In the wake of the recent elections (which tend to inspire hope and optimism in nations hungry for change), together with vaccine euphoria, more than two thirds of South Africans believe that life will return to normal within the next six months.
This was the fascinating revelation at a recent webinar hosted by Novus Holdings, a leading printer and manufacturer in South Africa. The event delved into the state of the economy from a consumers’ perspective and how behaviours, and attitudes have shifted.
“Studies show that if you ask any South African – no matter their circumstance – if they believe that their life will be better in the foreseeable future, they will say yes,” said Dr James Lappeman from the University of Cape Town (UCT) Liberty Institute. “The South African psyche tends to have a built-in ruggedness wired for resilience, with many people believing that ‘this too shall pass.’”
Shifting attitudes: What does it mean for businesses?
Peter Metcalfe, Group Executive of Sales at Novus Holdings, said that understanding this psyche, and how this influences changing trends, can shine light on the darkness of uncertainty.
“As a business, no matter the industry you are in, there has never been a more pressing time to stay abreast of changing consumer behaviour, which is often a pre-curser for sector disruption,” explains Metcalfe, adding that Novus Holdings has seen a number of behaviour shifts impacting the printing and packaging landscape.
“Understanding these trends helps to keep a business resilient and agile. We have experienced this first-hand and moved to embrace uncertainty amidst the new normal and changing consumer tendencies.”
Trends pre-COVID-19: Is South Africans’ optimism grounded in reality?
Paul Egan, also from the UCT Liberty Institute, said that the economy pre-COVID-19 in South Africa already had multiple crisis scenarios at boiling point, such as low economic growth, problems arising from Eskom and other State-Owned Enterprises (SOEs), as well as a lack of service delivery and rising inequality.
“Studies indicate huge declines in the way consumers felt about their financial situation and satisfaction with life in general, pre-pandemic. On top of this, 40% of South Africans between the ages of 15 and 34 were Not in Employment, Education, or Training – what we typically refer to as NEET – indicating that South African youth saw no obvious end route in terms of getting a job or improving their circumstances through education,” explained Egan.
Then came COVID-19, hurtling the country into a humanitarian and economic crisis with unprecedent economic pain, stress and disrupted education. Well-known brands like Ster Kinekor, Kulula, Edgars, Musica, Cosmopolitan, Men’s Health and Greyhound either applied for business rescue or ceased their operations altogether.
“In many ways the crisis regressed any progress we had made as a country. Between 2020 and 2021 the average life expectancy dropped by 3 or 4 years, putting us back by about 15 years,” said Egan.
What has been the effect on the consumer landscape?
Using the latest data from March 2021, a year after the first lockdown, Egan says that the country moved from crisis to shock.
“About 1.5 million jobs were lost last year. The small recovery that we made since then has not put us back to where we were, with 38% of consumers earning a bit or significantly less than what they were pre-lockdown.”
The group that was impacted the most was the poor, or those earning less than R3 500 per month, as 1,15 million jobs were lost in this category, while 110 000 jobs were shed in the working-class category – or those earning between R8 000 and R22 000 per month. The middle class – those earning between R22 000 and R40 000 – have been impacted with 175 000 fewer jobs available.
So how have consumers coped with the financial stresses?
According to research from Old Mutual, 69% of consumers used loyalty points or rewards, 39% of people switched to cheaper supermarket brands, 57% went on payment holidays, 39% of people chose cheaper streaming options, while 25% of consumers moved to cheaper cellphone or data options, and 36% cut down on domestic help.
Another theme that emerged from last year was the country’s over-reliance on the grants system.
“You may be surprised to learn that the top question searched for in Google by SA consumers in 2020 was ‘How do you apply for an unemployment grant?’,” says Egan. “The government may have underestimated the reliance that was built on its social relief packages as it discontinued the COVID-19 relief grant in May this year. Barely two months later we experienced devastating riots, resulting in the government reversing its decision and promptly reinstating the grant.”
He adds that a sobering reality is that in October 2020 more than 70% of South Africa’s adults lived in households that receive government grants.
Lappeman said that one of the biggest themes to emerge one year later after the hard lockdowns was “the double penalty” of being “digitally locked out” of education and opportunity.
“The poor are paying huge penalties with increased barriers to entry, exacerbated by the digital divide brought on by the pandemic. We may say that 80 – 90% of South Africans have access to mobile phones, but it is a very different situation when you are trying to engage in work or education opportunities at home, and you don’t have an internet connection. For those that used to travel to the cities in search of work, were forced to do it online, but this was impossible for many. For most South Africans a standard amount of data is above what they can afford. In other words, the majority of South Africans have experienced a digital lock out.”
Graph: Only 10% of households are living in an environment where they have internet connection at home, which has resulted in the majority of South Africans being “data poor” or “digitally locked out” of work or learning / education opportunities.
Where to from here?
“If you are in business or management you need to be grounded in the reality of the situation – remember that your experience is more than likely not that of the majority of South Africans. Economic difficulties provide huge economic opportunities, and it can be a fertile breeding ground for innovation and creativity,” said Lappeman.
He cautioned however that while there is a lot of evidence of people trying new things and being “experimental”, it is too soon to tell what is going to last, and what won’t.
“Be careful of change porn – where every story you read suggests that change is happening fast and furiously around you. The new normal will be true for some but in most industries, change doesn’t happen as quickly as what you may think.”
Egan added this is why it is important to look at what behaviours and habits have changed, which ones are likely to stay, and which may switch back.
Metcalfe said that even amidst a changed world, there is opportunity.
“The crisis has taught us to stop, pause and think, harness the good people around us, knuckle down and do what we do best. Despite all of the challenges brought on by the pandemic, we are using it to seek out opportunity, and to ride out the wave, so that when the tide turns, our business is in a stronger and better position to capitalise on changed behaviour and habits.”