“It’s no secret that South African consumers are experiencing a severe wallet squeeze thanks to a raft of rising costs including spiralling petrol and electricity prices, the implementation of sugar tax and a VAT increase to 15%. The effect that this has had on consumer behaviour is profound and we’re now clearly seeing shoppers (…) consolidating their spend,” says Kelly Arnold, client service director of the global information firm Nielsen. Nielsen’s new Shoppergraphics Report is based on surveys among thousands of representative South Africans households.
These are some of the report’s findings:
On average, South Africans are now only going food shopping 60 times a year. In recent years, a “top-up” shop twice or three times a week was the norm, but this has now dropped to once every two weeks, with an average value of R210, Nielsen reports.
The number of stores that shoppers visit has increased to 4.9 retailers a year. This is because shoppers are extremely price conscious, seek out deals and are more prepared to shop around, says Nielsen.
Frozen chicken, ready-to-eat cereals, sugar and UHT milk continue to attract the biggest sale volumes, but this year canned meat has also become a major product. “The latter might be because of the listeriosis crisis earlier this year which compelled many consumers to switch from cold meats,” says Arnold.
The biggest decline in spending (-6%) was on household and cleaning goods, “which are no longer seen as a necessity”.
Sales of carbonated soft drinks were negative, the report shows. “In this regard, contributing factors may well be the shift in volumes from 500ml to 450 ml size bottles within some of the top brands as well as an influx of other brands carving out a market share for themselves and now spreading their national footprint,” explains Arnold.
Poorer shoppers are shifting towards large retailers
The Shoppergraphics Report reveals that the LSM 1-6 market is increasingly buying their groceries from branded retail chains, away from small independent sellers like spaza shops. This is due to the fact that more retail chains have opened stores in previously under-served areas with large, traditionally modern trade retailers having invested in this sector in the last two years, says Arnold. “We also know that branded retail offers more competitive pricing and is therefore seen as less expensive.”
Higher LSM groups are increasing their spending on independent retail. “The type of behaviour driving this trend is that higher LSM groups are going to branded retail for their big monthly shops and utilising independent retail outlets to do their more frequent top-up shopping. For example, ‘I’m on my way home to Soweto I stop at the taxi rank where there is a spaza shop nearby, grab a couple of things as a top-up’, resulting in LSM 7-10 spending more there,” explains Arnold.
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