The South African economy in 2024 is facing high inflation and rising costs of living, leaving consumers with tighter budgets. However, the resilience of the retail sector has been noteworthy, as certain categories—especially those focused on essentials—have continued to grow. Retailers have had to adapt quickly to the shifting behaviour of consumers, many of whom are now prioritising basic goods over luxury items.
Shift Toward Essential Goods
As inflation rises, consumers have become more selective, focusing on essential goods like food and clothing. According to SA Stats report, a 2.5% growth in food and clothing sales in the first quarter of 2024 reflects this trend. Consumers, particularly middle- and lower-income households, are cutting back on non-essential purchases and prioritising necessities. Grocery retailers are seeing higher demand for staple items such as bread, milk, and basic cleaning products, while budget clothing stores are thriving as shoppers look for affordable apparel options.
Budget-Conscious Consumers: The Rise of Discounts and Store Brands
Another notable shift in consumer behaviour is the growing preference for store brands and discounted products. Private-label goods, which typically offer better value for money, are becoming increasingly popular among South African consumers. Supermarkets that provide a range of affordable private-label products have seen increased foot traffic, as shoppers look for ways to stretch their budgets.
Impact on Luxury and Discretionary Spending
While essential goods have proven resilient, sales of discretionary items such as electronics and furniture have taken a hit. Household goods, including furniture and electronics, saw a 4% decline in sales, reflecting the reluctance of consumers to make big-ticket purchases. With rising interest rates and increasing debt, many households are postponing the purchase of luxury goods, choosing instead to focus on paying off existing obligations.
Despite the economic challenges posed by rising inflation, South Africa’s retail sector has shown resilience. Retailers offering essential goods, private-label products, and discounts have adapted well to shifting consumer behaviours.
Source: SA Stats, BehaviourReport
