South Africa is navigating choppy economic and political seas and nowhere is that more apparent than in the latest Consumer Confidence Index (CCI) figures, which showed a 10-point decline to 77; offsetting the gains made in the previous quarter. (Note: The survey was conducted from October 31 – November 18, 2016).
Nielsen South Africa MD Bryan Sun comments, “The roller-coaster consumer confidence sentiment in South Africa continues, as respondents’ outlook deteriorated in the fourth quarter following the short-lived increase in the third quarter, which may have been boosted by the municipal elections.
“An impending credit-rating review was a major source of apprehension during the fourth quarter, and lower-than-expected GDP growth and rising food prices also were concerns. In addition, South Africans are increasingly anxious about ongoing disruption and uncertainty in tertiary-education structures.”
To provide a deeper understanding of the key shifts within the consumer confidence indicators, Nielsen has conducted a trended analysis of certain key sets of CCI data, since 2005. A key finding that arose out of this study is the fact that job prospects are at their lowest level since 2005.
Proof of this is that in response to the question “What do you think job prospects will be in South Africa in the next 12 months?” the latest results saw only 18% of respondents saying Excellent or Good, as compared to 31% in the previous quarter and 50% in Quarter 1’ 2005.
In terms of the state of their personal finances in the next 12-months, 4% less than in Quarter 3 (7%) said Excellent; 4% less (43%) said Good, while 6% more (37%) said Not So Good. In terms of whether now is a good time to buy the things they want and need, 2% said Excellent, 21% said Good, while the same number as the previous quarter (51%) said Not So Good.
The instability in consumers’ finances is also permeating their predisposition towards purchasing, with just 23% saying it is a Good or Excellent time to buy, the lowest level as compared to 32% in Quarter 4, 2014 and 27% in Quarter 4, 2015. This is also in stark contrast to the more favourable 2005 levels of 45%.
Once South Africans have covered their essential living expenses, the most number of respondents indicated that they use their spare cash to strengthen their long term financial security, with 39% (up from 37% in Q3, 2016) saying they will use their spare cash to put into savings. Paying off debt is also a concern with 37% saying they would use spare cash to pay off debt, credit cards and loans. The third highest number (19%) said they would buy new clothes, although this number is down from 21% in the previous quarter.
Big shift in what worries
In terms of the trended CCI data since 2005 which provides a broader, longer term view of changes in consumer outlook, this reveals enormous shifts in what South Africans worry about. Whereas six years ago, in 2010, the annual average, showed crime as the biggest concern at 26% of respondents and rising utility prices and debt both at 25%, these have now been completely supplanted. These days what’s most worrying for South Africans is the economy at 37%, and job security and rising food prices at an annual average of 25%. Interestingly, political stability has also crept up in the worry stakes, having risen from 12% five years ago, to 16%.
The very latest concerns – for Quarter 4, 2016 specifically – reveal that Macro Level Concerns remain dominant with 35% of South Africans citing the economy as their top concern, 27% security of their jobs and 25% are trying to cope with increasingly steep food prices. South African concern over political stability has risen further with 18% indicating it is a big concern.
In terms of Wellbeing, 19% of the population cite debt as a big concern, 14% their children’s welfare/education, 12% maintaining a work/life balance and 5% worry about their health.
Based on the above outlook, 84% have changed their spending to save on household expenses. In terms of what they’re cutting back on 55% of respondents have decreased their spend on takeaway food, 52% spend less on new clothes and the third highest number 47% are switching to cheaper brands, while 45% are cutting down on out of home entertainment and trying to save on utility costs.
Sun comments, “The consumer outlook for 2017 remains subdued, but companies who are able to adapt or innovate their offerings to the consumers’ wallet realities can achieve success.”