Consumer spending trends in 2018
SA retailers and manufacturers face a significant shift in the way consumers behave over the next few years as economic conditions tighten, consumer confidence falls and Internet shopping takes off. Research conducted by GfK South Africa shows that many people are fearful about the future, with 46% saying they are not very, or not at all, confident about it.
Crime and lawlessness are of the biggest fears for the future, with 61% of local respondents highlighting these as a concern. Protecting their families is therefore paramount for these respondents. This has a major effect on consumer behaviour when it comes to in-store and digital shopping.
The big take-out: To survive and thrive in the future, brands need to take changing consumer shopping and spending trends into consideration.
The study reported not only bad news, however. South Africans are becoming better educated. There were nearly 900,000 students in SA’s public universities in 2016 – an 82% increase in student numbers since the advent of democracy. And more South Africans today have access to the Internet than do not.
Meanwhile, Generations Y and Z, which account for nearly two-thirds of the population, are reshaping the country’s values as they come of age. They are driving values of adventure, freedom, curiosity and authenticity.
Here are some ways we at GfK SA see these larger social and economic trends affecting how consumers will shop in 2018 and beyond:
South Africans are entertaining themselves at home rather than heading for the malls and nightclubs, partly because of fears about personal safety and financial security. However, this has not translated into mass adoption of e-commerce, because many people fear they will be victims of cybercrime if they shop online. Around 80% of South Africans are more concerned about the security of their personal information when shopping online than when shopping in a store, and 47% say security of their personal information is a barrier to making online purchases. Brands that show they care about customers’ safety will win the consumer’s heart.
2. Experiences trump possessions
Research data reveals that 50% of local consumers agree that experiences are more important than possessions. Rather than wanting to spend money on expensive possessions, consumers are gravitating towards low-cost experiences such as visiting the beach, listening to music, playing video games, going to church or watching televised soccer with friends.
Manufacturers and retailers that want to remain relevant need to think about how they will weave their brands into consumers’ day-to-day lives.
3. Instant everywhere
Brands like Uber and Airbnb are setting a new pace for the customer experience. Consumers expect products and services to be available when they want them – at any time, at any location, and on any device. Brands should thus focus on delivering slick, frictionless mobile interfaces that make it simple for consumers to gain access to services and products instantly and everywhere.
Around 57% of SA respondents to our research say they need shops and services to be available at all times; 31% say it is essential to have access or store content in the cloud. Demand for instant access to services and products is even higher among people aged below 35 years.
4. Savvy shoppers
SA consumers are coping with the difficult economic situation by shopping less frequently, spending less during each shopping trip and buying bigger packs for better value. They are also becoming less loyal to brands as they seek out the best prices.
About 70% of local consumers say they are less loyal to any one retailer, because they have to shop around more to find the best value; 69% agree the most important thing about a brand is that it offers good value for money. They are embracing the Internet for bargain hunting:
• 88% of connected consumers use the Internet to find products they want
• 45% use the Internet to purchase a product
• 40% check prices online, then buy in a traditional store
• 65% have used a mobile phone to help them shop in the past six months
5. Considered consumption
Local consumers are demanding transparency and authenticity to enable them to make considered consumption choices. Eco-citizenship has a high priority, with younger people in particular recognising the importance of sustaining the planet so that they can have a prosperous future.
There is an emerging quest for a deeper level of meaning, perhaps linked to the shift towards valuing experiences more than possessions. Consumers are increasingly aware of the impact they have on others and on the planet through the consumption decisions they make. Respondents in our research say:
• They only buy products and services that appeal to their beliefs, values or ideals (54%)
• Where and how a product is made is very important (47%)
• Brands and companies have to be environmentally responsible these days (54%)
New brand stories
To remain relevant in the face of these changes, brands need to realign their brand stories with consumers’ emerging needs and considerations. Those who get it right will be able to play meaningful roles in consumers’ lives and touch them with slick, seamless and authentic solutions and experiences.
* Thompson is insights director at GfK South Africa.