Consumer Confidence Index for Quarter 3, 2017 up 5-points to 83
Small improvement in job prospect and personal finance outlook
Johannesburg - Jan. 15, 2018 – The latest Nielsen South African Consumer Confidence Index (CCI) for Q3, 2017 reflects a 5-point increase from the previous quarter to 83 points, the highest level since Quarter 3, 2016.
Nielsen South Africa MD Bryan Sun comments; “South Africa is slowly turning around from recent economic declines to low levels of growth. As inflation is contained, grocery prices have stabilised, with additional relief in many food commodities due to the end of the drought, in certain regions. However, there is declining sentiment regarding job prospects and intentions to buy, so a full recovery is still a distant dream.
“In addition, a more cautionary consumer mindset, has led to more risk-averse spending behaviour and a heightened focus on saving, especially in the areas of out of home eating, entertainment and fashion, followed by an acute awareness of price for consumer-packaged goods. To counter this, businesses have been drawn into more promotional activities, eroding brand equity and margins.”
With continued pressure on consumers’ disposable income, Nielsen’s CCI Quarter 3, 2017 results reflect the persistent anxieties of South African households. Nagging uncertainty and fears for the future seem set to continue reflected in 76% of survey respondents foreseeing poor job prospects for South Africans, over the next 12 months. There has, however, been a steady increase in the number of respondents who think job prospects will improve, since Quarter 4, 2016.
Looking ahead at the state of their personal finances over the next 12 months, 59% of South Africans have a positive outlook which shows a steady increase from the 50% recorded in the fourth quarter of 2016.
In terms of whether now is a good time to buy the things they want and need, 71% said it is not a good time, but this is a drop from the 75% recorded in Quarter 4, 2016, which indicates a slight upswing in consumer sentiment towards both planned and impulse purchases.
Heightened economic perceptions come with a personal obligation towards better managing squeezed household budgets. In light of this, the latest CCI results reflect a strong responsibility for future financial planning, revealed by the highest number of South Africans (37%) saying they will use their spare cash to put into savings.
Paying off debt is also a high priority, with 37% of South Africans saying they would use spare cash to be accountable and pay off debt, credit cards and loans. Clothing retailers can also take heart from the fact that 22% say they would purchase new clothes after covering essential living expenses, while 19% would spend on out of home entertainment and 17% would spend their spare cash on home improvements - the latter reflects South Africans need to indulge, escape from reality and enhance their surroundings.
In terms of their biggest worries, 82% of South Africans believe the country is now in a recession, which is a substantial jump from Quarter 4, 2016 but not surprising given the economic headwinds South Africans faced in 2017 including lacklustre growth rates.
Against this backdrop, a hefty 86% of South Africans say they have changed their spending to save on household expenses compared to the same time last year. Top of their cost-cutting list is takeaway meals (63%), followed by less spending on new clothes (62%) and 55% switching to cheaper grocery brands. Out of home entertainment at 54% and expenditure on gas and electricity (53%) have also felt the pinch.
In terms of their major concerns, macro level problems come out tops with 37% of South Africans citing the economy as their top concern. With growing unemployment; job security has become South African’s second biggest concern (25%), affecting consumers’ predisposition to unwarranted spending with discretionary purchases the first to go.
Other factors associated with South Africans concern for their future, are closer to their personal circumstances, with crime making a reappearance in the top five concerns (22%) along with personal debt (19%) and increasing food prices (17%).
Overall Sun comments; “Consumer confidence in South Africa is slowly inching upwards. However, the ongoing political uncertainty and less optimistic business confidence, weighs on continued investment and growth. Amidstt such uncertainties, consumers are looking for greater efficiency and value and are remixing their category and brand repertoires. Despite the subdued outlook, pockets of growth exist for companies who are proactive and swift to adapt or innovate their offerings for the changing and new consumer needs.”
The Nielsen Global Survey of Consumer Confidence and Spending Intentions for South Africa was conducted from 15 - 26 September 2017 and polled more than 30 000 online consumers in 60 countries throughout Asia-Pacific, Europe, Latin America, the Middle East/Africa and North America. The sample has quotas based on age and sex for each country based on its Internet users and is weighted to be representative of Internet consumers. It has a margin of error of ±0.6%. This Nielsen survey is based only on the behaviour of respondents with online access. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60% Internet penetration or an online population of 10 million for survey inclusion. The sub-Saharan African countries in this study are compiled from a separate mobile methodology survey among 1 600 respondents in Ghana, Kenya and Nigeria. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.
Nielsen Holdings plc (NYSE: NLSN) is a global measurement and data analytics company that provides the most complete and trusted view available of consumers and markets worldwide. Our approach marries proprietary Nielsen data with other data sources to help clients around the world understand what’s happening now, what’s happening next, and how to best act on this knowledge. For more than 90 years Nielsen has provided data and analytics based on scientific rigor and innovation, continually developing new ways to answer the most important questions facing the media, advertising, retail and fast-moving consumer goods industries. An S&P 500 company, Nielsen has operations in over 100 countries, covering more than 90% of the world’s population. For more information, visit www.nielsen.com.
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