Johannesburg residents top the list of SA’s highest spenders, splurging 49% more than the average citizen, a joint study by Discovery Bank and Visa shows. Cape Town follows in second place with Durban third.
Capetonians outspent the average South African by 38%. The Western Cape’s popular tourist destination however, registered the biggest growth in spending, fuelled by “above-average spending increases on groceries, eating out, and travel compared to other cities”. Durbanites spent 6% more than the national average. Johannesburg, with a population exceeding that of Cape Town by about 2-million, has seen an outflow of people relocating to Cape Town in recent years.
The SpendTrend24 study compared credit card spending data between Discovery Bank clients, the rest of SA and those from select global cities.
It looked at data for the period 2019-23, analysing over 13-billion transactions made on 60-million credit cards worldwide. It encompassed 11 cities in emerging and developed markets including Acrra in Ghana, Los Angeles in the US, London in the UK and Lagos in Nigeria.
“We delved into detailed transaction data to understand how much people spend, what they spent on, and how they transacted. This granular analysis enabled us to discern shifts in spending preferences over time, illuminating how consumers adapt and become increasingly financially astute,” the report reads.
“To ensure our analysis was accurate and fair, we compared similar groups of clients using metrics that control for the impact of dynamics like card replacements. All spend-related metrics are based on the local currency of the relevant market for contextual accuracy. Moreover, to safeguard sensitive information and the privacy of cardholders and Visa clients, we anonymised data and indexed analysis throughout the study.”
The data showed that groceries, retail, travel and fuel remained SA’s biggest expenditure categories, making up nearly two-thirds of total spend.
Retail spending is the main category for high net worth clients. Groceries tops spending for mass, mass affluent and everyday affluent consumers.
The study categorises high net worth clients as the top 5% of clients based on spend per active credit card, while everyday affluent mass refers to the next 20% of clients based on spend per active credit card and the mass affluent segment refers to the next 25% of clients and the mass segment is the remaining 50% of clients based on spend per active credit card.
The results of the study showed spending on groceries slowed in 2023, compared to a year before, primarily due to soaring food inflation.
“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 or bought less to cope with rising costs — likely worsened by individuals using more of their disposable income to repay debts due to higher interest rate,” the report reads.
The survey shows Cape Town spends the most on groceries and Johannesburg spends the most on eating out. Spur, McDonald’s and KFC are the favoured in-person eating spots. Mr D, Nando’s and Uber Eats are the preferred online merchants.
“Online grocery shopping has become increasingly popular, with between 7% and 15% of grocery spending now happening online. The highest use is among those aged 31 to 40 years old. Interestingly, clients are spending more per purchase when buying groceries online, with an average of 29% more spent per transaction compared to in-store grocery purchases.”
The SpendTrend24 report found that the surge in “revenge-travel” following the pandemic had cooled and South Africans’ travel habits had settled. However, the study found the cost of travel was higher than before.
“In SA, spending on travel decreased for the mass and mass affluent segments compared to the previous year, but it increased for those in the everyday affluent and high-net worth segments,”
“Unsurprisingly, domestic travel centres along SA’s ‘Golden Triangle’, with Cape Town being the top destination, followed by Johannesburg, and Durban. The trend of people moving from inland areas to cities along the Garden Route has also led to increased travel to East London, George and Gqeberha.”
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