buying cheaper brands or private-label products instead of their preferred brands.<\/p>\n Among consumers who traded down, 36% opted for private-label products.<\/p>\n \u00a04. They shop across channels and find value at discounters<\/strong><\/p>\n Another important change in spending habits has to do with where people shop.<\/p>\n South Africans claimed to have shifted a considerable fraction of their spending toward modern retailers and away from the small independent retailers collectively known as the fragmented trade or informal trade.<\/p>\n This is what stressed-out South Africans are willing to sacrifice to cut costs<\/strong><\/a><\/p>\n Debt shock for South Africans as tough economy bites<\/strong><\/a><\/p>\n![\"SAConsumers\"](\"http:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2016\/07\/SAConsumers-e1468395955360.png\")
<\/a>Four traits<\/strong><\/p>\nMore on debt in South Africa<\/h3>\n