South Africa: Reaching the Consumers

Consumer Profile

The population in South Africa is relatively young, with a median age of 28.1 years. The number of inhabitants has increased by 1.2% in 2021. However, the population is gradually ageing. About 44.9% of the population is under 25 years old, 42.5% is 25 to 54 years old, and 12.6% is over 55 years old (Data Reportal). The average number of people per household is 3.4 (ESRI, 2021). There are more women (50.8%) than men in South Africa. The South African government estimates that 80.9% of the population is black, 8.8% mestizo, 7.8% white and 2.6% Asian. The inhabitants are 68.3% in urban areas. The provinces of Gauteng and KwaZulu-Natal respectively account for 26.3% and 19.1% of the population, and the major cities in terms of density are the cities of Johannesburg, Cape Town and Durban. The level of education in the country has been judged to be among the lowest in the world by the OECD. Only 48% of adults aged 25-64 have completed upper secondary education, lower than the OECD average of 79%; and only 7% of the 25-64 years old have attained a bachelor's or equivalent tertiary education degree. The level of below upper secondary attainment among 55-64 year-old is very high, at 68.6% (OECD, 2020). Moreover, the level of education varies according to ethnic origin. Only 4.8% of the Black and 5% of the Métis had a degree in 2020, compared to 26.8% of the White and 15.1% of the Asians. Similarly, ‘some secondary education’ is the highest level attained by 41% of the Black, 43.3% of the Métis, 21.7% of the Asian and 12.1% of the White (South Africa Department of Higher Education and Training).
Basic occupations account for 24.9% of the labour force, sales and service occupations 14.8%, crafts tradesmen 10.4%, office workers 9.4%, technicians 8.7%, managers 8.6%, plant and machine operators 8.5%, workers 6.5%, professionals 6.4% and farmers represent 0.5% (Stats SA, 2021).

Purchasing Power

According to the World Bank, the PPP per capita GDP in South Africa amounts to $ 13,360 in 2020. South African households had an average disposable income of about USD 9,338 in 2021 (OECD). The purchasing power is very limited for many inhabitants, since more than half of the population lives below the national poverty line and the unemployment rate is very high (33,6% in 2021). Social and income inequalities are high in South Africa and the Gini coefficient for total net wealth inequality stands at 0.76 in 2019 (0 being the minimum level of inequality, 1 the maximum, World Bank). South Africa suffers among the highest levels of inequality in the world, with high unemployment, especially among young people (over 50%), being one of the main causes of inequality. Women earn 38% less than men (World Bank). In addition, the white population represents slightly more than 10% of the labour force, but earns almost 3 times the average salary of the black population, constituting nearly three quarters of the total labour force. Black people represent the majority of the country's jobless at more than 39%, compared with a rate of 8.8% for white people (Stats SA 2021).

Consumer Behaviour

Due to minimal increases in wages and rising prices, consumers sometimes have tight budgets. Consumption is not as massive as in Western countries and South Africans tend to watch their finances and curb spending. The perception of the price / quality ratio is generally the main purchase factor for a South African consumer. To increase their savings, some purchases are sometimes pushed back, prices are compared and consumers are ready to move away to do better business. Purchases are increasingly made at discounters or using different channels. Modern retailers are no longer preferred to small traders and informal traders. The level of consumer confidence is low. Internet penetration has been rising in recent years and this is reflected in the evolution of online sales. The increase in online retailing has influenced the way in which South African consumers buy their goods in-store. Since social media has been recognized as a major source of influence, retailers are increasingly using such platforms to build their reputation. Consumers are encouraged to buy on the internet because of lower prices and free. Data protection is often a topic of interest to consumers. Also, 70% of South Africans worry that they will not be able to protect their personal and financial data while many fear cyber-attacks. Consumers tend to favour national companies, especially in the fashion sector. However, they are relatively open to international companies, especially Western ones. Consumers tend to be loyal to brands, only if the price charged by the company is right.

Some trends have emerged recently in South Africa driven by consumers wanting to reduce their spending. First, cocooning is developing, entertainment is increasingly at home rather than in shopping malls, clubs and other establishments. This is also the consequence of rising fears for personal safety. Inexpensive Experiences like going to the beach are increasingly preferred to material goods as are listening to music or watching sports events on TV. The adoption of a more responsible mode of consumption is under development. Indeed, transparency and authenticity are two factors that can push a consumer to make a purchase. In a country characterized by extreme economic inequality between rich and poor, consumers are becoming socially aware and tech-savvy, they are attracted to companies that act as a force for positive change. In South Africa, industry pioneers such as Discovery, Unilever and Woolworths are driving this trend. The young population is more concerned than the rest of the population by the issues of eco-citizenship and the preservation of the planet. The second-hand market is growing in the country, and it is estimated that 15% of the South African population sells used products online (fashion items, phones, DVDs, CDs, books and electronics), and this figure is increasing. Collaborative platforms such as Airbnb and Uber are expanding in the country.

Consumer Recourse to Credit

Credit and debit cards as well as online payments are the most common means of payment in South Africa. In order to meet consumption needs, the majority of households use indebtedness and loans to households have increased in 2018. However, due to the recession and rising over-indebtedness, consumers tend to concentrate on the repayment of their debt rather than on new large purchases. In addition, private loans and loans outside the formal system are common in South Africa, and the situation of over-indebtedness may be more serious than the figures published by the government. There are more than 24 million credit consumers. Credit, personal loan, car loan and mortgage loans are estimated at 17.9 million with assets of 1.57 trillion Rand. The loans are used to finance real estate projects, to offset the cost of living, to purchase cars. With the recession, consumers should continue to use consumer credit to finance themselves other than savings, and this could continue to increase the country's over-indebtedness.

Growing Sectors

Technologies, mobile phones, connected objects, security equipment, photovoltaic panels, prepared and takeaway meals, home and office delivery services, fruits and vegetables, clothing and footwear, jewelery.

Consumers Associations

Parliamentary Oversight Group , in English
National Consumer Commission , in English
Credit Bureau Association , in English

Population in Figures

Total Population:

59,893,885

Urban Population:

68.3%

Rural Population:

31.7%

Density of Population:

49 Inhab./km²

Men (in %)

49.1%

Women (in %)

51.3%

Natural increase:

0.84%

Medium Age:

24.0

Ethnic Origins:

About 80% of African origin; under 10% of European origin; under 10% of mixed African, Asian and/or European origin; and about 2.5% of Asian, primarily Indian, origin. (Statistics South Africa)

Population of main urban zones

Source: Citypopulation.de, Latest data available.

Age of the Population

Source: World Bank, Latest data available.

Consumption Expenditure

Media in Which to Advertise

Television

TV is the most expensive but also the most popular media of advertising in the country. Nearly 70% of the households in South Africa have TV sets.

Main Televisions
Channel O
E.TV-MIDI TV
SABC 1-SOUTH BROADCASTING CORPORATION
Supersport - M-Net

Press

Press in South Africa has a better reach to consumers but is relatively expensive. However, regional and local newspapers are less expensive, but suited only for a product with strong potential in a specific region. Advertising through magazines is a more affordable option for small- to medium-size enterprises. It is the best advertising option to reach a focused target, consumer group or to sell industrial and commercial products. Further benefits of newspaper advertising include the fact that due to the vast number of different types of publications, different target markets can be identified and targeted.

Main Newspapers
Business Day
The Citizen
The Sowetan
The Times
Mail-Guardian
Sunday Independent

Mail

Businesses can reach consumers all across the country through mail writing, however this medium is not considered to be an effective means of advertising anymore.

In Transportation Venues

With the growing restrictions imposed by city councils on outdoor advertising, and the over-supply of roadside advertising in specific geographic nodes, transit advertising can be an effective promotional tool. Transit advertising is used in major cities and towns only. Advertising space is available on rails, buses, taxis and other specialized mobile vehicles.

Market Leaders:
Provantage Media

Radio

Radio is the most traditional form of mass entertainment in the country. It reaches over 90 % of the population and is also by far the least expensive. There are almost 15.4-million radio sets in South Africa, with more than 30-million listeners. According to the South African Audience Research Foundation, South Africans spend an average of more than three hours a day listening to the radio.

Main Radios
Channel Africa
702 Talk Radio
List of radio stations in South Africa

Web

While e-commerce is a new trend to the South African business market, it is growing rapidly at a rate of 26% since 2015. As more and more people gain access to the internet and mobile devices, an increasing number of consumers is expected to start shopping online: there are currently more than 18 million e-commerce users in South Africa, with an additional 6 million users expected to be shopping online by 2021. These future 24 million e-commerce users might spend an average of USD 189.47 online. Currently, the total South African e-commerce revenue across all product categories is 2.69 billion USD. Electronics and media are currently the leading product categories bought online in South Africa, accounting for 35.9% of the market share, followed by furniture and appliances (which generate 20% of the total revenues). In South Africa, 60% of online shoppers buy via desktop, and 55% and 38% often shop via mobile and tablet respectively.

Market Leaders:
Intoweb
DMMA

Main Advertising Agencies

Association for Communication and Advertising (ACA)
National Association of Broadcasters (NAB)
Out of Home Media South Africa

Main Principles of Advertising Regulations

Beverages/Alcohol

Advertising is permitted on television, radio, in the cinema, in print and outdoors. However, advertisements may not be transmitted in the commercial breaks immediately before, during or immediately after children’s programs.
Proposed amendments to the draft Liquor Amendment Bill, under consideration by the Department of Trade and Industry, may see a ban on all print advertising of all alcohol products as well as a ban on all digital and social media advertising.

Cigarettes

The Tobacco Products Control Amendment Act was passed in 1999. This act bans all advertising and promotion of tobacco products, including sponsorship and free distribution of tobacco products.

Pharmaceuticals/Drugs

Must be registered by the Medicines Control Council. Pictograms may be used on packaging and in advertisements provided they relate to the approved claims on the product.
For more information, you can consult the South African Code of Practice for the Marketing of Health Products.

Other Rules

The advertiser accepts responsibility for the accuracy of the research and claims.
The guiding principle in all comparisons shall be that products and/or services should be promoted on their own merits and not on the demerits of competitive products.

Use of Foreign Languages in Advertisement

South Africa has 11 official languages, but promotional material including advertisements is typically printed in English language.

Organizations Regulating Advertising

Advertising Regulatory Board (ARB)