NielsenIQ (NIQ), a global consumer intelligence leader, has released its Mid-year Consumer Outlook: Guide to 2025 report offering a strategic roadmap for South African retailers aiming to capture consumer attention in the coming year.
According to World Data Lab, global consumer spending is expected to grow by $3.2 trillion in 2025, marking nearly 6% growth compared to 2024.
In South Africa, there are early signs of increasing consumer confidence and resilience, despite ongoing challenges posed by rising food and utility prices that continue to strain household budgets.
NIQ’s bi-annual study provides a comprehensive look at the impact of economic factors on consumer confidence, shifts in attitudes, and key insights into the drivers behind purchasing decisions. The report is based on feedback from over 17,000 online respondents across 23 countries.
The data reveals financial polarisation among South African consumers: 42% report being better off compared to last year, while 33% say they are worse off. Notably, 17% indicate they are thriving financially, a rise from 11% in 2023. This marks an improvement from mid-2023, when 36% reported being better off and 42% said they were worse off.
Zak Haeri, Managing Director for NIQ South Africa, said: “Inflation has cooled in South Africa this year, just as it has worldwide. However, rising utility and food costs continue to challenge consumers, many of whom need to pay for more to get less, even with their income levels stagnating.
"Prices in categories such as Home Care, Confectionary & Snacks, Pet Food, and Health & Beauty remain inflated, in some cases leading to declining sales volumes. Brands and retailers with products in these areas will need to think of ways to sustainably push higher volumes without overpromoting and undervaluing – or over-subsidising – their offerings.”
Rising food prices (39%) remain the top concern for South African consumers, followed by increasing utility costs (24%) and the potential for economic downturns (20%).
A significant 83% of consumers are seeking additional income streams beyond their primary jobs to keep up with expenses, while 27% anticipate increasing their personal debt to maintain their current lifestyle.
Job and income losses have also impacted 25% of South African respondents.
In today’s challenging economic climate, consumers across all financial backgrounds are seeking value in every purchase:
42% are switching to lower-priced products.
43% opt for items on promotion.
43% bulk buy when their preferred brands are on sale.
40% are shopping more at discount or lower-priced stores.
55% use loyalty programmes to manage their spending.
69% of South African consumers are likely to switch to or try a new brand due to lower pricing, while 74% will choose brands that innovate to offer affordability.
78% prefer energy-efficient or low-cost-to-run products.
Consumers also plan to continue cutting back on non-essential spending, with 49% reducing out-of-home (OOH) dining, 48% cutting back on food delivery and takeaways, and 46% scaling back on OOH entertainment. Other areas expected to see reduced spending include holidays (42%), salon beauty and grooming (42%), and home improvements and décor (41%).
However, South Africans are more inclined to spend on health-related products compared to the global average. Two-thirds (67%) plan to increase their intake of vitamins and supplements, while 61% intend to spend more on products that promote relaxation and stress relief.
There are significant upselling opportunities as consumers are willing to pay a premium for products with valuable attributes. In the Tech & Durables sector, unit sales of premium-priced smart/mobile phones, particularly 5G models, are on the rise.
However, there is some price deflation due to increased competition from emerging Chinese brands and promotional activity.
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