SIMON BROWN: I’m chatting now with Ged Nooy, MD of NielsenIQ South Africa. Ged, I appreciate the early morning. The 2020 view – you recently conducted a survey on 20 months of change in the South African manufacturing and retail sectors, which showed a couple of points that we’ve certainly been hearing from some retailers. I suppose this confirmed it.
Perhaps the key one is that consumers are doing fewer trips to the stores. There are bigger baskets, which is some good news, and this is perhaps even more marked in the lower LSM groups – who used to typically make more trips and are now cutting back quite a bit. There is a significant shift in how we shop over the pandemic
GED NOOY: Morning, Simon. Thanks for having me. Yeah, we’ve seen that on average South Africans are doing two times fewer trips per month in shopping. This is down to obviously a constrained wallet. But it’s interesting that you say the lower LSMs – we’re actually seeing it more pronounced within the upper LSMs. Previously the lower LSMs have been constrained, while the higher LSMs have been insulated; but their wallets are starting to be squeezed.
It’s actually more pronounced in the upper LSMs who were shopping more frequently, but the frequency has dropped now too.
So we are seeing that actually across each one of the LSMs.
We are seeing, as you mentioned, the basket is getting bigger. On average there are four items more per basket, and we are seeing a move to more up-sized packs, as people are starting to bulk buy because they’re doing less frequent shopping.
SIMON BROWN: Okay. That makes sense. One of the things your data did show as well, which I suppose the likes of Tiger Brands really enjoys, is that the top brands, the sort of A-brands, are doing the same or even better. You talk around the trust point, and I suppose if I’m walking into a store and things are a little bit tight in the wallet, I’m not going to try something I haven’t tried before. I’m going to stick with what is known and trusted. That really comes down to that power of branding.
GED NOOY: Yeah. Look, there are two angles to that. I think the first one is people don’t have the money to try all new brands, and you cannot waste money on trialling something. So people do go for the tried-and-trusted because they cannot waste the money.
The other thing you’ve got to remember is Covid has impacted the supply chain globally. So your A-brands are able to have stock on the shelves, which has also [benefitted] them, so they’ve been able to stay top of mind. We’re seeing that … through the brand equity that they built during Covid that has continued now.
Another interesting trend that we have seen is that a lot of shoppers are starting to move to private label – which is quite interesting.
SIMON BROWN: When I chat with retailers they always say that as far as they’re concerned, from a global perspective we’re a little light on private label. But I take your point as well: in logistics, if you’re a large player in the space with your A-brands, you’re probably better at the logistics. You’ve got more clout with the shippers and the haulers and the like.
Black Friday is kicking off this week, although truthfully it has started already in most places. We are certainly seeing lots of discounting, lots of promotion. But you make the point in the survey that actually retailers have to tread carefully with their promotions.
GED NOOY: Yeah. What we noticed is last year Black Friday was very muted versus the previous years. That obviously talks back to the constrained wallet. As you rightly mentioned (it started last year), Black Friday has increased this year: instead of being one day, it’s starting to be a week or even a month of ‘Black Friday’.
I think the big thing is retailers and manufacturers alike need to start looking to see that with [the consumer’s] constraint wallet they need to make sure that they’ve got the right price for the right basket items, so that they can be more effective in making sure that the shoppers are actually coming into store, increasing their basket and driving more efficiencies.
But it’s hard to predict, because of the current state of flux we’re in with Covid and lockdown. One thing we might see is people using Black Friday night to do some Christmas buying.
SIMON BROWN: Yeah. I’ve got some friends who, for example, wanted a TV months ago and it’s like ‘We’ll wait for black Friday and we’ll get it a bit cheaper then’. It can work but, to your point, it needs to be done effectively, otherwise it actually just sort of takes money out of the retailer. I suppose it gives it to the consumer – not the worst thing.
We’ll leave it there. Ged Nooy, MD of NielsenIQ South Africa, I appreciate the early morning.