Consumers ‘to spend more on food in festive season’
bdlive.co.za - Dec 10th 2014, 10:42
South African consumers will cut back on travel and socialising in favour of food purchases over the festive season as tough economic conditions force people to be more pragmatic in their spending habits, Deloitte’s Year-End Holiday Survey revealed on Tuesday.
Consumer’s ability to spend has been tempered by indebtedness, inflation, and unemployment.
Rodger George, African consumer business leader at Deloitte, said consumers were showing signs of conservatism as general day-to-day living expenses continued to rise while consumers try to stretch their budgets as far as possible.
"In line with the overall increase in the cost of living in SA over the past year, 66% of South African consumers surveyed have indicated that they are spending more on essential household expenses such as groceries and energy bills this year," he said.
The average proportion of the consumer budget that will be spent on food has jumped to 44% compared to 36% last year while spending on socialising drops to 13% from 23% in 2013.
Nevertheless, consumers will still allocate a significant portion of their holiday season budget to gifts with 43% of expenditure going towards presents in 2014, roughly similar to last year’s 42%.
The spending patterns in South Africa appear to mirror trends in Europe where consumers are also grappling with poor economic growth. This year’s Deloitte survey indicates that South African consumers are becoming increasingly concerned about the strength of the domestic economy, with 56% of respondents holding a negative view of economic conditions compared to 53% last year.
South Africans are, however, less negative about the economic climate than they were during the recession in 2008-09. Interestingly, South African males are significantly more positive about economic prospects next year than their female counterparts, with 33% of men holding a positive view compared to 19% of women.
Concern is percolating over SA’s stunted growth as union activism, unemployment, and political uncertainty sap business and consumer confidence. Gross domestic product growth is forecast to average less than 2% this year, below its potential rate of 3.5% and lagging SA’s emerging market peers. With unemployment hovering at about 25.5%, strikes, a lack of policy coherence, poor infrastructure engagement, and rigid trade laws have hindered growth. Private fixed investment, mining, and manufacturing output are also dwindling.
Ahead of the peak-trading season, nationwide blackouts have come as cold comfort to both consumers and retailers.
Eskom has urged South Africans to brace for power-supply troubles for at least the next 18 months.
South Africans have also ditched the sweet taste of chocolate for hard cash as the number one gift they are most likely to receive.
Gifting preferences also differ between men and women, where men show a strong preference for tangible products like books, cash, and CDs, while women rank pampering, beauty treatments, cash, and chocolates as top of their wish list.
"Looking at the younger generation, teenagers prefer games; CDs and books as gifts during this festive season, with the rest of the top ranked products consisting of digital and high-tech gadgets. Children under the age of 12 have had fairly consistent preferences, with games, action figures, and dolls dominating the festive shopping list," Mr George said.From DFM Publishers (Pty) Ltd
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