Loyalty programmes provide a lifeline to South African consumers amid rising costs

 The latest Consumer Outlook: Guide to 2026 report by NielsenIQ (NIQ) highlights a complex dynamic in South Africa's consumer landscape, revealing that while nearly two-thirds of citizens expect improvements in their household situations by 2026, this sentiment belies a growing fatigue with inflation and economic uncertainty.

Despite the optimism, actual spending behaviours indicate that South African consumers are adopting a more cautious approach to shopping.

The study, which surveyed nearly 19,000 consumers across 27 countries, indicates that 37% of respondents feel worse off compared to the previous year, a notable increase from 33% last year.

In contrast, only 38% believe they are better off, down from 42% in the last survey. Notably, factors such as escalating food prices, rising utility bills, and overall economic stagnation are contributing to a tight financial squeeze.

“While inflation has reportedly eased, many South African households are still grappling with financial constraints,” explained Zak Haeri, Managing Director of NIQ in South Africa.

“Consumers and retailers alike must navigate a market where caution prevails.”

High on the list of consumer concerns, 21% of shoppers cite increasing food prices as their primary worry, while 11% are particularly anxious about rising utility bills.

These concerns are driving many to rethink their spending in a bid to make ends meet.

Comprehensive data from the report underscores these behaviours, with significant percentages of individuals preparing to cut back on various categories including:

• Food delivery and takeaways (45%)
• Out-of-home dining (43%)
• Out-of-home entertainment (43%)
• Small domestic appliances (40%)
• Large domestic appliances (38%)
• Selected discretionary groceries such as snacks (42%) and alcoholic beverages (39%)

Against this backdrop of caution, loyalty and rewards programmes have emerged as critical strategies for managing the cost of living, utilised by 51% of South African consumers.

Shoppers are increasingly seeking ways to maximise value, with 45% reporting that they take advantage of sales by stocking up on preferred brands, and 40% choosing to switch to lower-priced alternatives.

Affordability drives brand loyalty strongly in this changing market, with 35% of consumers emphasising low pricing as their primary consideration for brand choice.

Meanwhile, the demand for health-conscious and trusted products remains significant, with healthy options and brand familiarity playing crucial roles in influencing purchase decisions.

“In today’s price-sensitive environment, brand trust has taken on greater importance,” Haeri added. “Seventy-four percent of South Africans regard brand trust as a critical factor in their purchasing decisions, highlighting the need for brands to ensure product quality and consistency.”

As many as 56% of respondents plan ahead before shopping, with 53% comparing prices and 64% committed to purchasing only items they will use, all aimed at reducing waste and unnecessary expenditure.

The Consumer Outlook serves as a strategic guide for brands seeking to connect with increasingly cautious consumers.

NIQ suggests that brands can enhance loyalty and drive larger basket sizes by emphasizing affordability, personalisation, and convenience, with loyalty programmes acting as essential tools in fostering repeat business.

“In this climate of careful spending, brands can cultivate consumer trust and loyalty not merely by competing on price but by delivering genuine value and innovation,” Haeri noted.

BUSINESS REPORT