More South Africans are looking for additional sources of income and considering taking on more debt to maintain their lifestyles as rising food, fuel and electricity costs put pressure on household finances.
Nearly three-quarters of financially pressured consumers say they are likely to seek additional income streams, including side hustles, while a quarter are likely to increase their debt to afford their current lifestyles, according to new research by market research group NielsenIQ (NIQ).
The findings point to continued financial pressure on households, with 41% of South Africans saying they are financially worse off than they were a year ago, compared with 37% in the previous year. Only 38% say they are better off.
The research comes from NIQ’s Consumer Outlook 2027 survey, which covered more than 21,000 respondents across 31 countries and was combined with the group’s measurements of actual purchasing behaviour.
Rising living costs are the biggest reason financially challenged South Africans give for their worsening circumstances. NIQ said about 79% of respondents in this group identify the cost of living as a major factor affecting their finances.
Food prices are the biggest immediate concern, with 34% of consumers worried about further increases. A further 23% are concerned about higher utility bills, while 22% point to fuel and transport costs.
Focus on essentials
The findings show how households are responding to pressure on their budgets with consumers becoming far more selective about how they spend their money. According to NIQ, more than four in 10 say they have stopped buying certain products so they can focus on essentials, reflecting the pressure many households are feeling.
To stretch their budgets further, about half of consumers are shopping more often at discount and value retailers, while nearly six in 10 are making greater use of loyalty programmes and reward points. Many are also keeping a close eye on the total cost of their shopping baskets rather than focusing only on individual item prices, the NIQ found.
Promotions are playing a bigger role in purchasing decisions. Nearly half of consumers say they are likely to buy in bulk or stock up on their favourite brands when they are on special.
At the same time, consumers’ understanding of value for money is evolving. Rather than simply looking for the lowest price, many are carefully weighing quality, affordability and long-term value when deciding what to buy.
NIQ says the consumer market is becoming increasingly divided between shoppers looking for lower prices and those prepared to pay more for premium products, while mainstream-priced goods face pressure.
“South Africa is an extreme example of a global trend: the mainstream market hollowing out while both value and premium products gain share,” says NIQ South Africa MD Zak Haeri.
The research found that 14.9% of sales value comes from value products, while mainstream products account for 52.6% and premium products 32.6%.
More than seven in 10 consumers say they would rather save money when a product is not clearly better than a cheaper alternative, according to the NIQ. However, 64% say they prefer a clearly premium product when they decide to spend more.
South Africa is an extreme example of a global trend: the mainstream market hollowing out while both value and premium products gain share
— Zak Haeri, NIQ South Africa MD
Affordability remains the biggest driver of purchasing decisions, with 39% of shoppers saying it is the most important factor when deciding whether a product is worth the price. However, consumers are not focused on cost alone. More than a quarter (26%) place the greatest value on quality and performance, suggesting they are looking for products that deliver lasting value rather than simply the cheapest option.
Financial pressures are also influencing longer-term decisions.
While three-quarters of consumers are exploring ways to generate additional income, a quarter say they may take on more debt to manage rising living costs. This highlights the growing challenge many households face as they try to maintain their lifestyles while grappling with the gap between income and expenses.
According to Haeri, these realities are making consumers more deliberate and discerning in their spending, increasingly scrutinising their purchases and expecting brands and retailers to clearly demonstrate why their products deserve a place in their budgets.
“Spending by exception is becoming the new norm, as South African consumers demand stronger justification for every purchase decision,” he says.
“The FMCG brands that thrive in 2027 will be those that have a nuanced understanding of where demand is emerging and which consumers are driving it.”
Business Day
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