When Stage 6 hits and you find yourself powerless for up to four-and-a-half hours at a time with hungry mouths to feed, what do you do?
Well, a recent report of a combined analysis by Visa and Vitality Bank has revealed that people lean towards spending more on eating out during load shedding.
Eating out and take-out spend has increased significantly as people are returning to restaurants and this had increased 60% more at load shedding levels 5 and 6.
“We witnessed a larger volume of clients transacting on take-out meals and at restaurants as the stages of load shedding increased. We also see peak volumes during stage 5 and stage 6 of load shedding, as more people are compelled to order in, or collect, their food,“ it said.
Visa and Discovery Bank worked together on the SpendTrend23 report to comprehensively analyse data from more than 350 million bank cards, $750 billion (R13.7bn) of spend and more than 20 billion transactions across four countries to identify and understand shifts in consumer spending behaviour before, during, and after the Covid-19 pandemic.
The study found that spending by South African consumers via electronic means and contactless transactions on groceries and travel was 20% higher than pre-Covid 19 levels though consumers were facing pressure from higher inflation and increasing prices.
Groceries
However, the mass market client group was feeling the economic strain, with an increased proportion of spend going to essentials like groceries.
According to the report, South Africans’ largest spend category is groceries which, as a proportion of total spend has increased for both Discovery Bank and South Africa owing to rising food prices that has outstripped general consumer price indices.
“South Africans experienced food inflation of 12% in 2022, almost double the national inflation rate. In South Africa, the increase in food costs is especially felt by the mass market. Mass market clients are spending almost 50% more on groceries than what they did in 2019,” the report said.
Total spend on groceries and basket size is directly correlated to income. However, the data shows that affluent client groups are able to better manage food inflation by substituting for lower price items, and by taking advantage of promotions or bulk savings.
Travel
Presenting the report, Lineshree Moodley, the general manager for Visa, South Africa and Hylton Kallner, the CEO of Discovery Bank said the proportion of travel spend on flight tickets had increased for the average South African by 12% for domestic travel and 2% for international travel though increased spend on travel is driven by higher flight prices.
Total spend on travel was currently higher than in 2019, driven by basket size though the combination of reduced airline capacity, aviation fuel price increases which have notched up 82%, and an appetite for what’s been dubbed “revenge travel” is driving demand and leading to consumers spending more on average per trip.
Travel spend is as a share of total spend 11% more cards spend on travel in 2022 vs 2019 (20%).
“South Africans experienced a marked increase in the price of airline tickets in 2022 due to the cost of aviation fuel, which increased by more than 80% in 2022 compared to 2021 and the reduced capacity due to airline liquidations during Covid-19, removing roughly 40% of domestic airline capacity virtually overnight,“ Kallner said.
The combination of reduced supply, fuel price increases and greater demand for travel meant that South Africans were paying 30% to 55% more for local flights than they did in 2019.
The report also noted that age was a factor, with consumers between the ages of 31 to 40 more than 70% more likely to shop online when compared to a consumer in their fifties.
Discovery Bank experienced a 13% decline in spend per active card during the pandemic, which was higher than the decline experienced by South Africa. However the recovery in spend per active card experienced by Discovery Bank was at a much faster rate than that of South Africa. Both had recovered to well above pre-pandemic levels, growing by 22%, when compared to 2019.
South Africans’ spending via credit card has bounced back, and was more than 20% higher than pre-pandemic levels.
“Based on these changes in consumer behaviour, we believe 2023 will be characterised by a further increase in online spend on key items like groceries and clothing, as delivery service infrastructure and offerings mature. While the current share of cards with online grocery spend is increasing in South Africa, it is still lower than the share of cards that purchase groceries online in many developed countries,” the report said.
An analysis of Discovery Bank clients’ online transactions indicated that on average 10% to 15% of online transactions are reversed.
BUSINESS REPORT
* An earlier version of this article was originally published on March 9, 2023.