Consultancy firm, Deloitte recently published its Food Frugality Index for June 2023.
The index indicates that consumers are changing their food purchasing habits due to the higher inflation environment.
Although Stats SA reports that inflation is generally slowing down, food inflation remains one of the categories that has not yet shown significant improvement.
Deloitte Index suggests that consumers have become increasingly mindful of their grocery purchases.
This is due to stagnant wages and rising inflation, causing the value of the rand to decrease in people’s pockets.
Food prices remain the highest contributor to the inflation rate:
The evidence suggests that things are tight and customers are carefully considering their options before going into the store.
Deloitte Africa consumer lead Rodger George explains, “Interestingly enough, only 35% of people say they’ve bought what they wanted to buy and, in fact, there’s a large majority that said we left, the tills with wanting to buy something, but we never bought it because of our situation, so they’re making trade-offs and making decisions not to buy things.”
Unnecessary Purchases
Households are more mindful now when buying groceries, focusing on their exact needs and avoiding unnecessary purchases that may end up going to waste.
They are also opting for less expensive ingredients to cook at home.
George continues, “On the one hand, you might have an example where people are shifting from proteins, let’s say from beef to chicken, then with the beef they might decide to go for lower ends stew beef situation so we find that people start making trade-offs in ingredients. We find that people are making trading because of sizes, instead of buying a 12.5kg maize meal lets buy 10kg maize meal and we will just stretch it longer and make the portions work.”
Deloitte says consumers are switching to purchasing supermarket house brands instead of their preferred brands, which is affecting retailers’ strategies.
George explains, “I think retailers and manufacturers themselves are looking at taking costs out of the system, also from their own point of view wastage. How can we reduce cost to get the product onto the shelf, so that we minimise the pass-through of wastage and wastage of costs to consumers. I think the back-end operation of retail is becoming smarter and also what we have on our shelves; you don’t have to have multiple offerings of the same category.”
Deloitte anticipates that consumer sentiment is likely to remain low due to various macro-economic challenges facing the country, including power cuts, high unemployment, and low economic growth.
It is uncertain if the observed changes in food purchasing behaviors will be temporary or a more lasting shift in consumption patterns. – Reporting by Matimu Khosa
