SA spending more resilient than global peers, says report

Discovery Bank and Visa have released their latest SpendTrend24 report, a comprehensive study of consumer spending habits.

The report is based on more than 13-billion transactions made on more than 60-million credit cards from 14 cities around the world from 2019 to 2023.

The SpendTrend24 report builds on the insight of the 2023 edition, and key findings include:

• Global consumer spending and saving habits are evolving, focusing on budgeting, value and trade-offs. Consumers are clearly becoming more cost-conscious and cautious about their spending habits as global nominal disposable income growth was constrained by rising inflation rates; 
• Despite a challenging macroeconomic environment, SA has proven to be resilient. SA cities showed more stable year-on-year spend patterns and less segment volatility compared with many global counterparts; 
• Groceries, retail, travel and fuel make up nearly two-thirds of SA spend. Overall, emerging market cities spend a higher share on groceries and fuel, and a lower share on travel compared with developed markets, which also spend a higher share on eating out and takeout. Global travel volumes have largely returned to pre-pandemic levels, but at a higher cost, indicating a recovery in the travel industry with evident inflationary pressures;
• Variances exist in category spend across markets and segments. Spend increased among the affluent and high-net-worth segments worldwide, with the mass segment experiencing modest growth or even declines; and
• The benefits of digital payment options are driving rapid adoption globally. SA benchmarks well against global counterparts, with an impressive nine percentage point increase in digital wallet use over the past year. 

“Our latest research highlights that throughout 2023, global economies navigated a complex path of post-pandemic revival, framed by persistent inflation and high interest rates. These challenges pushed up the cost of living, prompting consumers to adjust their spending habits,” says Discovery Bank CEO Hylton Kallner.

“The analysis allows us to explore the effects and to compare the spending patterns of typical South Africans and Discovery Bank clients with those of other emerging and developed markets.

“This comparison highlights South Africa’s economic resilience. The report confirms that South African cities demonstrate more stable spending patterns year on year and less fluctuation in spending across different market segments compared with cities in emerging and developed countries.”

Lineshree Moodley, country manager for Visa SA, says: “Visa is delighted to partner with Discovery to share insights from the latest SpendTrend24 report. Despite economic challenges, South Africa has shown remarkable resilience.

“SpendTrend24 charts the path forward in our digital economy and we firmly believe that with the data and foresight provided by the research; individuals, businesses and economies are empowered to innovate, foster financial inclusion and drive meaningful change in the face of evolving consumer demands and business needs.”

Highlights on spend, what people purchase and how they pay

How much people spend:

• While consumer spending in SA outpaced inflation by 19 percentage points in 2022, the growth in consumer spending closely matched inflation in 2023.

What people spend on:

• In the past year, average grocery spending in SA rose by 8%, compared with the 16% increase the year before. In SA’s market segments, grocery spend growth ranged from 0% in the mass segment to 8% in the high-net-worth segment. This is consistent with the view that the mass segment has adjusted their purchasing habits to cope with rising costs — likely worsened by more disposable income being used to repay debts due to higher interest rates;
• Spending on eating out and takeout also increased in the past year by 8%, while 70% of South Africans surveyed in 2023 say they cook a meal at least once a week, and 37% say they would pay more for healthy food options; and 
• SA fuel prices were 1.5% higher in 2023 than in 2022. On average, Discovery Bank clients spent more refuelling their cars than other South Africans. This may be due to the effective reduction of fuel costs by up to 20% with Vitality Money, and the extra up to 50% savings from Vitality Drive.

How people pay:

• The growth of SA online spend in 2023 outpaces in-store spend growth by five times. South Africans are increasingly shopping online, surpassing other emerging markets and keeping pace with developed ones.

Read all the spend, travel and payment insights, and expert predictions for 2024 from Visa and Discovery Bank. Download the full report here.

This article was sponsored by Discovery Bank.