Consumer Confidence Index falls by 20 points, lowest in 15 years
CAPE TOWN - The South African Consumer Confidence Index for the second quarter of 2020 fell by 20 points to 68, the lowest level in 15 years, due to the Covid-19 impact on the economy, according to The Conference Board Global Consumer Confidence Survey, conducted with Nielsen.
“To place the latest results in context, this is the biggest drop that we have seen in a single quarter since the inception of the survey. It also makes South Africa one of the top 10 countries globally in terms of the extent of its decline,” Nielsen South Africa Connect managing director Kelly Arnold said yesterday (wed).
He said despite South Africa emerging from restricted living and the restarting of the economy, it was now clear that the pandemi had “”an immediate and titanic impact on consumer sentiment.”
South Africans’ immediate spending intentions had unsurprisingly declined by 12 points, with only 21 percent of South Africans saying now was a good or excellent time to purchase what they needed or wanted.
South Africans’ views of their finances for the next year had also seen a significant 29 point drop to 34 percent, and only 17 percent of respondents had a favourable view of their job prospects in the coming year, a percentage that was in turn, down by 6 points compared to the previous quarter.
In terms of disposable income, 79 percent of South Africans said they had spare cash. Once they met essential living expenses, the highest number said they would spend spare cash on saving (48 percent), followed by paying off debt, credit cards or loans (37 percent) and 27 percent who said they would spend it on new clothes.
There was a marked drop of 9 points for those who would put spare cash into going on holiday compared to the previous quarter.
Eighty-seven percent of South Africans said they had changed their spending to save on household expenses, compared to this time last year.
The top action taken to achieve savings was cutting down on takeaway meals (69 percent), followed by 64 percent percent saying they were spending less on new clothes and 45 percent who are switching to cheaper grocery brands.
Looking to the future, by far the biggest concern of South Africans over the next 12 months was the economy (48 percent) followed by job security (46 percent).
Health was up a substantial 15 points from the previous quarter to 25 percent, propelling it into the Top 3 consumer concerns.
“The South African consumer is currently battling the economic fallout from Covid-19 and is feeling financially fragile, to say the least. As South Africa emerges from the lockdown; manufacturers and retailers will need to develop a deep understanding of the fundamentally altered consumer sentiment and devise new business strategies that will meet a range of their altered needs,” said Arnold.