Festive frugality in 2022 as consumers walk a fine line between splurging and saving

Based on insights from a worldwide NielsenIQ Consumer Insights study. Unpacking the Holiday Outlook, it’s clear that this time of year continues to hold high emotional value for consumers with most remaining Christmas “enthusiasts” with no plans to change the way they celebrate.

NielsenIQ MD Ged Nooy comments: “Regarding their intentions, most consumers do not want to give up their usual traditions and are determined to pamper themselves and their loved ones. But this year, the dilemma is that despite their best intentions, consumers are also struggling to make the most of their tight budgets and have adopted tactics such as shopping early and taking advantage of special offers.”

This early approach is confirmed by the fact that a quarter of all rands spent last year were on promotions during the high season shopping week ending 26 December. Significantly, this is 3% points lower than the average for the previous year, and a full half of what was seen during Black Friday week in the previous month of November 2021.

This suggests that retailers and manufacturers pulled back significantly from their Black Friday investments.

The state of the retail nation

Another useful gauge of current Christmas mood is the latest NielsenIQ State of the Retail Nation review which reflects data measured over the four weeks to the end of October 2022. It shows that the total FMCG basket now measures R567 billion (12MM TY) representing 13% annual growth.

In terms of the key consumer trends that emerged during the measurement period, the NielsenIQ analysis found that certain long-forgotten consumer behaviors have begun to re-emerge as South Africans finally emerge from the specter of Covid-19.

These include:

• Frequency turns a corner – The trend of fewer shopping trips has not yet stabilized, though the decline has slowed. In recent months, some consumers have seen a resurgence in monthly shopping trips.
• Larger curves – Shoppers have increased the number of products they buy per shopping trip as the interval between trips has become longer. In certain cases, consumers have scaled up (long-term economy), downsized, or completely exited a product category (budget).
• Feet through the door recovers in the short term – Consumers have resumed their pre-Covid behavior of shopping across retailers.
• Ease of use – The rise of convenience continues, but not only in the form of fast delivery and fast e-commerce capabilities. Locality is increasingly important with independent retail (non-branded supers, spazas, etc.) having a large footprint and decentralized offering, seeing a significant increase in key performance indicators versus modern retail channels.

In addition to these new trends, certain lockdown-induced behaviors continue to grow. For example:

• Home economics – Consumption in the home continues to show value growth increasingly driven organically versus pure price.
• Increased category performance – As home consumption consolidates its position, consumers are shopping more categories to suit their specific needs.
• Inflation Nation – The ongoing effects of inflation are clearly indicated by an increase in value per buyer in recent months that exceeds the number of units they purchase. Simply put, consumers pay more and get less for that cost.

*Data source: NielsenIQ’s Market Track, the largest retail (grocery) data source in the country and the only currency used by all of South Africa’s major retailers. This benchmark data includes more than 10,000 branded stores (e.g. supermarkets and garage forecourts) and more than 143,000 independent stores (e.g. spazas and taverns) across South Africa’s nine provinces and measures more than 80% of all grocery transactions .

**Be aware of that NielsenIQ, as an unbiased provider of data and analytics data, is subject to contractual terms that prevent it from releasing specific manufacturer and retailer data points. We also do not comment on specific dealer market share or performance, and therefore ask that all content of this nature be attributed to your referral source.