Stocktake: Post-Covid consumer behaviour
While consumer spending is under pressure, retail investments paint a more positive picture in Southern Africa.
Some interesting research from brand agency HaveYouHeard on how consumer ideology during the pandemic tends to follow that of their tribe; Crazy Store is already planning its 500th store in the future; and there is a new plastics player in Southern Africa, Arkay Plastics.
The post-Covid consumer follows its tribe
What does the post-COVID-19 consumer look like? This is the question brand communications agency, HaveYouHeard asked in its final lockdown study. While acknowledging that different cultures across the globe would respond differently to the same pandemic, HaveYouHeard set out to contextualise the South African consumers’ response; and how that impacted their lives in terms of their feelings, finances, shopping behaviour, and entertainment and socialising. The post-pandemic South African consumer is not expected to be that much different pre-pandemic; but will face significant challenges on the financial and mental health fronts. HaveYouHeard head of insights, Claudia Schonitz, explains: “Many, many South Africans have emerged from the pandemic with considerably less spending power. Not only will this put pressure on brands and businesses to fight for less, they will need to work harder to convince consumers to support them. At the same time, in a country that already boasts the highest levels of anxiety in the world, financial insecurity will acutely negatively affect its citizens’ emotional wellbeing.
“Some will look to fight (in different ways such as activism, proactive positive action etc.); others will flee or look for escapism (emigrate or binge watch series); some will freeze (do nothing except experience increased levels of internal stress); while others will look to flock or herd (socialise, connect, laugh – or fight) in tribal groups.” She says brands will need to be cognisant of the evolving emotional state of their consumers across the different brand touchpoints, occasions and at the point of purchase. Schonitz pointed out that the most noticeable behavioural shifts have been in three ‘domains’: social, home and e-commerce. “Over the next 12 months, connecting socially will be central to much of our activity and behaviour. Further, while many key purchase decisions were previously made based on status, badging and image, this has been stripped back for now. We anticipate these drivers will once again kick in as we start socialising more.
Being at home has become a new comfort zone, unleashing new habits, rituals and comfort-providing activities. We have become better at not doing much (while also doing more in the home) and enjoying it. She predicts this is a behaviour that will persist for much longer. “Finally, purchase behaviour has been forced online, but not in the whole and not with a sense of everlasting adoption. While we are all aware that ecommerce is going to become a staple of many brand teams’ focuses, what the research has highlighted is that this loyalty is currently low: 81% of respondents shopping for groceries online stated that safety from COVID-19 is the biggest benefit to online grocery shopping, but only 27% claimed they were likely to continue once COVID-19 is no longer a threat,” adds Schonitz. She also cautioned that perhaps the biggest change to behaviour has yet to manifest itself – ideological in-grouping: “The pandemic has affected us in one of two ways when it comes to germs and viruses: we either believe in the science and listen to what the experts say, or we believe in the conspiracy theories flouted across social media. Ideological in-grouping isn’t about what is right, rather who is right. So, badging, beliefs and behaviour are now set via association, or who you want to be seen with. And this relates to brands in the following way. There’s been for some time a growing expectation for these entities – brands, businesses, people – to make positive impacts on society and play responsible roles. These issues provide direction for what consumers care about, and what brands should prioritise when wanting to be seen as a positive and influential contributor to their community, tribe or country.”
The Crazy Store opens its 400th store
The Crazy Store opened its 400th store in September at the North Cape Mall in Kimberley. Kevin Lennett, managing director of The Crazy Store, attributes their success to their quest to continuously grow and improve their product offering and the importance placed on understanding their customers. “Opening our 400th store in 2020 is a massive achievement for our business and comes down to hard work and spending time engaging with our customers when they are in our stores. We have set out to fill our shelves based on customer feedback, requests and of course, their shopping patterns.” Recent years have seen the retailer opening an average of 25 stores per year, with a high of 43 stores opening in one year. The opening of the 400th store does not mean that The Crazy Store did not face challenges during 2020. Due to COVID-19, none of the stores were able to trade during level 5 of the lockdown, and level 4 only saw 35% of the extensive product offering being made available to the public. With over 5000 product lines, 2000 staff, 18 different product categories and 80,000m2 of combined floor space, the 20-year-old retailer has now set its sights on the future and reaching the 500th store mark.
Arkay Plastics gets investment for growth
International private equity firm Spear Capital has announced its investment in Arkay Plastics Zambia and Arkay Mozambique, collectively known as Arkay Plastics. The deal will equip the manufacturer with the means of becoming a leading player with market dominance in the manufacturing sector. Arkay Plastics is regarded as the leading brand name for plastic houseware, furniture, industrial products and packaging in Zambia and Mozambique, with distinct segments in retail, exports, packaging, and crates. The manufacturer also carries approved supplier status with international organisations such as Carlsberg, Castel, Coca-Cola, Heineken, Plascon and AB InBev. Spear’s drive to increase Arkay Plastics’ production capacity will enable the company to fulfil larger orders while growing the higher-margin crate business. In addition, Arkay will prioritise the company’s sustainable manufacturing growth through environmental impact and waste reduction.
This latest transaction by Spear Capital demonstrates growing confidence in developing FMCG companies in southern Africa, despite the persistence of the COVID-19-related global economic downturn. Spear Capital predominantly focuses on food and beverage, retail and wholesale and pharmaceutical sectors in sub-Saharan Africa, providing between US$2-10 million in growth capital to consumer-based businesses which meet its mission and investment strategy.
This week in numbers:
As if we needed any more proof that COVID-19 has fuelled an ecommerce boom in South Africa, newly released data from FNB shows that average eCommerce spend recorded on FNB merchant devices during the first half of 2020 grew 30%, year on year, compared to 2019. Further evidence of this boom is in the growth stats of local e-tailer, OneDayOnly.co.za, which have already exceeded 100% within the 2020 year. Even as restrictions for physical retailers eased further with the country’s move to Level 1, local e-tailers believe that continued growth in the eCommerce sector remains inevitable. With this growth, however, Matthew Leighton, spokesperson from OneDayOnly.co.za, believes that delivery logistics will come under pressure, raising a need to differentiate between different ecommerce models.
QUOTE of the week:
“The rise of the data-driven marketer has propelled the marketing function beyond the role of branding and into a customer experience and growth-driving champion. Marketers have to solve the customer data conundrum,” said Sally Ann Lopez, senior director of marketing, program management and operations at the global CMO Council, in RetailingAfrica.com.
*Stocktake is a weekly roundup of current FMCG retailing and brand news, curated and edited by Retailing Africa Publisher & Editor, Louise Burgers. Keep the industry updated and send your announcements and news to: firstname.lastname@example.org.
Louise Burgers (previously Marsland) is the Publisher and Editor and Co-Founder of RetailingAfrica.com. She has spent over 20 years writing about the FMCG retailing, marketing, media and advertising industry in South Africa and on the African continent. She has specialised in local and Africa consumer trends and is a passionate Afro-optimist who believes it is Africa’s time to rise again and that the Africa Continental Free Trade Agreement (AfCFTA) will be a global gamechanger in the next decade.
– Receive the Retailing Africa newsletter every Monday and Thursday • Subscribe here