There are signs of growing consumer confidence and resilience, even with rising food and utility prices straining South Africans’ finances, with more consumers saying they are better off than a year ago.
The NielsenIQ (NIQ) “Mid-Year Consumer Outlook: Guide to 2025” report reveals that 42% of South African consumers say they are better off than this time last year while 33% say they are worse off. Only 17% say they are thriving financially, up from 11% in 2023. The situation has improved since mid-2023, when 36% said they were better off and 42% said they were worse off.
However, though interest rates have started coming down and inflation has slowed, nearly a third of South Africans are feeling worse off as a result of higher food prices The report reveals that South African consumers’ top concern remains rising food prices (39%), followed by increasing utilities costs (24%) and the threat of an economic downturn (20%). The majority of consumers (83%) are looking for income streams beyond their primary jobs to pay their way, while 27% agree they are likely to increase personal debt to sustain their lifestyle.
A quarter of South African respondents have been affected by job or income losses, exacerbating their financial plight.
The reports finds that consumers from all income levels are looking for value in their purchases by switching to lower-priced products (42%), buying whichever product is on promotion (43%), buying in bulk when preferred brands are on sale (43%), shopping more often at discount or lower-price stores (40%) and shopping with loyalty programmes to help manage spend (55%).
The majority (69%) say they are likely to change or try a new brand because of lower pricing, 74% will buy a brand that has innovated to make it as affordable as possible and 78% will buy a product that is energy efficient or low cost to run.
Consumers intend to continue cutting back on non-essentials like out-of-home dining (49%), out-of-home entertainment (46%), food delivery and takeaways (48%) and socialising with friends and family (44%). They also plan to decrease their spending on holidays (42%), salon beauty and grooming (42%) and home improvements and décor (41%).
A quarter of South African respondents have been affected by job or income losses, exacerbating their financial plight
Interestingly, South Africans are more likely to spend on health products than the global average. Two-thirds (67%) said they will start or increase their intake of vitamins and supplements, while 61% plan to spend more on products that help with relaxation and antistress.
The report finds that intentional consumers are willing to pay a premium for worthwhile attributes. In technology and durables, for example, unit sales of premium-priced phones, particularly 5G models, are up. However, there is an element of price deflation due to fiercer competition from emerging Chinese brands and promotional activity.
“Rising utility and food costs continue to challenge consumers, many of whom need to pay for more to get less, even with their income levels stagnating,” says Zak Haeri, MD for NIQ in South Africa.
“Prices in categories such as home care, confectionery and snacks, pet food and health and beauty remain inflated, in some cases leading to declining sales volumes. Brands and retailers with products in these areas will need to think of ways to sustainably push higher volumes without overpromoting and undervaluing — or oversubsidising — their offerings.”
NIQ is the world’s leading global consumer intelligence company. Its “Mid-Year Consumer Outlook: Guide to 2025” report identifies macro catalysts across industries. The forward-looking study provides a strategic road map for South African retailers looking to win over consumers in the year to come.
The big take-out: Consumers from all income levels are looking for value in their purchases and cutting back on non-essentials.
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