NIQ Consumer Outlook for 2027: SA consumer economy becomes more polarised as inflation bites harder

Nearly equal levels of South Africans say they are financially worse off (41%) and financially better off (38%) than a year ago. The number of South Africans reporting that they are worse off is up from 37% a year earlier, showing that more households are taking strain.

These findings come from NIQ’s latest global Consumer Outlook 2027 survey of more than 21,000 respondents across 31 countries, combined with NIQ's measurement of real-world purchasing behaviour. The research reveals that economic uncertainty is no longer a temporary disruption, but a defining feature of how consumers make decisions.

Findings include:

• Most (79%) financially challenged consumers in South Africa blame rising living costs for their worsening financial situation.
  
• Rising prices top the list of near-term concerns for South African consumers, with 34% worried about increased food prices, 23% about steeper utility bills and 22% about higher fuel and transport prices.
  
• Worldwide, more than $23bn in value share has shifted away from mainstream-priced products toward value and premium alternatives.
  
• A basket costing $100 in 2024 now costs approximately $105, showing that global inflation remains high.

Deliberate purchase choices

The research shows that South African households are becoming more deliberate about what they purchase, where they shop and which brands they choose. But this is not a simple story of consumers trading down. Spending is shifting from the mainstream middle toward both value and premium alternatives.

“South Africa is an extreme example of a global trend: the mainstream market hollowing out while both value and premium products gain share,” says Zak Haeri, managing director at NIQ South Africa. “It is not just that lower-income consumers are seeking savings and value, while other segments are spending on premium goods. Middle and high-income consumers are also making deliberate choices about when to choose the value product and when it is worth paying more for better quality and performance.”

NIQ categorises South Africa as a polarised market, where 14.9% of sales value comes from the value segment, 52.6% from mainstream products and 32.6% from the premium segment. As in most markets around the world, growth is concentrating at the value and premium ends of the market, creating increasingly different pathways to success.

In a polarised market, shoppers are gravitating toward either meaningful savings or meaningful upgrades. More than seven in 10 South Africans agree they would rather save money if a product is not clearly better and 64% say they prefer to choose something clearly premium if they are spending more.

Among South African consumers, 26% say quality or performance are most important to determining if a purchase is worth it, compared to 39% who say affordability is most important.

Strategies for navigating affordability pressures

As affordability pressures persist and financial confidence softens, South African consumers are adapting their lifestyles, spending habits and long-term aspirations to a fundamentally different reality.

Some of the tactics they are using to improve their financial health and stretch their money further include:

• Three-quarters are likely to seek additional income streams such as side hustles to cope with the financial pressure.
  
• A quarter are likely to increase their debt level to afford their current lifestyle.
  
• More than four in 10 have stopped buying certain products to focus just on essentials.
  
• Nearly six in 10 are shopping at stores with loyalty points and using loyalty points to manage spend.
  
• Half are shopping more often at discount and value stores.
  
• Around half are monitoring the cost of their overall basket of goods.
  
• Nearly half are stocking up or buying in bulk when their preferred brand goes on sale or promotion.

“Spending by exception is becoming the new norm as South African consumers demand stronger justification for every purchase decision,” says Haeri. “The FMCG brands that thrive in 2027 will be those that have a nuanced understanding of where demand is emerging, which consumers are driving it.

“Retailers and brands will be challenged to adapt as quickly as consumers do, creating relevance as financial realities become more polarised, value expectations rise, wellbeing becomes a core component of value, and technology reshapes how shoppers discover and choose products.”

To learn more, visit niq.com/consumer-outlook-2027.