When it comes to consumer spending in South Africa's major cities, Johannesburg residents emerge as notable outliers, surpassing the national average by a significant margin.
This is a key finding of the SpendTrend 2024 report, a collaboration between Discovery Bank and Visa that analyses credit card spending behaviour to understand consumer spending habits.
The report analysed spend data across 14 cities worldwide, including South Africa.
Personal consumer spending growth in South Africa steadied in 2023 after the surge seen in post-pandemic spending in 2022.
While consumer spending in South Africa outpaced inflation by 19 percentage points in 2022, the growth in consumer spending closely matched inflation in 2023, lagging behind by just two percentage points.
Joburg residents spent 47% more than the average consumer in South Africa, followed by Capetonians who spent 38% more than the average, while Durbanites spent 13% more than the average.
Among these cities, spending increased the most in Cape Town, rising by 6%.
This growth was driven by above-average spending increases on groceries, eating out, and travel compared to other cities.
Variances exist in share of category spend across markets and segments. Spend increased among the affluent and high net worth segments worldwide, with the mass segment experiencing modest growth or even declines.
Choices appear to be made between affordability and convenience, with segments and markets differing in their share of spend on groceries, eating out and takeout,
and travel.
Groceries, retail, travel and fuel remain South Africa’s biggest spend categories, making up nearly two-thirds of total spend.
However, the breakdown varies by market segment: groceries are the top category for mass, mass affluent, and everyday affluent clients, while retail is the main category for high net worth clients.
In the past year, average grocery spending in South Africa rose by 8%, compared to the 16% increase the year before. This was influenced by high food inflation rates of 12% and 11% over the last two years, respectively.
In South Africa’s market segments, grocery spend growth ranged from 0% in the mass segment to 8% in the high net worth segment.
This is consistent with the view that the mass segment has adjusted their purchasing habits or bought less to cope with rising costs – likely worsened by more of their disposable income being used to repay debts, due to higher interest rates.
Spending on eating out and takeout also increased in the last year by 8%, following a 28% surge the year before, driven by post-pandemic recovery.
However, 70% of South Africans surveyed in 2023 say they cook or bake a prepared meal at least once a week, and 37% said they would pay more for healthy and nutritious food options.
Although Cape Town spends the most on groceries, Johannesburg spends the most on eating out – but Cape Town comes in a close second.
Online grocery shopping has become increasingly popular, with between 7% and 15% of grocery spending now happening online. The highest use is among those aged 31 to 40 years old.
Interestingly, clients are spending more per purchase when buying groceries online, with an average of 29% more spent per transaction compared to in-store grocery purchases.
More consumers prefer contactless payments, which now make up the majority of transactions in South Africa. This surge is driven by the increasing popularity of digital wallets.
Hybrid work arrangements vary by city and industry but remain common. Discovery Insure reports that over 75% of clients who are office workers now commute at least three days a week.
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