Snapshot of the state of South African consumers

Kantar’s annual Mzansi Barometer, now in its fourth year, shows that South Africans are deeply concerned about load-shedding, the rising unemployment rate, the increased cost of living, crime and violence, and corruption in government.

The barometer measures how the current environment affects consumer sentiment, what consumers are concerned about and how this affects their behaviour. The study this year included 415 South Africans who are representative of the connected population (having internet access) and 85 who are based in townships.

Load-shedding remains the biggest concern for 65% of connected consumers. The South African Reserve Bank has estimated that load-shedding cut the country’s economic growth for 2023 by 2%. Economic growth is forecast to remain at just 1% for 2024, largely due to load-shedding.

Rising unemployment has moved from fifth place in 2023 to second in 2024 and is cause for concern for 55% of respondents. The official unemployment rate grew from 32.1% to 32.9% in the first quarter of 2024. Unemployment according to the expanded definition, which includes discouraged job seekers, grew by 0.8% to 41.9% in the first quarter of 2024. 

The rising cost of living is a concern for 55% of connected consumers. A CNBC Africa study found that South Africans have spent 80% of their monthly income within five days and that 73% of their income goes towards servicing debt, leaving just 23% for living expenses such as food, data and transport. The biggest increases are in electricity (up by 31% since the start of 2023), water (up by 9.6%), eggs (up by 38%), meat (up by 9.5%) and transport (petrol rose more than 14% in 2023).

Poor service delivery and gender-based violence have grown as key concerns according to this year’s study. Poor service delivery or lack of it is of concern to 32% of consumers. Gender-based violence, as well as the cost of education, trouble 28% and 22% of consumers respectively.

The youth remains optimistic

This year’s barometer reveals that people have become more polarised in their assessment of the country’s outlook. The number of respondents who are optimistic that things will get better increased from 34% to 40%. The most pessimistic are those who live in townships and older South Africans; 53% of township consumers are pessimistic about the future.

More than half of the respondents are optimistic about their future household finances, which indicates that people are considering how to navigate their personal worlds within the context of the wider macroeconomic realities of the country. Higher-income respondents and younger South Africans (aged 18 to 34 years) are most optimistic.

Sources of income are predominantly salaries (50%), grants (32%) and piece work (17%). A growing number of people, particularly in townships, are considering or have a found a way to supplement their primary income.

The plate of our nation

Kantar’s household shopper panel shows that inflation in the cost of the key 116 items in the fast-moving consumer goods basket has decreased from 16% in 2023 to 9% in 2024. However, the price of certain foodstuffs has risen more: rice rose by 24%, beer and cheese both by 15% and coffee by 13%.

To manage these increases, consumers are reducing the luxuries they buy, including by eliminating the purchase of unnecessary food items and buying less alcohol. They are eating out less. Both alcohol and energy drinks have taken a hit. Kantar’s Worldpanel reveals that 62% of categories are in volume decline.

Consumers are managing the increased cost of living and inflation by becoming savvier, hunting out bargains, using store rewards programmes for discounts, using lay-by rather than credit to avoid the cost of debt and, most importantly, buying fewer grocery and household products. People are dropping out of some categories altogether and are re-evaluating and consolidating how they use categories. Beverages and dairy have taken the biggest knock, while 58% of home-care categories are experiencing a decline in penetration.

However, despite constrained household budgets, a quarter of consumers are willing to pay more for the brands they know and love. Kantar’s Meaningfully Different Framework shows that some shoppers are willing to pay twice as much for brands with high pricing power than for brands with low pricing power, no matter how cash strapped they are. Township consumers are particularly reluctant to downgrade. This is because consumers have an irrational love for their favourite and trusted brands and will enable their budgets for loved brands while compromising on other products with options that are “good enough” for what they cost.

Kantar’s research reveals that consumers’ purchasing decisions depend on the time of the month. When there is not enough money, consumers are prepared to compromise, choose a cheaper brand or buy a smaller pack size.

A nation of smart value-hackers

Consumers are placing higher demands on the brands in their ecosystems, seeking out value wherever they can and making more from less. Consider, for example, Foodies of SA, which  continues to inspire accessible, everyday gourmet food, @cheapskate_sa, which shares affordable finds, and @vuvuvena_reads, which  shows South Africans how to hack value from rewards programmes.

Nearly every internet-connected consumer has a store rewards card. The largest loyalty programmes use buying currency as their key mechanism, which appeals to the 65% of South Africans who want some version of cash back. Retailers top the list of the most used rewards programmes, offering meaningful value with minimal effort required by shoppers, while democratised apps like the Moya App ensure that the frictionless and value-filled lifestyle is accessible across income groups.

As brands brace themselves for arguably their most demanding and sophisticated consumers yet, they need to ensure that they are part of the consumer’s ecosystem of brands that add meaningful value seamlessly. This requires two big shifts in brand thinking. First, brands need to shift from focusing on their category only to focusing on lifestyles and ecosystems, and second, rather than only focusing on ownership of the customer experience they need to start collaborating with other brands.

Shopping behaviours

Consumers, particularly those living in townships, still prefer to shop in-store. However, about 80% of the connected population shop online. The biggest growth in online shopping has been among lower-income groups. This behaviour has been driven by both the accelerated move to online by consumers themselves and by retailers making their product and delivery more accessible to broader population groups.

Social and environmental sustainability issues are important to South Africans. Interestingly, what consumers say they value and what they do tend to be very different. While 99% say they want to live a sustainable lifestyle, only 15% are actively changing their behaviour. Kantar calls this the value-action gap. Despite the huge value-action gap, consumers are watching and scrutinising how brands respond to the world’s challenges. This means that brands with reduced social and environmental impact are no longer just a nice-to-have. Kantar believes the value-action gap is an opportunity for brands to offer consumers the option to make better choices.

The media platforms of choice

Despite the high cost of data, South Africans are increasingly turning to social media, including when load-shedding hits, and are prepared to sacrifice food purchases to afford data. All social media brands showed a net increase in use.  WhatsApp remained top of the list, followed by YouTube and TikTok.

How can marketers sell their brands in this consumer reality? Kantar recommends putting the brand’s price in context, giving the brand message the best possible opportunity to land and being present and winning in the last mile. Consumers are willing to pay up to 14% more for brands that are seen as meaningfully different, which means that brands need to become better at articulating their meaningful difference and frame that context in people’s minds so that they can justify afterwards why they bought the brand.

Creative quality counts: ads with high creative quality are six times more profitable in the long term in terms of equity, and four times more profitable in the short term in terms of sales.

Brands need to be present and ready to fend off the competition on the shelf and online. For smaller brands in particular, distribution is key, given that they grow more through being available than through marketing.

Kantar has launched a new marketing podcast called Future Proof Mzansi, hosted by Stacy Saggers and Senamile Zungu on Spotify, Apple Podcast and YouTube.