SA consumers ditch takeaways, new clothes and pricey groceries in belt-tightening drive
As South Africans worry about job prospects and the economy, 85% of consumers have changed their spending habits
As confidence remains in the doldrums, consumers are changing their spending habits, according to a survey by Nielsen.
The Nielsen consumer confidence index, based on a sample of internet users with quotas based on age and gender, remained at 90 in the third quarter of 2018 from the previous quarter, as South Africans await an economic turnaround.
“South African consumers have faced a number of economic challenges during 2018, putting increased strain on their wallets, including increasing unemployment, a 1% VAT increase and petrol price hikes,” Nielsen Africa MD Bryan Sun said.
According to the survey, South Africans remain concerned about job prospects, with only 34% seeing them as excellent or good in the next 12 months compared to 35% the previous quarter.
However, 62% have a positive outlook about the state of their personal finances over the next 12 months, up from 61% in the second quarter.
The major concerns for consumers are the economy at 33%, followed by job security at 26%, crime at 25% while 18% are worried about debt.
On the back of this, Nielsen found that 85% of South Africans say they have changed their household spending in the third quarter. In order to save on expenses, 66% of consumers have cut down on takeaway meals, 61% have cut down on buying new clothes while half of the respondents have switched to cheaper grocery brands.
Almost 50% are spending less on gas and electricity while 45% are cutting down on out-of-home entertainment.
“The willingness to spend freely among South Africans has declined,” said Sun.
This follows the release of the FNB and the bureau of economic research confidence index last month, which plummeted from the record highs seen earlier this year, falling from 22 in the second quarter to seven in the third quarter of the year.
FNB chief economist Mamello Matikinca said at the time: “A confluence of adverse economic developments in all likelihood deflated the confidence levels of consumers in recent months, including a technical recession in the first half of the year, rising unemployment, an increase in VAT and personal income taxes, a substantial drop in share prices on the JSE, a depreciation in the rand exchange rate and soaring fuel prices.”