Slight uptake in South African consumer confidence

  • Consumer Confidence Index for Quarter 3, 2017 up five points to 83
  • Small improvement in job prospect and personal finance outlook
The latest Nielsen South African Consumer Confidence Index (CCI) for Q3, 2017 reflects a five-point increase from the previous quarter to 83 points, the highest level since Quarter 3, 2016.

Nielsen South Africa MD Bryan Sun
Nielsen South Africa MD Bryan Sun
Nielsen South Africa MD Bryan Sun comments: “South Africa is slowly turning around from recent economic declines to low levels of growth. As inflation is contained, grocery prices have stabilised, with additional relief in many food commodities due to the end of the drought, in certain regions. However, there is declining sentiment regarding job prospects and intentions to buy, so a full recovery is still a distant dream.

“In addition, a more cautionary consumer mindset, has led to more risk-averse spending behaviour and a heightened focus on saving, especially in the areas of out-of-home eating, entertainment and fashion, followed by an acute awareness of price for consumer-packaged goods. To counter this, businesses have been drawn into more promotional activities, eroding brand equity and margins.”

Uncertain times

With continued pressure on consumers’ disposable income, Nielsen’s CCI Quarter 3, 2017 results reflect the persistent anxieties of South African households. Nagging uncertainty and fears for the future seem set to continue reflected in 76% of survey respondents foreseeing poor job prospects for South Africans, over the next 12 months. There has, however, been a steady increase in the number of respondents who think job prospects will improve, since Quarter 4, 2016.

Looking ahead at the state of their personal finances over the next 12 months, 59% of South Africans have a positive outlook which shows a steady increase from the 50% recorded in the fourth quarter of 2016.

In terms of whether now is a good time to buy the things they want and need, 71% said it is not a good time, but this is a drop from the 75% recorded in Quarter 4, 2016, which indicates a slight upswing in consumer sentiment towards both planned and impulse purchases.

Heightened economic perceptions come with a personal obligation towards better managing squeezed household budgets. In light of this, the latest CCI results reflect a strong responsibility for future financial planning, revealed by the highest number of South Africans (37%) saying they will use their spare cash to put into savings.

Paying off debt is also a high priority, with 37% of South Africans saying they would use spare cash to be accountable and pay off debt, credit cards and loans. Clothing retailers can also take heart from the fact that 22% say they would purchase new clothes after covering essential living expenses, while 19% would spend on out of home entertainment and 17% would spend their spare cash on home improvements - the latter reflects South Africans need to indulge, escape from reality and enhance their surroundings.

What worries South Africans the most?

In terms of their biggest worries, 82% of South Africans believe the country is now in a recession, which is a substantial jump from Quarter 4, 2016 but not surprising given the economic headwinds South Africans faced in 2017 including lacklustre growth rates.

Against this backdrop, a hefty 86% of South Africans say they have changed their spending to save on household expenses compared to the same time last year. Top of their cost-cutting list is takeaway meals (63%), followed by less spending on new clothes (62%) and 55% switching to cheaper grocery brands. Out of home entertainment at 54% and expenditure on gas and electricity (53%) have also felt the pinch.

In terms of their major concerns, macro-level problems come out tops with 37% of South Africans citing the economy as their top concern. With growing unemployment; job security has become South African’s second biggest concern (25%), affecting consumers’ predisposition to unwarranted spending with discretionary purchases the first to go.

Other factors associated with South Africans concern for their future, are closer to their personal circumstances, with crime making a reappearance in the top five concerns (22%) along with personal debt (19%) and increasing food prices (17%).

Overall Sun comments; “Consumer confidence in South Africa is slowly inching upwards. However, the ongoing political uncertainty and less optimistic business confidence, weighs on continued investment and growth. Amidstt such uncertainties, consumers are looking for greater efficiency and value and are remixing their category and brand repertoires. Despite the subdued outlook, pockets of growth exist for companies who are proactive and swift to adapt or innovate their offerings for the changing and new consumer needs.”

16 Jan 2018 11:46

<<Back





Comment
FOLLOW US
Latest News | About Nielsen | Contact Us | Website | Bizcommunity