A NielsenIQ global Thought Leadership Report on “Consumer Outlook 2023” shows that volatility in everything from prices to weather events has created unsettled consumers who, having just lived through recent inflation highs — and not knowing when to brace for the next set of extreme circumstances — are displaying a caution that is likely to linger for some time.

The report also specifically highlights for South Africa:

• 37% of consumers are expecting the economic downturn to last for 12 months or more, with 26% claiming they only have enough money for food, shelter and the basics.
• Consumers’ biggest concern over the next six months is the increase in food prices (51%), as well as concerns over job security (20%).
• Transport costs are among the top category that consumers plan to spend more on (29%) in 2023 compared to the previous year, and, interestingly, even with the additional burdens on family spending, consumers are still planning to spend as much on groceries and household items in 2023 as before (48%).
• High inflation and, by effect, higher product prices, have pushed consumers towards discounters (49%), chasing promotions (36%) and buying in bulk (50%), while 56% are keen to take advantage of loyalty schemes.
• 32% have also turned to online shopping to get better deals, save on petrol and minimise trips to stores.
• Consumers plan to spend less on most discretionary spending categories, where out-of-home dining (23%), out-of-home entertainment (32%) and clothing (36%) are leading areas where they are planning to trim their wallet allocation.

Overall, financial concerns and job security have risen to the forefront.

Lara Hodes, economist at Investec Bank, says the employment index trended lower in January (below 50.0) following a strong uptick in December, suggesting that any improvement in staffing levels at the end of the year was temporary.

“A pick-up in sentiment, and accordingly investment, is needed to drive sustainable growth and significant job creation,” she says.

Standard Bank economist Goolam Ballim, however, is more upbeat, saying there could be a “burst of employment over the near to medium term.

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“Having said that, we think that employment will likely be within the highly skilled areas of the economy, with more managerial and professional candidates finding employ than those lesser-skilled,” he says.

A look at the consumer wallet for the year ahead shows that South African consumers will shift spending towards maintaining contributions to future-focused mainstays such as financial services (50%) and paying off debt (35%), while also increasing their spending on groceries and household items (33%) and contributing more to education for themselves or their families (23%).

Generally, “42% of those surveyed mention that financial health and job security are on par with mental and physical wellness (40%) as the leading areas of greater importance, while equally important is the fact that 25% state that they are planning to spend more on health and wellness products this year,” says Ged Nooy, NielsenIQ’s managing director in South Africa. BM/DM