60% of SA consumers concerned about meeting financial obligations
Almost six in 10 South African consumers were worried about meeting their financial obligations in May, according to a survey by Boston Consulting Group’s (BCG) Centre for Customer Insight.
The company did surveys of consumers at the end of April and May, which confirm the devastating impact that the Covid-19 pandemic is having on consumer incomes.
“The second wave of our consumer sentiment survey, conducted at the end of May, found that financial insecurity and worries about continuing to be able to make a living had become the major factor in consumer behaviour, and decisions about spending,” said BCG Johannesburg managing director and partner Stefano Niava.
The earlier April survey showed that consumers were just beginning to feel the financial effects of the pandemic, and fears of infection and death were as strong as fears about their economic well-being.
“Consumers’ health concerns haven’t disappeared. When asked what words or phrases came to mind about the coronavirus, ‘Death toll’ topped the list, but the other most frequent phrases were economic: ‘loss of jobs’, ‘business closures’, ‘hunger’, ‘economic recession’, ‘increased poverty’, ‘increased insecurity’ and more,” Niava said.
Of those, more than two-thirds feared not being able to pay their bond or rent. The inability to pay utilities, support to extended family, and school fees were also frequently cited, and one in five people were worried about being able to make payments on short-term debt.
Most South African consumers had sharply cut expenses.
Four of every five (79 percent) surveyed said they had either delayed or reduced spending and that percentage was consistent across income levels.
Consumers also expected to see prices rising as supplies of certain goods fell.
More than half (51 percent) said they expected to buy fewer household care products, but two-thirds of them expect those products to be less available in the market.
They also anticipated shortages of fresh foods and 54 percent expect to be spending less on that.
The one category where most consumers planned to spend the same or more was vitamins, herbs and supplements.
Two-thirds (65 percent) said they would buy the same amount of those products or more, but the fear of shortages was driving that too.
Consumer use of retail channels was shifting.
Consumers looking to reduce spending would be buying less from discounters and wholesalers, and informal retail channels would pick up business, especially for food purchases.
Consumers remained brand conscious, equating more durable brands with higher quality.
“They generally don’t plan to ‘trade down’ by buying brands perceived as inferior to save money; they prefer to reduce or postpone spending, rather than shift to more economical brands that offer less durability,” said Niava.
South Africans continued to avoid public places and physical contact with strangers at the same high levels in May, as in April.
The vast majority — 84 percent — continued to believe the world was in serious danger, and 72 percent believed the worst impacts were yet to come. About 85 percent of the consumers surveyed were worried about food shortages, and 78 percent feared an increase in crime.
Amidst so much uncertainty, changes were being made in daily habits to reduce risks. More than four out of five respondents (82 percent) reported using hand sanitiser more, and they were wearing face masks.
Eighty-four percent of those surveyed in May, were getting updates on Covid-19 developments several times a day, a slight drop from the 92 percent of consumers surveyed in
April, who said they received coronavirus updates at least once or twice a day.