A recent study by MoyaApp, an app that helps users manage their social grants and communicate with the state, has found that South African consumers are highly sensitive to price increases. The study, which surveyed around 2,500 people, mostly household decision-makers, found that a R5 price increase can deter 77% of consumers, with 44% of consumers saying they would permanently stop buying a product if its price increased.
The study also found that 33% to 35% of consumers across all income levels and financial situations always shop during promotions. This suggests that promotions are not just for low-income households, but are a widespread practice among South African consumers. According to Shana Abrahams, head of research at MoyaApp, this challenges the common perception that low-income households are the only ones who shop during promotions.
MoyaApp's research, conducted in collaboration with Hibirism, a company that works with sociologists and anthropologists to understand the cultural context of consumer behavior, provides valuable insights into the shopping habits of South African consumers. The app, which has 4.5 million monthly users, mostly people with low-functionality phones and limited data, allows users to perform various tasks without using data, such as sending and receiving messages, reading the Bible and children's books, and keeping track of soccer scores.
The study found that 42% of consumers spend more than 100% of their income on monthly purchases, and 65% of households send money to family members every month. This suggests that many South African consumers are struggling to make ends meet and are prioritizing their spending carefully. Abrahams notes that these consumers are not frequent shoppers, but rather tend to do most of their shopping in the first week of the month.
Despite their financial struggles, consumers in this market are loyal to products that have been used for generations. For example, two products that are never removed from shopping baskets, regardless of price or financial pressure, are maize meal and cooking oil. Many consumers also indicated that they remain loyal to specific brands of maize meal that they grew up with.
The study introduced the concept of the "Waardigheidsindeks" (Dignity Index), which measures the financial pressure experienced by consumers. According to the study, 49% of respondents are "under pressure", making painful daily decisions and often sacrificing what they want for what they can afford or what offers more value. A further 17% are in crisis, with survival as their only focus, and price as the only factor that matters when deciding what to buy.
The study's findings have implications for retailers, who should prioritize the dignity of their customers when marketing their products. According to Abrahams, retailers should "lift the status cost of your product" and avoid marketing messages that imply poverty. By doing so, retailers can build brand loyalty and increase sales among South African consumers.
Key points
- South African consumers are highly sensitive to price increases, with 77% of consumers deterred by a R5 price increase.
- 33% to 35% of consumers across all income levels and financial situations always shop during promotions.
- Retailers should prioritize the dignity of their customers when marketing their products to build brand loyalty and increase sales.
