June 20, 2024
October 17, 2024
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Introducing The Year of the Consumer: Stitch Scale Summit 2024

The third annual Stitch Scale Summit, to be held 3rd October in Johannesburg, will explore in detail how today’s consumers think, how they are being influenced and the ways in which they consider where and how they spend their money.

Thea Sokolowski, Head of Marketing + Communications
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Introducing The Year of the Consumer: Stitch Scale Summit 2024

Much of the data and statistics around economic growth and rising commerce in South Africa often point to macro drivers like rising tech savviness and penetration, digital literacy and financial access among consumers. We know online shopping and digital payment adoption skyrocketed during the pandemic, and that consumers are increasingly becoming more comfortable paying from their bank accounts or digital wallets and interacting with brands and services online.

And more than four years after the onset of the pandemic, consumers across regions, generations and income levels are approaching commerce and exhibiting purchase or spending behaviour in nuanced and increasingly divergent ways. What does the consumer psyche look like in South Africa today, and what does this mean for brands and services looking to better reach, understand and ultimately convert them?

The third annual Stitch Scale Summit, to be held 3rd October in Johannesburg, will explore in detail how today’s consumers think, how they are being influenced and the ways in which they consider where and how they spend their money. Joined by leading voices from across South Africa’s retail, banking, insurance, travel and other sectors, we’ll explore how innovative brands are adapting to better meet today’s consumer where they are, and how they’re thinking about acquisition and retention across the customer journey - including, of course, the role of payments in enabling and enhancing the customer experience.

Here we explore some of the trends and influences shaping the South African consumer psyche, and pose some questions we’ll be looking to explore during October’s event.

Global and local phenomena have contributed to a shift in consumer behaviour, mindset

Notable changes in consumer confidence and spending patterns can be attributed in a big way to large global events - such as the pandemic, as well as seemingly distant world events such as the wars in Ukraine and in the Middle East. While consumer confidence in South Africa had risen from 2019-2022, 2023 saw a notable decline, according to South Africa’s National Index.

Local events and influences also contributed in a significant way to a major shift in the economy, and in response, to consumer behaviour and mindset. Rising unemployment - sitting at 32.9% in Q1 2024 - is one of the highest in the world. As well, frequent load shedding, heightened over the last few years, has cost the South African economy an estimated R1.6 trillion in 2023 alone.

PWC’s 2023 Global Consumer Insights Survey found that consumers in South Africa are actively adjusting their purchase behaviour in response to load shedding, seeking products that are less reliant on electricity and less likely to spoil, and increasingly purchasing food and other goods online to be delivered to the home.

South Africans have taken the following actions in response to the increased load-shedding in 2023:

52% purchased non-perishable foods or bought smaller pack sizes to ensure groceries do not spoil.

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51% sought out alternative power sources to ensure that they have electricity during load-shedding.

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50% changed the type of products they purchase to those that are less reliant on electricity and/or last longer.

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40% purchased more takeouts or bought more convenience food that can be quickly reheated or prepared.

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31% purchased more goods online since going into stores is more difficult during load-shedding hours.

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High inflation and unemployment have led consumers to increase focus on cost reduction and savings - indicating the continued relevance of competitive pricing, though there are nuances on a category-by-category basis.

Additionally, many more are working from home, which has led to a shift in the types of products purchased. Funds saved on costs of transport are in some cases being funnelled into home improvements, for instance, to make the workplace more suitable. There’s also been a dramatic spike in food and grocery delivery where the home serves as both the office and the kitchen.

Despite advancements in digital payments, however, the market remains highly cash-reliant, with the large majority of retail transactions still made in cash. One factor cited in a recent FinScope report, for instance, points to challenges across the country with access to affordable data and home internet, resulting in only 66% in the country having access to internet at home. Perhaps another factor contributing to cash’s staying power is the high rate of fraud in the nation, where upwards of 70% of South African consumers have indicated experiencing fraud.

In response, innovative ‘bridge’ payment methods like Cash at ATM or cash on delivery have become increasingly available as a gateway into online or digital shopping and payments for those still wary of digital transactions but who can access online shopping. 

How these drivers have sparked new trends and behaviours in today’s consumer

More than ever, consumers expect seamless, positive experiences when engaging with brands, including more elements of personalisation. Many are also seeking the feeling of 1:1 engagement or interaction, whether in person when or through technology like AI chatbots, social DMs and even engagements with influencers.

Consumers are demonstrating a desire and demand for new and better ways to experience commerce, to pay and to play. They’re also facing some lingering psychological effects leftover from periods of strict lockdown, such as a ‘hermit’ mindset which has led to more time spent at home, greater spending on food and grocery delivery and items for the home and increased feelings of loneliness. Some are saving up for bigger, experiential expenses over things, with a sustained surge in so-called revenge travel to compensate for missed trips during COVID, while some are choosing to forego more out-of-home expenditures.

Moreover, while there are nuances between income levels and age cohorts, many of these behaviours are observed across traditional demographic segments. This means today’s customers are perhaps more difficult to predict, reach and attract than ever. This is combined with the fact that they have more and more choices when it comes to where they spend their money, with more competition across industries and a diminishing ability to stand out on product offering alone. In these cases, the ability for brands to craft a better experience and implement personalisation is playing a bigger role than ever.  

In part 2 of this series, we’ll dive deeper into specific trends and behaviours, where they come from and how brands can think about adjusting the way they interact with customers based on a greater understanding of their current mindset. 

Interested in joining us to discuss the Year of the Consumer and more at this year’s Scale Summit?

Express interest here