Although it is now well known that Covid-19 has subdued global economies and put strain on consumers’ willingness to splurge on non-essential items, professional services firm Deloitte shines a light on how consumer behaviour is being shaped currently and how they plan to spend money going into the future.
Deloitte conducted a series of surveys since the onset of Covid-19 from the start of 2020.
Most shockingly, Deloitte’s surveys show that 41% of South African consumers are spending more every month than they are earning, up from 38% from six months ago.
As much as 29% are spending their entire salary every month, equating to about 70% of South Africans depleting their salaries every month, which is “quite worrying”, says Deloitte consulting consumer industry leader Roger George.
Globally, only 20% of people are spending above their income levels, he points out.
These factors are resulting in 55% of survey respondents reporting their intent to delay spending on “big ticket” items, such as electronics, vehicles and property.
This is clearly a sign that reining in unnecessary spending is ever-present in the mind of the consumer given the anxiety levels being seen, says George.
What is “equally worrying”, he adds, is that 45% of survey respondents are “really worried” about being able to meet upcoming payment obligations, such as rent/mortgage and vehicle repayments. “This has been steadily increasing as Covid-19 has been unfolding and is likely to continue until people feel less anxious and until we start seeing a reversal of the pandemic.”
As far as age and financial anxiety owing to the current climate is concerned, Deloitte’s data points to 52% of people in the 35 to 54 year old age group being most concerned about their upcoming payments, followed by those aged between 18 to 34 years with 43% reporting financial obligation anxiety. Both age groups represent people just starting out in their careers and investing in their futures, says George.
While vaccinations in South Africa are proceeding at a slow pace, over 33% of South African adults surveyed by Deloitte say they would like to be fully vaccinated in the next six months.
As at March 23, statistics on South African vaccinations reveal that only 182 983 people have been vaccinated, which compares against more than 456-million having been inoculated globally.
This translates into nearly 80% of survey respondents expressing concerns over their personal and family’s health.
Further, Deloitte highlights that the largest percentage (24%) of respondents are unsure about when they will receive their vaccinations – likely a result of government’s slow pace of rollout and a lack of information about when the general population will be able to queue for their shot.
A worrying 19% do not want a vaccine, while 16% predict they will be able to get their vaccine within the next nine months.
Fourteen per cent expect to be vaccinated within the next three months.
The problem with this situation is that the statistics should be the reverse of what Deloitte’s data is showing, he states, implying that people willing to take the shot should have confidence in getting their vaccine in the very near future. “This will mean people can see the end of the pandemic, people starting to be less anxious, and this is what is happening in other countries.”
People were also asked about how their spending and living behaviour will change once the pandemic starts to subside, with new trends emerging. The survey shows that although consumers' expectations will likely evolve as will their understanding of the future, currently, consumers indicate that they are likely to continue “cocooning” activities and avoid exposure to strangers.
Respondents expressed interest in doing more activates that revolve around what Deloitte calls the “at-home economy”, including more cooking at home, as opposed to eating out or getting takeaways; buying fresh produce; and streaming entertainment on mobile devices and televisions. Increasingly, people also show more interest in doing online shopping, as opposed to in-shop shopping; working from home; and doing home improvement projects.
In terms of the things people plan to do less of, respondents swayed towards engaging less in in-person services, going to gyms, eating at restaurants, using public transportation, attending in-person events, using ride hailing services, staying at hotels and taking flights.
Meanwhile, although cash-strapped consumers have maintained or increased spending on non-discretionary purchases, discretionary spending has started recovering from lockdown restrictions, but still remains limited, reports Deloitte.
In this regard, the firm’s latest survey shows that 29% of consumers plan to spend less on clothing and footwear in the next month, followed by 34% of consumers planning to spend less on electronics.
Forty-six per cent want to spend less on home furnishings, while 49% plan to cut spending on restaurants and takeout.
However, showing signs of growth, consumers plan to spend more on groceries with 28% showing interest, 16% being willing to spend money on household goods and 17% being willing to spend on medicine.