Tag: consumers

South African consumers have hit hard times over the past few years as a creeping GDP growth, high unemployment and many political shocks continued to weigh on the economy.

In June, GDP data from Stats SA showed that South Africa has officially entered into a recession, with economists predicting tough times ahead for consumers, as more ratings downgrades are in the pipeline, which will ultimately put further pressure on the pocket.

One of the key components of South Africa’s slide into recession was a cut in consumer spending, in everything from recreation, clothing and transport, to even basic needs categories like food.

And South Africa’s biggest food retailers are feeling the pinch.

In April, Pick n Pay missed expectations for its full year earnings citing strained consumer spending as shoppers sought out cheaper options – which appeared to drive them to Shoprite’s doors, who reported a 14% growth in turnover in its latest financial year.

Woolworths, which has consistently positioned itself as a ‘premium’ food store, has seemed to weather the storm, with its latest results for FY2016 showing a 24% growth in profit from its food segment – which makes up 37% of the group’s total turnover.

A weakening economy and drought conditions hit South African food prices hard in 2016, with food inflation hitting close to 12% throughout the year. With a record yield from crops expected in 2017, some relief is on the cards – but the recession and other expected economic woes are likely to keep the pressure on consumers.

In the latest assessment of prices across South African retailers, we found that there has not been much a shift among South Africa’s food retailers.

When shopping for the BusinessTech basket of goods, Woolworths still checks out at the highest price – though it is apparent that, with the exception of Shoprite, competitors have struggled to keep prices low.

The BusinessTech Basket of Goods

For our basket, we look at some essential and non-essential food products. The basket contains 12 items, with store-brands priced for each item where available. The table below shows the pricing:


Prices were sourced in-store from stores around Centurion and cross-checked online, where applicable.Promotional prices, where marked, were not taken into account. Woolworths self-raising flour prices were determined on a per kg basis. In-store prices are subject to change depending on individual regions and promotions.

Prices have increased significantly in some cases, compared to the mid-2015 review. This is most notable in sugar and maize, which were impacted by drought conditions in the country during the interim period.

The most striking difference between the 2015 and 2017 reviews is that Pick n Pay, which was ranked as the cheapest basket in 2015, is now extremely close to being the second-most expensive, a few rands under Spar.

Checkers, which has positioned itself as the more affordable option, has lived up to that reputation, with many of its prices actually decreasing between 2015 and 2017.

Source: www.supermarket.co.za

As brick-and-mortar retailers seek to turn their physical stores into an asset instead of a liability to compete against online retailers, they will need to make sure they are heeding the demands of today’s increasingly mobile phone dependent consumers.

For one, while studies have showed in-store shopping remains important to a majority of shoppers, an International Council of Shopping Centers survey released on Monday showed that more than three-fifths of consumers expect that by 2020 they will actually prefer to be left alone to do their own thing while in stores instead of engaging with a sales person. The only caveat: stores have to provide easy access to products and sizes available there.

ICSC didn’t respond to a request for more details on any historical and other findings of the survey.

The survey of more than 1,000 people in February conducted by Opinion Research Corp. for ICSC also found more than half of the consumers said they prefer to virtually see how home furnishings and accessories fit in a home before they make a purchase. Separately, more than half said they want to compile a shopping list on a store app and receive a floor map to locate products.

The survey also showed how much consumers have come to rely on click-and-collect services, and how mobile is a key part of the experience: Nearly three-quarters of shoppers said they’ve made a purchase using their mobile device and picked up the product in store. Not surprisingly, millennials were even more likely than the average, with 87% of them saying they had made mobile purchase to pick up in store.

More retailers are trying to turn that to a traffic-driving weapon.

“We introduced buy online and pick up in store and buy online and ship to store” without any shipping fee, Crate & Barrel COO Michael Relich said in an interview earlier this year. “We are trying to use that to drive store traffic. When they come in, we give them bounce-back coupons. They use our stores as a showroom first. We actually see a lot of transactions start in one channel and finish in another. Brick and mortar is good for us.”

While retailers such as Crate & Barrel are capitalizing on the shifting consumer behavior, a late 2016 survey by PricewaterhouseCoopers (PwC) for JDA, a supply chain software provider, showed that most retailers are still behind when it comes to designing a digital strategy that would give them a leg up in winning consumers’ wallet share.

Against the backdrop that some retailers are debating the economics of whether to use their mobile sites or roll out their own apps to target shoppers, the ICSC survey suggested there’s demand for retail apps: 71% of consumers said they have one or more retailer apps on their phones and 74% of them access them at least once a week. Some 86% of millennials accessed a retailer’s app weekly, outpacing 74% of Generation X and 61% of Baby Boomers.

In another sign there’s room for growth for voice-activated personal assistants like Apple’s Siri or Amazon’s Alexa, 37% of consumers said they’ve used a digital assistant to build shopping lists or to place orders for in-store pickups. The survey also offered an encouraging sign for mobile payment: 35% of survey respondents said they’ve used that feature.

With personalization a key buzzword for retailers seeking to stand out and offer a product or service only available in their stores, the survey indicated it’s time for them to take a closer look at prices: more than two-fifths of consumers said they are open to the idea of retailers “personalizing” prices based on their shopping patterns and demographics.

By Andria Cheng for www.etail.emarketer.com

Demand for ‘green’ stationery grows

With growing concerns about the environment, office supplies are no exception to the consumer drive for products that promise wellness and sustainability.

More than half of small office and home office consumers buy environmentally friendly office supply products, according to Understanding the Small and Home Office Consumer, the latest report from global information company The NPD Group. That number increases to 76% among those purchasing for an office of 31-50 employees, who have a larger carbon footprint.

“Consumers today are becoming increasingly cognisant of the products they use and food they put into their bodies. With office products also part of everyday life, they are just as important,” said Leen Nsouli, director, office supplies industry analyst, The NPD Group. “The emphasis consumers and marketers are placing on green products presents a big opportunity for revenue and innovation within the office supplies industry.”

Paper products such as notebooks and janitorial supplies are the most popular green supplies purchased, driven by printer/copier paper, paper towels, and cleaning supplies.

Overall, purchasers are pleased with the choice of green products, with nearly 80 percent indicating they are very to extremely satisfied. In particular, green product users like the fact that they are using non-toxic products, and are doing their part to help the environment. At the same time, some feel they lack the quality of non eco-friendly products, and can be expensive.

“Environmentally friendly products are popular among office supplies purchasers; however, there is room for improvement and further development,” said Nsouli. “Manufacturers should take consumer dislikes into consideration, to further capitalize on this trend and get ahead of the competition.”

Source: The NPD Group, Inc. / Understanding the Small and Home Office Consumer 2016

Methodology

An online survey was conducted in July 2016 among a U.S. representative sample of males and females age 18 and older. Qualified respondents indicated they work in a home office or for a small business of 50 employees or less, and have responsibility for purchasing office supplies for themselves or their office location.

SA consumers under the cosh

From today, consumers will pay more for fuel and should brace themselves for further increases including meat prices by the end of the year, say experts.

The price of petrol will increase by 44 cents a litre and diesel by 22 cents.

Gwarega Mangozhe, chief executive at the Consumer Goods Council of SA, says the higher price of fuel, which is directly linked to the weakening of the rand against the dollar, will inevitably impact on disposable household incomes which are already under pressure from other cost increases.

“Consumer spending is subdued and some of our members have noticed a change in shopping habits as consumers search for bargains, while some are prioritising their overall spend on groceries in light of tighter disposable incomes.

“While we remain confident that many of our members will experience a fairly busy festive trading season, the overall outlook remains uncertain given the predicted low economic growth during 2016.”

Momentum economist Sanisha Packirisamy, says the 43c/l under recovery in the price of petrol last month was largely a function of a 1.7 percent depreciation in the rand against the dollar between August and September and a 0.4 percent uptick in average monthly international oil prices over the same period.

Packirisamy says the Organisation of the Petroleum Exporting Countries (Opec) caused a 7 percent rise in international oil prices late in the month owing to a largely unexpected agreement by Opec to cut production levels.

“If oil prices persist at these levels there could be a further increase in petrol prices next month, should the rand stay at similar levels as well.”

She added the rand was also under pressure from heightened fears around a sovereign rating downgrade by Standard and Poor’s rating agency in December on the back of weak growth fundamentals and persistent policy incoherence.

“In our view, the expected rise in petrol prices still leaves the year-on-year inflation rate in private transport costs in the Stats SA consumer basket at reasonably low levels.”

Standard Bank economist Kim Silberman says the outlook for the remainder of the year was for the petrol price to continue to rise, which will add pressure to consumers’ disposable income.

Silberman says consumers spent on average 5.7 percent of their income directly on petrol, which added pressure to consumers’ disposable income.

“However, the effects of the fuel price are far broader than that and will most likely feed through to the price of public transport and the general cost of producing goods and services.

“We expect meat price inflation to accelerate in December.”

Neil Roets, chief executive of debt management firm Debt Rescue, says he expected further increases in the price of fuel towards the end of the year.

“The ongoing political bickering within the ANC and an extremely sluggish economy is likely to impact on the rand and it looks as if the price of crude oil may also be on the rise.”

Roets says one of the major effects of the fuel price increase on the economy would be the continued rise in the price of food.

“The announcement by the Red Meat Producers Association that the red meat price could increase by as much as R8 per/kg in the short term and that it could take between three to five years to restore herds following the severe drought, is bad news for consumers who are dependent on meat for their daily survival.”

Roets says the real elephant in the room was the expected downgrade by the ratings agencies later in the year.

“Despite all the efforts by the government to persuade the agencies that the economy was on the mend, they are not buying into the narrative and the reasons are clear: widespread corruption and parastatals like Eskom and SAA that are burning through taxpayers’ money at an alarming rate.”

Damon Sivitilli, head of marketing at city debt management firm DebtBusters, says the price of fuel increasing put more pressure on the already strained budgets of many consumers.

He says not only would the fuel hike and the resulting increasing cost of commodities choke consumers, it would also have a huge impact on small businesses across the country.

Sivitilli advised consumers to start reviewing their budgets by looking at their needs and adjusting their spending on luxuries in order to survive the economic and political turmoil.

“The repo rate went unchanged last month due to stable inflation rates, but the upcoming increase in petrol costs may put pressure on this once again and continue the trend of rising inflation and costs into the new year.”

The science of retail shopping

According to studies by leading consumer manufacturing companies, the majority of people look and then turn to the left when they enter a store. This is a very good example of how, despite an increasingly sophisticated and tech-savvy society, people remain habitual creatures.

It also presents a conundrum of sorts to retailers and the way they design their shops – how do you stay ahead of your competitors without alienating customers and their ingrained habits?

Getting the tried and tested basics right will create a solid foundation and leave room for innovation; solidifying and enticing your shoppers.

First impressions

The adage “first impressions last”, remains true when it comes to shopping. Also known as the decompression zone, your shop’s threshold area is the space where your customers transition from the outside into what you have to offer.

It is the area where quick and critical decisions are made like how well put-together or haphazard your shop is and what the overall design aesthetic is trying to communicate. Customers will in all likelihood miss products and other signage as they take in the overall shop experience.

To the left it is

As we’ve already established, shoppers will then start walking to the left. The first wall or space they enter will have to be very impactful. It will provide the perfect platform to display your most important products, whether it’s big ticket items or sales products that you have to move quickly.

The bottom line is to make use of people’s left handed autopilot setting to create an experience with a bang.

Pave the yellow brick road

The trick is to keep your shoppers going, exposing them to the entire shop and its products. A well thought-out path is an effective way to strategically control the traffic in your store while avoiding potential congestion.

Stores often have a circular path to the left to get customers to walk through to the back of the store and come to the front again. These paths are often a different colour or texture with the promise of great products along the route.

However, make sure that you don’t rush your customers. With all the effort and time put into merchandising products, the last thing you need is customer hurrying along merrily without even giving it a second glance.

Create natural breaks on your road through special signage, seasonal displays or even a live promotion for the day. Special display fixtures – featuring products near the end of or in between aisles – also encourage impulse buys particularly if they complement other products in close proximity.

If your store doesn’t have specific aisles you can also, on your shopping path, group products together that are a natural fit. Also, remember to keep high-demand or products or promotion at eye level.

Lastly, ensure that you are constantly rotating or “re-designing’’ these displays without taking away the familiarity of the store layout.

The end of the line

Till or checkout counter placement can leave you with quite a headache. A good rule of thumb is to place it at the end of your path or shopping experience. In big stores individual checkout counters per department are also very convenient.

If possible, design a big enough counter for shoppers to place their products and personal belongings. Also, take advantage of the wall behind the counter to create interesting and engaging displays as well important exchange and return policy notifications.

With all the above boxes ticket, it’s important that you continue to evolve your store as new shopper needs arise. Furthermore, ensure that you observe customers and what they are drawn to, avoid, how they move and continue to tweak your design.

By Robbie Johnson, retail manager at Drive Control Corporation (DCC)

Amendments to the National Credit Act making it illegal to collect prescribed debt has contributed to the big drop in civil summonses and judgments for debt, James O’Haughey, CFO of Intelligent Debt Management Group, told Fin24 in a studio interview.

“The National Credit Regulator has been quite active in the industry,” he says.

The latest figures from Stats SA showed that the total number of civil summonses issued for debt decreased by 13.4% in the first quarter of 2016 compared with the first quarter of 2015.

The largest contributions to the 13,4% drop were civil summonses relating to money lent (contributing -7.6 percentage points); ‘other’ debts (contributing -3.1 percentage points); and services (contributing -1.3 percentage points).

The total number of civil judgments recorded for debt fell by 11.2% and the total value of the judgments slipped by 5,8%.

O’Haughey expect these figures to continue to fall as the selling and the collection of prescribed debts resulting from credit agreements are prohibited by The National Credit Act.

What exactly is prescribed debt? According to the Prescription Act 68 of 1969, section 10 (1), debt is prescribed if:
* You have not acknowledged the debt in the past three consecutive years, either in writing or verbally;
* You have not made any payment towards the outstanding amount, nor have you promised to pay; and
* The creditor has not summonsed you for this debt within three consecutive years.
A home loan (bond), municipal accounts, monies owed to SARS and your TV licence cannot become prescribed debt.
The amendment last year brought relief to thousands of indebted consumers.

“It is now illegal to collect prescribed debt and that has had quite a big impact in terms of credit providers to collect through the courts.

“There has also been a lot more education in terms of consumers, which has led to credit providers not needing to collect through judgments,” says O’Haughey.
Although there has been a significant decline in civil summonses and judgments, he added that credit providers are using debt counselling as a method of debt collection.

“It is a very good process because we as debt counsellors look at all the debt of a consumer; and their financial situation so it is a very effective tool.”

Source: www.fin24.com

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