The reduction in the frequency of shopping trips has also led to an increase in basket size with consumers adding four more items to their baskets, the study found. Picture: Motshwari Mofokeng/ANA
The reduction in the frequency of shopping trips has also led to an increase in basket size with consumers adding four more items to their baskets, the study found. Picture: Motshwari Mofokeng/ANA

Shoppers’ habits have dramatically changed amid Covid-19 - NielsenIQ study

By Philippa Larkin Time of article published Nov 19, 2021

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AS an analysis by NielsenIQ this week revealed that South African shoppers had dramatically reduced the frequency of their monthly shopping trips, from an average of five trips per month two years ago, to an average of three, Statistics SA said this week the September retail sales volumes rebounded by 2.1 percent year on year following an unexpected decline of 1.5 percent in August.

Siphamandla Mkhwanazi, FNB’s senior economist, commenting on the September retail sales, said the sales volumes showed the impact of the riots on the sector might be bigger than initially thought.

“Notwithstanding, factors such as the improved roll-out of income support grants, an improvement in consumption credit uptake (credit cards and general loans), the better-than-expected civil wage agreement and the swift recovery in non-labour income should support retail sales volumes going into the festive season,” he said.

However, Mkhwanaz said these must be weighed against elevated transportation costs, still depressed consumer sentiment, slow readjustments in the labour market and possibly a less supportive interest rate environment.NielsenIQ said 500 000 households had been forced to stretch their monthly shop to beyond a month. This latter trend emerged strongly in quarter three, pointing to the ongoing financial fall out from Covid-19 and correlated with the unprecedented increase in unemployment rates in South Africa.

NielsenIQ analysis also noted the impact of unemployment.

It said that 500 000 households had been forced to stretch their monthly shop to beyond a month, a trend that had emerged strongly in quarter three pointing to the ongoing financial fall out from Covid-19 and correlated with the unprecedented increase in unemployment rates

NielsenIQ South Africa managing director Ged Nooy said, “The reduction in the frequency of shopping trips has also led to an increase in basket size with consumers adding four more items to their baskets, which has increased from a total of eight to 12. However, what we found is that consumers have not increased the number of categories they purchase from. Rather, there has been a reduction in the number of categories landing in their basket while they are upsizing on essential items. This behaviour change has resulted in the average basket value pre Covid-19 increasing from R226 to R427.

NielsenIQ analysis also found that there had been changes in behaviour across all walks of life but at different rates due to the disparity of income across groups. Higher LSMs had seen a sharper drop off of shopping trip frequency.

“Before Covid-19, the average number of shopping occasions in this target market was seven per month but by August 2021 this had declined to four. Lower LSMs were already constrained and although their frequency of trips has also declined it is not as big a drop, as what we see in higher LSMs but is nevertheless significant,” said Nooy.

NielsenIQ analysis also found that historic well known and long-established ‘A brands’ had gained strength during Covid-19.

In light of this 75 percent of 20 brand leaders had increased or maintained share since the onset of Covid- 19.

“These brands were able to maintain supply chain and they provide trust and security for cash-constrained consumers. Consumers are cautious about expenditure and are making choices based on cash in hand and sticking with brands that deliver against their promise,” said Nooy.

This year has also seen South African consumers switching stores due to constrained movement.

“Interestingly, we see a continuation of this, where Wholesalers have over the last year gained shoppers as constrained households seek out better deals and in some cases are moving to bulk buying. However, this is not the majority, as grocery retailers still have the highest levels of household buying from this channel,” Nooy said.

Another driver of store switching was consumers seeking out promotions.

Nooy warned, “What remains critical, especially as we head into the annual Black Friday heavy promotion period, is for the industry to fully understand the efficiency of promotions to better manage substitution in light of the reduced frequency of shopping trips. It is therefore important to have a handle on the category and brand price elasticity, to allow for precise price setting that is aligned with brand equity.”

Looking ahead, Nooy said with petrol prices going up, ongoing load shedding and a potential fourth wave of the Covid-19 pandemic, it was unfortunately not a very optimistic outlook and brands and retailers would feel the pressure of a constrained consumer in the last two months of 2021 and into 2022.

BUSINESS REPORT

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