Consumers seek less costs to survive
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FINANCIAL hardships wrought by the Covid 19 pandemic have forced South Africans to downscale their lifestyles by switching to cheaper supermarket brands and less pricey cellphone and data options, replacing gym subscriptions with home training, moving in with family members, diligently seeking loyalty programmes and holding more than one job.
According to the Old Mutual Savings and Investment Monitor (OMSIM) released yesterday, amid declining of confidence in the economy, which was at its lowest in decades, millions of South Africans were feeling heightened financial pressure from the impact of the pandemic and the unrest and looting a few weeks ago.
Old Mutual’s head of research, Lynette Nicholson, said: “There is no doubt that consumers are having to take a much closer look at the way they manage their money, and many are having to adapt their lifestyles to survive.”
To build on its 2021 OMSIM findings, Old Mutual conducted an additional “rapid results” survey last month to assess whether the recent unrest had further eroded people’s sense of well-being.
The July findings were that people’s confidence in the economy dropped a further 3 percent from 34 percent to 31 percent, the lowest in decades.
The percentage of respondents who made emergency funds a priority also went up from 37 percent to 40 percent over the short period of time.
OMSIM said it was noteworthy in the July report 23 percent of the working metropolitan population had become more concerned about having sufficient insurance in place.
“The Covid pandemic seems to have jolted many of us into facing up to financial realities that we may have been in denial about in the past. For an example, 87 percent of South Africa’s working metropolitan householders claim that the pandemic has changed the way they think about or manage their finances,” Nicholson said.
The research found that although job and income security remains the top financial priority for 65 percent of the people surveyed, they were also prioritising the way they spend their money.
About 62 percent of households were cutting expenses in any way they could, while 50 percent, up 10 percent from last year, were prioritising paying off debt, and 37 percent were ensuring they have enough emergency funds in place.
The research found that 39 percent of respondents have switched to cheaper supermarket brands, 25 percent have downgraded cellphone and data options, 31 percent have replaced gym memberships with home training, 18 percent have moved in with family, while 69 percent were taking advantage of rewards and loyalty programmes that offer the opportunity of paying less for food, fuel and other household expenses.
“By taking advantage of our new normal online lifestyles, many of us now have the opportunity to learn more, upskill ourselves, find ways to develop our talents and make money from those skills,” Nicholson said. This, she said, was a reference to “polyjobbers”, a term coined to describe people who were holding down more than one job.
The research also found that the pain and difficulties of the past 18 months have led to some behaviourial shifts that could have negative long-term consequences.
Nicholson said about 43 percent of respondents have taken out a personal loan, 25 percent have cut down or cancelled their home or car insurance, while 20 percent have cut down or cancelled their medical scheme cover or moved to cheaper options.
BUSINESS REPORT ONLINE