A joint study by Discovery Bank and Visa has laid bare how load-shedding has altered the spending patterns of consumers, with 60% of the bank’s clients eating out more during stages 5 and 6 than when there is no load-shedding.
Discovery said the study showed a larger volume of clients transacting on takeout meals and at restaurants as the stages of load-shedding increased.
The study recorded peak volumes during stages 5 and 6 of load-shedding as more people are compelled to order in or collect their food.
“The average basket size for groceries was also analysed to establish if this was a key driver of spend. However, we found little to no effect on the average basket size as the stages of load-shedding progress. Ordering and receiving groceries generally takes longer than eating out, not to mention the need to then prepare and cook food without electricity, so consumers do not typically change their grocery shopping habits due to load-shedding,” the study noted.
“Instead, the immediacy of the next meal results in consumers opting to eat out. In summary, eating out has rebounded to pre-pandemic levels across all regions. Local data indicates that load-shedding further drives spend in takeout meals and eating out.”
The research also found that while many consumers experienced difficulty and disruption during the pandemic, spending levels have returned to pre-pandemic levels, especially in categories such as groceries, services, travel, retail and takeout food purchases.
However, the study found that consumers in the mass market — those earning less than R100,000 a year — were feeling the economic strain that comes with high inflation and rising interest rates and were redirecting their spending to essentials like groceries.
When it comes to travel, Discovery and Visa said the combination of reduced airline capacity, aviation fuel price increases, and an appetite for what’s been dubbed “revenge travel” is driving demand and leading to consumers spending more on average per trip.
Results and trading updates from companies such as Spur, City Lodge and Sun International seem to bear witness to the Discovery and Visa study.
Restaurant group Spur last month said it expects its profit to more than double in its interim results. The group said total restaurant sales grew close to one-third year on year and over one-fifth compared with the first six months of 2022, with revenue from its speciality brands — The Hussar Grill, Casa Bella and Nikos — jumping 62.3% year on year and Spur 33.6%.
City Lodge almost doubled interim revenue and declared a dividend as consumers resumed travelling and eating out after the lifting of Covid-19 restrictions. The hotel group reported headline earnings per share of 17c in the six months to end-December — compared with a loss of 6c in the previous corresponding period — on a 94% jump in revenue to R848m.
Sun International on Friday said income from its urban casinos rebounded with strong growth and improved margins. Its hotels and resorts, especially Sun City, “had an exceptional second half”.
The Discovery and Visa research analysed data by client group and stratified by card-type data using Visa’s extensive payments database. The research period covered the years 2019 to 2022, to capture both the pre- and post-pandemic trends.
The study also sought to find out why there has been a surge in airline tickets.
It found the following:
- The cost of aviation fuel increased by more than 80% in 2022 compared with 2021.
- Reduced capacity due to airline liquidations during Covid-19 removed 40% of domestic airline capacity.
- The combination of reduced supply, fuel price increases and greater demand for travel means that South Africans are paying 30% to 55% more for local flights than they did in 2019.
“By and large, South Africans are now spending more on travel. We expect this trend to continue as more airline capacity inevitably comes online and flight prices normalise. It’s likely that a preference for local destinations will continue due to increased awareness and inflationary pressures that are causing consumers to reprioritise,” the report stated.
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