The South African consumer landscape is fragmented and polarised, characterised by the double-edged demand of the South African consumer: Some feel more prosperous, while others are among the most financially stretched in the world. Some crave new, premium and convenience products, while others seek value for their money, quality private-label goods and prefer to stick to their firm favorites.
The topic of this polarization was front-and-center during a recent Nielsen event in Johannesburg. The event highlighted the dichotomy across three core themes: purpose, value and convenience, which emerged in a recent Nielsen survey as the most important future growth and innovation drivers for clients.
There is a growing realisation among retailers and manufacturers that the consumer has to be at the center of their growth strategies, said Bryan Sun, Nielsen Africa Managing Director, as the event kicked off. Achieving this requires a crystal clear view of the consumer context: Their circumstances, needs, aspirations and outlook, and determining how you can meet this in the short, medium and long term.
Establishing a Connection Through Purpose Within this context, Esti Prinsloo, Nielsen BASES Lead for Africa, explored the concept of purpose: a brand or company's reason for being. Brand purpose is essential in developing connections with discerning and fickle consumers. Gone are the days when a well-known brand name was enough to secure a sale. Acceleration and amplification of information, excitement, experiences and exponentially more choices have opened the doors for experimentation and disloyalty.
Disloyalty is the new norm, said Esti. Hyper-competition among brands is on the rise as manufacturers and retailers race to remain relevant, aiming to offer solutions that deliver specific consumer needs amid a world of growing choice. She highlighted how purpose becomes all the more important when brand loyalty is steadily eroding. In fact, the Nielsen disloyalty survey found that a whopping 38% of South African consumers say they actively look for something new or love trying new things. Fifty-four percent are more conventional, preferring to stick with what they know but they can still be moved to experiment, while a third of South African consumers are more likely to try and swap brands.
Modern day consumers are playing the field. Retention, extension and innovation propositions must be compelling to both brand loyalists and new, experimenting consumers. Esti concluded that in current times, purpose holds the power to bind the consumer to a brand.
Unlocking Consumer Spend by Providing Value Value is also contributing to the fragmented demand landscape in South Africa. At one end, some consumers want products and services that offer value for their money; at the other end, a different group wants premium products. Speaking about this polarization, Nielsen South Africa MD for Connect Kerith Botha said it's important to remember that value is not just about price or being cheap. It's about getting bang for the buck. Consumers will pay more for a product that delivers what they are looking for, whether it's quality, uniqueness, heritage, social responsibility or fresh organic ingredients. The key for brands is understanding which value lever to pull.
Consumers who prefer premium offerings are at the other end of the value spectrum. Kerith explained that premium products provide value because of their special, enhanced or exclusive benefits-characteristics that local consumers have a definite willingness to pay for. In line with this, premium products account for almost a quarter of local spend within private label and branded products.
The pull for premium is supported by a recent Nielsen Premiumisation study, which found that 40% of South Africans said they would premiumise, or buy premium products: 45% said they are willing to pay more for personal electronic goods, 45% will pay more for clothing and shoes, and 39% will pay more for meat and seafood. In terms of what makes a product premium, 65% said high-quality materials/ingredients, 55% said exceptional function/performance, and 55% said a well-known and trusted brand.
Even though South African wallets are feeling squeezed in the face of volatile petrol prices and costly utilities, which are straining essential living costs, consumers are hungry for quality and value-and that presents a huge opportunity for manufacturers and retailers. To capitalise on this huge potential for innovation and growth, however, brands need to understand consumer sentiment and propensity to spend.
Simplifying a Hyperconnected, Hyperlife with Convenience Convenience is the third super driver of double-edged demand, and was dissected in detail during the event by Kim Reddy, Consumer Insights Lead for Nielsen South Africa. Consumers around the globe are leading increasingly hectic hyperconnected, hyper lives said Kim, and they're looking for things that make their lives simpler, especially those that help with work-life balance. Consumers therefore need products, places, spaces and processes to help them overcome everyday obstacles for effortless living and anything that saves consumers time and effort is highly sought after.
She explained that while convenience is important, convenience doesn't mean the same thing to everyone. Circumstances, culture, location, market maturity and technology are key influencers, and they're driving the need for FMCG convenience solutions to be tailored to different segments of society and geographic areas.
Against a backdrop of increased demand for ease, utility and simplicity, Kim mentioned some of the key factors to consider when future proofing businesses amid the urbanisation phenomenon. South Africans are flocking to urban areas in search of better employment prospe
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The South African consumer landscape is fragmented and polarised, characterised by the double-edged demand of the South African consumer: Some feel more prosperous, while others are among the most financially stretched in the world. Some crave new, premium and convenience products, while others seek value for their money, quality private-label goods and prefer to stick to their firm favorites. 
