South African consumers are expected to spend R224 billion over the festive season, marginally less than last year, as the rising cost of living continues to eat into people’s spending.
This is according to short-term lender Wonga, who conducted a survey detailing the expected spending habits of South Africans over the festive season.
Wonga expects the spending patterns seen over Black Friday to be replicated over the festive season, with South Africans spending less than last year.
The head of marketing at Wonga, James Williams, told Newzroom Afrika that they expect spending to be around 4% less than last year at R5,700 per person compared to R6,000 in 2022.
“This is a reflection of South Africans having to tighten their belts due to the rising cost of living driven by inflation,” Williams said.
A major part of festive season spending is on food and drink, with 33% of all spending going towards that category during the festive season.
Transport and travel is another huge category, taking up 18.5% of spending.
Wonga concurred with Standard Bank’s analysis that South Africans prefer to use cash to spend during the festive season rather than take on credit.
Williams said this largely mirrors the spending seen during Black Friday in 2023, where South Africans spent around R7 billion in total.
According to data from Ozow, both value and volumes were down on Black Friday 2023 compared to 2022.
Portfolio manager at 36ONE Evan Walker told 702 that Black Friday is no longer the aspirational purchase it was a few years ago.
This is, to a large extent, due to the country’s macroeconomic issues that affect consumer’s wallets.
These issues include that the country has likely reached the peak of its interest rate cycle, faces high food inflation, and has experienced intense load-shedding in 2023.
Aside from the tough economic environment, Walker said South Africa’s constrained logistics also played a role.
“We’ll see very constrained imports coming through our ports this year. So I think the retailers are sitting in this predicament where they won’t have enough stock for the Christmas season,” he said.
“So why should they go ahead and discount when stock is running low in certain categories and a month late coming through the ports, given the shambles those are in?”
“They’ve still got to make money. So I think, to a large extent, this ports issue also compounds it, and retail is not offering the extent of the discounts.“
Walker’s comments come after recent news that a maritime gridlock at South Africa’s ports has kept nearly 100 vessels waiting to dock as Transnet struggles with breakdowns and bad weather.