Global Courant 2023-05-17 21:00:09
Despite months of unrest about it the state of the economy across the continent, Africans remain willing to spend money on all kinds of goods. But this year, they’re making it clear that brands need new strategies to make their money. According to the Euro monitor Consumer trends 2023, more consumers stick to a budget, looking for cost-effective solutions that are eco-friendly by proxy, while at the same time these customers seek instant gratification. These trends are the most willing consumers to shape the continent this year.
This is an opposite reflection of consumer confidence during the Christmas shopping season and throughout the past year, especially as many African countries experienced near-record inflation. For example, in the middle of last year, last year, Ghana experienced a significant rise in inflation, reaching a rate of 31.7% in July, the highest since 2003. This resulted in an increase in prices, particularly for commodities such as food. Despite efforts to contain inflation, these contingencies will persist and affect the way consumers spend their money in 2023. These are the three main consumer trends shaping the continent this year.
Budget and stick to it
According to Euromonitor, about 75% of global consumers fall into the group that uses the budget holders. as eeconomic shocks, record high inflation and supply shortages continue to drive the economy cost of living, more people will either pay more for daily necessities, trade for cheaper alternatives, or forego items altogether. While inflation across Africa appears to have peaked last year, it is already slowing down. However, situations unique to developing and low-income countries in Africa could continue to affect livelihoods for the rest of the year. Earlier this year, Gita Gopinath, deputy executive director of the International Monetary Fund, said at the World Economic Forum said that prices will still remain high for most of 2023, because while inflation is slowing, there is no deflation. This means that commodity prices are still rising, just at a slower rate. For example, food prices have fallen, but are still about 30 percent above 2019 levels. In undefined times like these, inflation and high prices undermine purchasing power, and consumers tend to be more methodical with their money and developing different ways to stretch it.
Across Africa, consumers are flocking to informal markets, which provide easy access to products in smaller quantities at more affordable prices. In informal markets, consumers can buy a cup of rice, a single tea bag or a single cigarette. Consumers are also adopting this strategy with modern retailers. And this budgeting is not just playing with sizes or quantities. Consumers also purchase large quantities of basic items to save money in the long run. In addition to pack sizes, consumers are looking for multifunctional products to reduce the number of products purchased. And buy cheaper replacement products for those products that are deemed too expensive. The point is that saving money is top of mind, and even as inflation and the cost of living fall, budget holders will continue to save in preparation for the unknown.
Affordable solutions that are indirectly environmentally friendly
As more consumers choose affordable options, they tend to make sustainable choices. Ecoeconomics refers to consumer behavior where the choices that save money also happen to be the environmentally friendly choices. This means that consumers tend to default to sustainable when faced with challenging situations. It is common for more consumers to turn to the familiarity and affordability of traditional plant-based dishes, which are also deeply rooted in local traditions. According to data from Euromonitor survey34% of consumers were willing to buy second-hand or pre-owned items in 2022
It is crucial for brands to recognize and appreciate the importance of local traditions to consumers in the region. For example, Unilever recently launched the Knorr Mitted Shiro, a stew powder made with chickpea powder and spices in Ethiopia, which was an important way to innovate within a market while honoring and celebrating local ingredients. This meets the affordability needs of consumers who want to reduce overall costs while enjoying a meatless meal traditionally paired with injera, an Ethiopian flatbread made from teff flour.
Enjoying pleasures even with limited finances
While saving money will remain a top priority for consumers in 2023, consumers still want to treat themselves whenever they can. In an era driven by rapid digital advancements and a society that values experiences, consumers are increasingly open to moments of self-indulgence, even if it means opting for smaller-scale pleasures. They look for ways to reward themselves, improve their mood and improve their overall well-being through purchases. According to Anje du Plessis, senior analyst at Euromonitor“This is where the Here and now trend comes into play as consumers seek instant gratification. The Here and Now trend signals a shift in consumer behavior and preferences, emphasizing the importance of seizing the present moment and finding happiness in small, meaningful experiences that match their financial circumstances.
However, Du Plessis notes that consumers are still wary of overstretching their budgets, and companies need to strike a balance between consumer satisfaction and affordability. “Offering flexible payment solutions is a strategy that brands and retailers need to provide consumers with a way to purchase products without a large cash outlay. For example, brands can offer customers interest-free repayments in four installments. Another strategy is to offer luxury or aspirational products in mini or travel formats, making them more accessible to budget-conscious consumers. A good example is Mac Cosmetics, which offers ‘mini’ variants of its cosmetic products at a price that is 35% cheaper than the full-size brand.’
African consumers are still shopping like this for as long as this
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