At Euromonitor International’s Eyes on Africa event in Johannesburg March 2023, our industry experts highlighted the most relevant consumer trends impacting the African consumer and what opportunities they may present for companies. These trends were derived from Euromonitor’s popular Top 10 Global Consumer Trends report, which we produce annually. This blog will focus on the three trends that are most poised to shape the continent and how companies may leverage these trends to drive sales further.
Budgeteers: Rising inflation sees consumer price-sensitivity
As consumers face higher prices amid rising inflation and increasing costs, a new consumer group, Budgeteers, is having a greater impact on the continent. With even tighter budgets, consumers are more careful on how they spend their money, developing diverse ways in which to stretch it. One popular way is to shop at informal markets, which are widespread on the continent and offer smaller quantities of a product at lower price points, for example, a cup of rice, a single tea bag, or a single cigarette. Even at modern retailers, consumers are using a similar strategy, for example, buying smaller pack sizes of discretionary items at an affordable price. But this interest in size can go the other direction as bulk buying of staple items becomes more popular, with shoppers seeking ways to save money over the long run. In addition to pack sizes, consumers are looking for multifunctional products to cut down on the number of products purchased. They also are buying less-expensive ‘substitute’ products for those products that are now deemed too expensive.
Retailers, too, are facing significant financial strain because of increased competition, changing consumer behaviour and inflationary pressures that are making consumers pickier on where they shop. One approach to appeal to cash-strapped consumers is to use loyalty programs. While loyalty programs are well-developed in South Africa, with Pick ‘n Pay’s Smart Shopper, Shoprite’s Checkers X-tra Savings and Clicks’ Club Card, more loyalty programs are emerging in Kenya and Nigeria, for example, My Club from Carrefour in Kenya and Spar’s Market Loyalty in Nigeria.
Retailers and brands need to find ways to address affordability, and pack size and promotions are a good way to start … particularly when Budgeteers are a driving consumer group.
Eco Economic: Cost-effective solutions environmentally friendly by proxy
Eco Economic describes consumer behaviour where the most cost-effective options wind up being the most environmentally friendly. In Africa, more than 20% of the population live below the international poverty line of less than USD3.10 per day.
As such, cost-effective choices tend to be sustainable by default. During times of hardship, consumers tend to gravitate to the familiarity and comfort of traditional dishes, which are often plant-based. These dishes are also more affordable, since ingredients are seasonal, local, and readily available.
Equally, as consumers in the region also have a deep appreciation of their local traditions, brands should be mindful of this by paying more attention to traditional ingredients. For example, a recent launch from Unilever shows how multinationals can innovate within a market while also honouring and celebrating local ingredients. Knorr Mitted Shiro, a stew powder made of chickpea powder and spices, was launched in Ethiopia in April 2023. Shiro stew, a meatless stew, typically consumed with injera (Ethiopian flatbread made with teff flour), makes an affordable meal and is ideal for consumers trying to cut down on overall costs.
Here and Now: Living a little, despite a constrained budget
While saving money remains a top priority for consumers, consumers still want to treat themselves whenever they can, particularly after a prolonged pandemic that limited spending. And this is where the Here and Now trend comes into play, as consumers seek instant gratification. However, as consumers are still wary about overstraining their budgets, companies need to balance consumer gratification with affordability. Offering flexible payment solutions is one strategy and brands, along with retailers, should offer consumers a way to purchase products without a big cash outlay. For example, Payflex, available in South Africa, offer shoppers interest-free repayments over four instalments. Another strategy is to offer mini- or travel sizes of luxury or aspirational products, thus making it more accessible to budget-conscious consumers. Mini Mac, offered by Mac Cosmetics, includes ‘mini’ variants of its cosmetic products at a price 35% cheaper than the full-size brand.
Payment flexibility and building brand loyalty can offer opportunities
Even with the financial challenges the region faces, opportunities still exist so long as companies remain attuned to the budgetary constraints of the African consumer. Consumers still need to account for their basic needs, but they also like to splurge whenever they can. As such, companies will need to think of creative ways to draw consumers in. By offering affordable pack sizes, for example, businesses can make their products more accessible and affordable to cash-strapped consumers. Equally, retailers should continue to invest in loyalty programs that offer cash backs and other loyalty benefits to incentivise consumers and encourage brand loyalty. By finding ways to balance the current economic climate with flexibility, opportunities still abound on the continent.
Download our 2023 report to learn more about the biggest consumer trends this year.