Smart spending in Africa: How budget-conscious consumers are shaping the market
Unyielding in the face of economic uncertainties, African consumers are blazing a trail of change, demanding new strategies and reshaping the continent’s market landscape, Writes Joseph Ekeng.
Despite economic uncertainties and inflationary pressures, African consumers are displaying a resilient willingness to spend money on various goods. However, their preferences have shifted, demanding new strategies from brands seeking their patronage. According to Euromonitor’s 2023 consumer trends, three key factors are significantly influencing consumer behavior on the continent: budget-consciousness, a preference for affordable and sustainable solutions, and the pursuit of small indulgences. These trends not only reflect global consumer sentiments but also encapsulate Nigeria’s perspectives on the evolving market.
Budgeting and Sticking to It:
As economic shocks and record-high inflation persist, African consumers are increasingly adopting budgeting practices. Approximately 75% of global consumers fall into the category of “budgeteers,” prioritizing cost-effective alternatives, trading down to lower-priced options, or even forgoing certain purchases altogether. While inflation in Africa appears to have peaked in the past year, challenges unique to developing and low-income countries continue to impact livelihoods.
In Nigeria, for example, inflationary pressures have affected consumer spending patterns. The cost of living remains high, with prices still above pre-inflation levels. Consequently, consumers are becoming more methodical in their spending habits, seeking diverse ways to stretch their money. Nigerian consumers are gravitating towards informal markets that offer affordable prices for smaller quantities of goods. They are also adopting bulk-buying strategies for staple items to save money in the long run. Moreover, consumers are seeking multifunctional products and exploring less expensive substitutes for costly items. This focus on saving money persists, irrespective of future declines in inflation or the cost of living.
Affordable Solutions that are Indirectly Environmentally Friendly:
African consumers, driven by the need for affordable options, are also increasingly drawn to sustainable choices. This phenomenon, known as Eco-Economics, reveals that consumers inadvertently gravitate towards environmentally friendly options when faced with challenging circumstances. In Nigeria, this trend is evident in the food sector, where traditional plant-based dishes are gaining popularity due to their affordability and cultural significance.
Euromonitor’s survey data indicates that 34% of African consumers, including Nigerians, were willing to purchase second-hand or previously owned items in 2022. This inclination towards sustainability highlights the importance of brands recognizing and appreciating local traditions in Nigeria and the wider region. For instance, Unilever’s introduction of the Knorr Mitted Shiro in Ethiopia exemplifies a brand’s ability to innovate within a market while honouring and celebrating local ingredients. By catering to affordability needs and offering meatless meal options traditionally paired with injera, Unilever demonstrates a commitment to sustainability and cultural appreciation.
Indulging in Pleasures, Even with Limited Finances:
While saving money remains a top priority for African consumers, they also seek opportunities for self-indulgence. In an era characterized by rapid digital advancements and an emphasis on experiences, consumers are increasingly inclined to treat themselves, even on a smaller scale. They actively seek moments of self-gratification to uplift their mood and enhance overall well-being through purchases. Euromonitor’s Senior Analyst, Anje du Plessis, explains that the “Here and Now” trend captures this consumer behaviour, emphasizing the importance of seizing the present moment and finding joy in small, meaningful experiences that align with their financial circumstances.
However, consumers remain cautious about overstraining their budgets. Brands and retailers must strike a delicate balance between consumer gratification and affordability. Market analysts stress that offering flexible payment solutions, such as interest-free repayments over multiple installments, can help consumers make purchases without a significant cash outlay. Another effective strategy is introducing mini- or travel-sized versions of luxury or aspirational products, making them more accessible to budget-conscious consumers.
RECOMMENDED ARTICLES
Comment
No comments found.