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Loyalty Programs, the Rise of the Value Hacking Shoppers, and Frictionless Living
The Mzansi Consumer Barometer is our fourth annual survey of South African consumers. We interviewed connected South Africans shortly before the election to track key consumer behaviours and identify and decipher what their biggest concerns are and how these issues affect their behaviour. It turns out that the mood across the country is united, and the state of our country seems to indicate some serious concerns.
The current situation of our country
So, how are South Africans feeling right now? This year their top five concerns are, in order, power outages, rising unemployment, rising cost of living, crime and violence, and government corruption. This is the second year in a row that power outages have been ranked as a major issue, while government corruption has risen from third to fifth place. This could be thanks to the 2023 Corruption Perceptions Index (CPI) released by anti-corruption campaign group Transparency International (TI), which shows that corruption levels in South Africa are at an all-time low, with a score of 41 out of 100.
Rising unemployment moved up from fifth to second place, while rising living costs moved up to third. Crime and violence remained in fourth place, with South Africans’ concerns similar to previous years.
When looking at the cost of living in South Africa, the top three categories where South Africans noticed an increase in costs were electricity and water, meat and eggs (remember the chicken and egg shortages?), and petrol and/or transport.
But South Africans have a different body structure
While South Africans’ concerns may paint a bleak picture, we remain optimistic, with 40% believing things will get better, compared to just a third last year. This outlook is driven primarily by young South Africans, with older people and South Africans living in townships reporting the highest levels of pessimism.
From an economic perspective, 50% of South Africans’ household income comes mainly from wages, grants and piecework. Compared with those who are optimistic about the economic and social development momentum, more households are optimistic about the future household financial situation; more than half (54%) of households expect to be in a more favorable financial situation in a year, especially higher-income and younger South Africans (18-34 years old). This is largely driven by a hardworking mentality, with 39% of South Africans actively considering how to generate additional income for their families, 22% already starting a business, 20% saying their business is their main source of income, 9% having a second job, and only 9% not doing anything else to supplement their income.
Our country’s plate
Kantar’s shopper panel shows that FMCG inflation is 9% and CPI is 5.5% (down from 16% last year). To combat this, we are cutting back on luxuries and being savvy about where and how we shop – for example, by getting discounts and joining loyalty schemes to buy more. 40% of the population are only buying what they really need and cutting back on spending, while 32% are saving or investing. The luxuries we are cutting back on include eating out (63%), unnecessary food (60%) and alcohol (51%) – closely followed by holidays (47%), clothes, shoes and accessories (45%) and going out with friends and family (45%). Cutting back on luxuries means eating less and using less – this is particularly evident in beverages (-7.8%) and dairy products (-14.6%).
On average, shoppers are reportedly still spending the same amount per store, but buying fewer items and redefining new categories through re-evaluation and consolidation to suit their needs, i.e. buying products that can be used for one or more functions (Pine-Gel anyone?). We are also trying cheaper brands more than before, especially among lower income groups, growing steadily from 32% in 2022 to 43% in 2024, in order to have the budget to buy the brands we want (even if they are more expensive). This doesn’t mean South Africans are ditching brands, but rather that we are prioritising the brands we like and making trade-offs with those that don’t hold as much value in our lives. We are also growing our range to include different pack sizes and ‘good enough’ options, which shows that brand marketers need to offer different choices to consumers.
We are becoming a nation of smart value hackers
South Africans are keen on hacking the system and getting more value from their efforts. Hacking is about designing a frictionless life, working with brands to lighten the mental load of the consumer world, anticipating and meeting consumers’ needs before they think about it, and Full of value, brands and businesses collaborate to provide more practicality to consumers’ lives so they are no longer forced to compromise due to time and money constraints.
Kantar’s research shows that South Africans are demanding more from brands in our ecosystem and look for value wherever we can. Yes, as consumers, we are more demanding and sophisticated than ever before! Brand marketers need to have a holistic view of humanity as a whole and all the brands in the ecosystem in order to provide them with options that fit seamlessly into our lives by removing friction and adding value.
South African consumers have been taught that they can have their cake and eat it too, and are no longer willing to make the trade-off between frictionless living and value. Their mindset is to do more with less – while people are consuming less and enjoying life less (due to inflation) – most have cut luxuries out of their lives without replacing them with anything. We have a mindset of doing more with less and are not willing to give up our pleasures. An example of this is South Africa’s foodies, who are working with brands to help us turn everyday staples into “gourmet foods”.
Consumers want to work with brands that add meaningful value to their ecosystem (e.g. Clicks, Vodacom, Vitality, eBucks) and store rewards cards across all brands. 99% of online South Africans have store rewards cards, 65% of South Africans want some form of “cash” back, and the phrase “cash is king” can also be translated into “utility” and “choice” being king, with 23% wanting to be able to buy “what I need” and 10% wanting to use it for entertainment.
Rewards programs are becoming the core of the value hacking ecosystem, with the top five loyalty programs being: Shoprite Xtra Savings, PnP Smart Shopper, Checkers Xtra Savings, Clicks ClubCard and Spar Rewards. Among high-income earners, Checkers Xtra, FNB eBucks and WRewards are the most popular.
Beyond rewards, partnering with existing platforms can solidify and create value in consumers’ lives. Below we share an example of Lebo’s ecosystem of brands (brands in her life) that integrate other brands into her life purely because of her closest partners with FNB, Checkers and Mr D.
This lifestyle is not just for the wealthy, but for all income groups – apps like MoyaApp bring many apps together in one place, which creates opportunities for brand collaborations. In the future, everything will revolve around an ecosystem of brands that seamlessly add meaningful value because consumers don’t want to jump through hoops. This requires two major shifts in brand thinking, from focusing on the brand’s own category and ownership of the entire customer experience to focusing on lifestyles, ecosystems, and courageous collaborations.
How do we shop in this country – online versus in-store, in-store versus online?
We are still an offline-oriented market as South Africans still prefer to shop in physical stores, especially those living in townships:
The overall percentage of online shopping (i.e. using any internet platform where transactions can be made) remains around 80%, with a significant increase among lower income groups, and all are proficient in e-commerce websites. The use of store websites is also high, which may be related to online price comparison (67% use e-commerce websites such as Takealot, Makro Online, Woolies Dash, Checkers Sixty60, etc.).
About the study
The 2024 Mzansi Consumer Barometer is Kantar’s fourth annual survey of South African consumers, tracking key consumer behaviours including households’ changing financial and social wellbeing, income changes, and South Africans’ leisure and work activities. We interviewed 415 South Africans, who are representative of the connected population. Watch our launch webinar on demand here. Contact our hosts, Stacey Jayne SuggsBusiness Growth Partners and Renissa GoodenDirector of Kantar Consulting.
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