South African consumers\u00a0are under increasing pressure according to Nielsen’s latest\u00a0Consumer Confidence Survey – which showed a 5-point decrease in South African consumer confidence to 90 in Q2, 2018.<\/p>\n
It found that inflationary pressures due to rising petrol prices, VAT increasing to 15% and the sugar tax have all contributed to a more constrained environment and have dampened consumer spend.<\/p>\n
Nielsen added that the initial optimism felt at the beginning of the year has officially subsided and consumers have again become cautious.<\/p>\n
Against this backdrop, a hefty 84% of South Africans say they have changed their spending on household expenses in Q2, 2018.<\/p>\n
The top action they have taken to save on household expenses is cutting down on<\/p>\n
In terms of where South Africans would put money in terms of their monthly budget allocation, 19% of South Africans said they would spend the highest amount on food and beverages at home and housing (rent, mortgage, utilities) and 9% would spend their monthly budget on education and routine transportation (car, commuting, petrol, and non-holiday trips).<\/p>\n
“We know that times are tough in South Africa,” said\u00a0Nielsen Sub-Saharan Africa MD Bryan Sun.<\/p>\n
“According to another Nielsen report, consumers are dropping categories from their basket as they are forced to spend more on basic essentials.<\/p>\n
“In addition, they are seeking value for money brands, including private label. In such a scenario, it is now all the more important to understand the needs of the consumer and tailor your offering to meet their requirements in this cash-strapped environment.”<\/p>\n
Sleepless nights<\/strong><\/p>\n In terms of their biggest worries, 71% of South Africans believe the country is now in a recession as compared to the 72% in the previous quarter – although it should be noted that this data was gathered prior to the recent announcement of South Africa experiencing two quarters of negative GDP growth.<\/p>\n Job security has now superceded \u2018the economy\u2019 as South Africans number one concern with the highest number of South Africans (29%) citing it as their top concern, followed by 25% who are worried about the economy.<\/p>\n Other factors associated with South Africans concern for their future are closer to their personal circumstances, with crime making a reappearance in the top three concerns at 23%, while debt has dropped to fourth spot from 23% to 19% and increasing food prices has risen from 16% to 19%.<\/p>\n Job concerns<\/strong><\/p>\n The latest results reveal that job prospects continue to haunt South Africans with only 35% seeing them as excellent or good in the next 12-months versus almost half (47%) who felt this way in the previous quarter.<\/p>\n This comes as no surprise given the recent Statistics SA unemployment figures which showed that South Africa’s unemployment rate rose to 27.2% of the labour force in the second quarter.<\/p>\n Looking ahead at the state of their personal finances over the next 12 months, 61% of South Africans have a positive outlook which shows a continued upward trajectory from the 60% recorded in the first quarter of 2018.<\/p>\n In terms of whether now is a good time to buy the things they want and need, 31% said now is a good time, holding steady from the 32% recorded in Quarter 1, 2018.<\/p>\n Heightened economic sensitivities come with a personal obligation towards better managing squeezed monetary resources. In light of this, Nielsen’s results reflect a strong responsibility for future financial planning, revealed by the highest number of South Africans (44%) saying they will use their spare cash to put into savings.<\/p>\n Paying off debt remains a high priority, with 35% of South Africans saying they would use spare cash to be accountable and pay off debt, credit cards and loans.<\/p>\n Clothing retailers can also take heart from the fact that 30% say they would purchase new clothes after covering essential living expenses, while 23% would spend on out of home entertainment and 21% would spend their spare cash on home improvements and new technology products respectively.<\/p>\n
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