South Africans still going shopping, despite economy

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Participants in 18 European countries and South Africa were surveyed to see what they intend spending on gifts, food, beverages and entertainment over the holidays. The survey also aims to understand the correlation of habitual patterns among the countries.

Spending to increase, but cost of gifts down

Despite consumer confidence levels in the South African economy being at a low (53% of participants surveyed have a pessimistic view of the current state of the economy) holiday spending is estimated to increase by an average of +4.75% year on year.

The bulk of the increased festive spend for this year will go towards socialising (+8.96%), gifts (+7.18%) and food (+3.7%), with spend on travel only expected to increase by (+1.63%) bringing the average spend increase down.

Other countries where spending is significantly set to rise include Germany (+8.62%), the Ukraine (+19.31%) and Russia (+16.33%), while countries such as Ireland (-2.67%) and Greece (-9.60%) can expect a reduction in spending as compared to 2012.

Although an increase in spend is expected it is important to note that impulse shopping is not on the cards - with consumers wary of taking on debt. South African shoppers, despite having a slightly larger gift budget compared to 2012, plan to spread their budgets carefully - hunting for bargains and steering clear of expensive price tags. The average price per gift is estimated to be significantly reduced (-23.4%) this year.

"This approach highlights a maturity among South African consumers, who want to have fun but at the same time realise that credit and festive debt is a burden they simply don't want to carry into 2014," says Ilse du Toit, retail specialist at professional services firm, Deloitte.

Value for money

Consumers will be looking for value for money; which includes cashing in on loyalty programmes and keeping an eye on promotions. The survey found that purchasing decisions by 31% of consumers will be influenced by loyalty programmes, with the majority of consumers preferring immediate discounts as opposed to delayed loyalty benefits.

The survey's findings on the influence of the internet on consumer spending habits are significant. The current trend is contrary to prior years when consumers relied on gift recommendations from friends, family or strangers, this year 55% of respondents who have access to the internet say they will be changing their habits and 'researching' their purchases online, and using brand/supplier sites.

Consumers, particularly those in age groups of 35+, indicate they will use online functionality to not only compare prices, but also look for competing products with better features.

As with previous surveys, the majority of market spend on digital-type gifts such as music, books and games will be transacted online. However, South African consumers are still 'testing the waters' with online shopping - with concerns over payment security and the exchange of personal information discouraging people from shopping online.

Physical stores still preferred

Overall, South African shoppers prefer conventional shopping methods - citing enjoyment of the 'ambience' and 'festive spirit' in stores over the festive season, as a reason. As a result, no increased percentage of online sales is expected, compared to 2012.

"Owing to several factors, local consumers still regard the physical store as a preferred means to transact - which is why South Africa trails slightly behind the other countries surveyed, with only 21% of respondents indicating they planned to make gift purchases online," adds Du Toit.

As with last year's survey findings - the bulk of the gift budget will be allocated to children (36%) - who may see up to five gifts in the stocking this year. Adults on the other hand have changed their gift expectations: most expect chocolate in their Christmas stocking, followed by practical gifts including cash, clothes/shoes and books.

Following on a worldwide trend, smartphones are increasingly being hoped for by South Africans at Christmas, despite the price tag associated with them. The smartphone has become the 6th most desired gift in Europe, and ranks as the 9th most hoped-for gift in South Africa. Hopes to have a buzz in the stocking aren't age-specific: 41% of young adults and 26% of adults, aged 25-34, have a smartphone on their wish-list. This trend dips in the age group above 35 - with most mature consumers preferring books, cash, gift vouchers and CDs as gifts.

"South Africa has had a turbulent 2013, but on a positive note, the ratio of consumers who believe the economic environment will be positive next year has increased. Retailers who acknowledge the evolving needs and demands of their customers will be the ones who have a prosperous new year," says Rodger George, consumer business industry leader at Deloitte.