SA consumers experienced a slight reprieve from a drop in load-shedding in the second quarter of 2024, leading to increased spending in certain fast-moving consumer goods (FMCG) and technical & durable (T&D) markets.
However, persistent inflation continues to strain household budgets, according to the latest NIQ Retail Spend Barometer, a report that combines data from NIQ and GfK to track retail sales countrywide.
The report reveals that consumers spent R181bn on FMCG in the second quarter, a 4.8% increase from the same period last year. However, this growth is slower than in 2023, when the sector experienced a 7.2% year-on-year jump.
While consumer confidence received a boost, aided by lower inflation — down from 5.4% in the second quarter of 2023 to 5.1% in 2024 — many are still struggling to cope with the high cost of living.
“Across the board, we saw consumers hunting for bargains and switching brands and stores to save money,” said Nikki Quinn, retail lead for Sub-Saharan Africa at NIQ and GfK.
Despite the economic challenges, certain FMCG categories recorded strong growth. Fresh food, frozen food, and personal care items were the top-performing segments, with year-on-year increases of 8.2%, 9%, and 8.6%, respectively.
Across the board, we saw consumers hunting for bargains and switching brands and stores to save money.
Quinn attributed the growth in perishable goods sales to the improved power supply, allowing consumers to store more fresh and frozen foods.
However, categories such as home care, snacking, beverages, and ambient food fell as consumers focused their spending on essentials.
“Persistent inflation, particularly in food prices, remained a deep concern for consumers. People are focusing on the basics and keeping their eyes open for specials and promotions,” Quinn said.
Notable resurgence
The tech and durables sector, which includes categories such as household appliances and technical consumer goods, recorded R31bn in sales in the second quarter, showing minimal growth compared with the same period in 2023.
However, certain categories such as home appliances experienced a notable resurgence, with sales growing 11.3% after a sharp drop in 2023, when the market normalised after the pandemic-driven investment in home improvements.
Though the overall tech and durables sector was affected by price deflation and lower revenue in the telecom segment, large-screen televisions performed exceptionally well, even outside traditional sales windows such as Black Friday, the report reads.
Major appliances, especially washing machines and refrigerators, posted double-digit value growth, while smaller appliances such as air fryers and hair stylers also performed well.
This comes after a 6.1% fall in the second quarter of 2023, when the market was normalising after the pandemic-era boom in home-related spending. Promotional activity and growing confidence in a stable power supply played a role in this resurgence.
Quinn said lower interest rates would help consumers.
“Hopes for interest rate cuts later this year could help to reignite consumer confidence. The introduction of the two-pot system for retirement funding might also serve as a tailwind ahead of Black Friday and the festive season. Early withdrawals of pension funds under the two-pot system are expected to boost household expenditure in the second half of 2024,” he said.
Despite these positive signals, consumers are expected to remain cautious, with many continuing to seek out bargains and shift their spending patterns to cope with ongoing economic pressure.
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