Unemployment and the economy have displaced COVID-19 as the top concerns for South African consumers as they personally experience the economic squeeze after weeks of lockdown. This is according to new Consumer Pulse research from GfK South Africa into the behaviours and sentiment of online consumers during the last weeks of the Level 4 lockdown.
Around
86 percent of respondents said they were extremely concerned about
unemployment compared to 80 percent in GfK’s survey during the Level
5 lockdown. By comparison, 66 percent said they were extremely worried
about COVID-19, down from 80 percent in Level 5, when the coronavirus
was their top concern. Some 74 percent said they were extremely
concerned about an economic crisis during Level 4.
Among
the respondents only 21 percent reported that they could continue
working as usual; 25 percent said they were working reduced hours and
7 percent said they had been retrenched. Nearly seven in ten (69%) said
that their income has decreased.
“While growing numbers of South Africans or members of their families have been exposed to COVID-19, larger numbers are directly experiencing the economic fallout of the virus and the lockdown,” says Rachel Thompson, Insights Director at GfK South Africa. “With the majority of consumers reporting decreased income and higher prices, South Africans are feeling the financial pressure.”
At
the end of Level 4 of the lockdown, 69 percent of respondents reported
that the economic situation in South Africa was worse than a year ago,
up from 51 percent in Level 5. But they were optimistic that the
economic impact would be short-term. Fifty-one percent said that they
and their families would be better off than today in a year, slightly
down from 53 percent in Level 5.
Emotions are running high among consumers
Seventy
percent of consumers reported negative feelings such as fear and
sadness during the Level 4 lockdown; 43 percent said they were bored,
and 42 percent said they were anxious. Most (60%) said that they will
maintain social distancing for a time or be very cautious in their
social behaviour, with just 16 percent saying that they “can’t wait to
get back to all the things I did before social distancing
regardless of any remaining risk”.
Says
Thompson: “Despite their eagerness to go back to the activities they
love, consumers also appear to be resigned to deep change in their
lives,
not much of it positive. Almost half (46%) told us they expect their
work situation to be worse after the crisis and 68 percent expect many
small businesses to close. Most (79%) predict that working from home
will become the norm.”
Looking
to life beyond the pandemic, consumers reported they are looking
forward to shopping (43%), dining at restaurants (47%) and socialising
outdoors (49%). Only 14 percent said that they would avoid going to
physical stores and shopping malls; however, 27 percent indicated they
would increase their usage of home delivery.
When
it comes to ecommerce, consumers said they expected companies to offer
free delivery (60%), fast delivery (64%), click-and-collect options
(56%), and telephonic support (55%). Hygiene and COVID-19 control
measures such as in-store disinfectant and social distancing were their
biggest demand of offline retailers.
Consumers are expecting more, but brands are falling short
Many
consumers reported negative retail experiences during the Level 4
lockdown, with 52 percent noting that prices for the items they usually
buy were higher than normal, 51 percent saying that goods were out of
stock, and 32 percent agreeing that they had to purchase brands they
would not usually buy. These experiences, at a time when consumers are
seeking comfort and support, could mar their perceptions
of some brands beyond the pandemic.
Around
80 percent said they had noticed examples of companies trying to take
advantage during the coronavirus crisis, and most (67%) felt it was
not right for companies to impose reasonable price rises on the products
and services that are most in demand. Eighty-seven percent said that
how companies conduct themselves during this crisis would impact whether
they do business with them in future.
“This
landscape is rife with danger for brands, along with some opportunity,”
says Thompson. “Since 44 percent of consumers said they would
definitely
reduce purchases to save money, competition for the consumer’s shrinking
rand will be fiercer than ever. Brands that abuse their market power at
this time may struggle to regain consumers’ trust as we settle into the
next normal. They will also need to engage
with consumers with great sensitivity as they begin to reactivate
marketing and advertising strategies that were paused during the higher
levels of lockdown.
“GfK
Brand studies have shown that proactive challenger brands can turn the
fact that consumers are looking to companies to show empathy and
leadership
to their advantage. Others could build long-term relationships with
consumers who are usually loyal to another brand in a time when
consumers are being forced to try alternatives to their preferred
products.”
About the GfK Consumer Pulse study
The
GfK Consumer Pulse study is conducted weekly across 30 markets
worldwide to track consumer perceptions, mood and behaviors in various
industries.
This will help brands and businesses to #MasterTheCrisis by
understanding consumer attitudes, behaviour, purchase intent, media
consumption, and more – both now and in the future. The study reveals
changes in demand for goods and services, so that companies
can respond with confidence and come out of the crisis stronger, better
positioned, and closer to consumers than before.
The
latest results reflect consumer sentiment and behaviour
during lockdown level 4 (26 May – 2 June). GfK interviewed a
representative sample of 450 online SA consumers (LSM7-10) during each
lockdown level.