Affluent South Africans have increased their spending on takeaways, eating out and travelling since the end of Covid lockdowns, but those less well-off are grappling with an almost 50% increase in grocery costs as rising inflation bites.
This is according to a study released this week of consumer spending shifts before, during, and after the pandemic. The second Spendtrend23, conducted by Discovery Bank and Visa, found that grocery spend continued to be by far the biggest item for consumers across all segments between 2019 and 2022.
Discovery Bank said its clients were eager to travel and were spending more on eating out and takeouts after the easing of lockdown restrictions.
Discovery Bank CEO Hylton Kallner said at the launch of the report that inflationary pressures were affecting lower-end consumers the most, citing the average food basket inflation of 12% released by Stats SA.
The Spendtrend23 report identified a 47% increase in grocery costs as a proportion of income since 2019 for mass market customers — classified as earning R100,000 or less a year — as opposed to a 4% hike for those earning in excess of R850,000 a year.
The Spendtrend23 report identified a 47% increase in grocery costs as a proportion of income since 2019 for mass market customers as opposed to a 4% hike for those earning in excess of R850,000 a year
Kallner said that unlike their mass market counterparts, whose shopping was limited by inflation on key commodities, affluent consumers were able to substitute lower price items and take advantage of promotions or bulk savings.
“You see the pronounced impact of items like brown bread, which is 80% more expensive at the end of 2022 versus 2019, and you can see the kind of pressure grocery inflation has on low-income earners in the analysis,” he said.
According to the report, those earning between R350,000 and R850,000 a year were paying 12% more for groceries since 2019, while their less affluent counterparts earning between R100,000 and R350,000 a year were paying 14% more for shopping baskets compared to 2019.
Kallner said there was a trend of eating out more since the pandemic subsided. “People tend to eat out much more frequently. You can see — whether you look at the South Africa data base or the Discovery data base — there is a 50% increase in spend on restaurants and takeout over the period of the analysis.”
Constant power blackouts were also having an impact on eating habits. The research showed people ate out 60% more during load-shedding, particularly towards the end of last year when stages 5 and 6 were prevalent.
“There is a correlation between load-shedding levels and eating out. As many consumers are unable to prepare meals at home due to interrupted electricity supply, there has been an increase in takeout purchases and restaurant dining.
“We witnessed a larger volume of clients transacting on takeout meals and at restaurants as the stages of load-shedding increased. We also see peak volumes during stage 5 and stage 6 of load-shedding, as more people are compelled to order in, or collect, their food,” Kallner said.
The report also showed a growing trend in shopping for clothes online, with twice the number of people purchasing clothing items compared to those buying groceries online. In terms of groceries, the top online merchants for Discovery Bank clients were CheckersSixty60, Pick n Pay asap! and Woolies Dash, while Superbalist, Cotton On, Zara and TFG were the most frequented online platforms for clothing.
Kallner said they noticed a spike in online retail on specific days of the week.
“When people are working Monday, Tuesday and Wednesday they tend to shop more online, and by Friday and Saturday they are more social and have more time on their hands and there is a significant increase in point of sales purchases”.
He said after drying up during the pandemic, travel spend was 20% higher than in 2019. A shift towards more domestic as opposed to international travel was seen across all categories.
“Every single segment is reflective of the trend towards more domestic leisure and business travel, and that from a long-term perspective is an important trend for the South Afrcian tourism market in that we are perfectly positioned to catch inbound overseas travellers, given the uniqueness of our travel proposition, but then equally to capture the increasing market share of South Africans as they rediscovered in a sense the country.”
But flights are expensive. The report found that South Africans were paying an average of between 30% and 55% more for domestic flights than they did in 2019, with jet fuel 80% higher in 2022 compared with a year earlier.
“You have got a significantly reduced supply of flights in South Africa to the extent there are 134,000 fewer seats a week in planes, about 800 flights a week fewer post Covid to where we were in 2019. We have a 40% reduction in capacity, 80% increase in the biggest single input price of fuel and the average price of a ticket naturally does reflect that,” Kallner said.
According to the report, the top international destinations for South Africans are the US, UK, UAE, Namibia and France.
Lineshree Moodley, Visa country manager, said leisure travel increased by 14% and business travel by 24% since 2019.
“This particularly trend is really important for us because as the tourism industry strengthens it provides thousands of jobs and helps to develop the infrastructure of the country,” she said.
Moodley said digital payments had also increased over the last two years.
Discovery Bank clients prefer booking flights earlier in the week with Tuesday being a popular day.
The data showed a low frequency of flight bookings during the weekend, and a high frequency between Mondays and Tuesdays.
“This could be an indication of consumers doing their research over the weekend, finalising their decisions and booking their flights in the early parts of the week,” said the report.
Given the hybrid work environment, with people working both from home and offices, there had been a 16% reduction in the number of kilometres driven by clients of Discovery.
“That is probably to be expected and is once again reflective of the hybrid environment for many people post Covid. Instead of driving to the office every day, they are probably working from home one or two and sometimes more days over the course the week. That, combined with the increasing price of fuel, provides a strong explanation why we are seeing less trips,” Kallner said.
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