A new survey by the international retail research agency Nielsen found that South African shoppers are "obsessed" with discounts, and that this is starting to hurt shops and producers.

Some 30% of all fast-moving consumer products sold in South Africa last year were for discounted prices, as part of a sale or promotion. This is three percentage points higher than in the previous year, and one of the highest rates in the world, according to the research agency Nielsen.

 

South African households are under severe strain due to rocketing fuel and electricity prices, as well as higher taxes. A survey by Nielsen shows that 75% of South Africans now know the prices of the grocery items they buy and notice changes in price, from 69% in 2017. 

“(Financial strain) has led to consumers seeking financial relief and the first casualty of their desire to ease their financial strain is discretionary spending, which has taken a toll on their grocery baskets. Unfortunately, this ‘money’s too tight to mention’ scenario has also seen South African shoppers prone to severe cases of Promo FOMO (fear of missing out)," says Nielsen Connect South Africa MD Kerith Botha.

Almost a third of consumer now search for promotions and 16% go so far as changing stores for a brand they prefer, based on the best promotions on offer. Some 22% of South Africans state that they change stores based on the best discounts on offer.

Sellers have also increased the frequency of their promotions in 2018, up by 3% from 2017.

It is starting to backfire, however.

More frequent promotions lead to higher consumer sensitivity to regular prices. "In effect, consumers are being trained to buy on promotion," says Botha.

She adds that not all discounted items are seeing much higher sales when promoted. According to Nielsen's own measurements, more than two-thirds of promotions don't break even for retailers.