Joburgers remain the nation’s big spenders while loyalty programmes rule the roost

Joburg residents spend 47% more than the average South African, while Capetonians spend 38% more and Durbanites 13% more, according to Discovery’s Spend Trend 24 survey released yesterday.

However, spending increased most in Cape Town, moving up 6% year-on-year on the back of increased spending on groceries, eating out and travel. Joburg did take top prize as “foodies” of the nation for spending in the eating out category.

Globally, persistent high inflation has made consumers more cautious with their spending, driving them to choose bank cards over cash not just for access to credit but to exploit value from loyalty programmes.

“We know that the loyalty market has always been dynamic, but post the pandemic it’s unleashed a new wave of innovation. So, despite there being geographic and industry differences, we see that consumers are looking for rewards programmes where they can enable it quite seamlessly via digital channels,” says Lineshree Moodley, country manager for Visa.

A 2023 Euromonitor study shows that 86% of South Africans expressed concern last year about the increasing cost of goods, with 37% intentionally buying in bulk or deliberately shopping at stores with loyalty programmes.

Read more in Daily Maverick: SA food price rises in 2024 likely to moderate for most products

Amanda Cromhout, chief executive of Truth, a global loyalty consultancy says 76% of South Africans use loyalty programmes, with Checkers Xtra Savings emerging as the most popular programme for 2023/24.

“Given that 55% of economically active consumers have stated that loyalty programmes significantly influence their fuel brand of choice, it is wise of the fuel companies to consider taking their customer loyalty approaches into their own hands. We have seen an explosion of four fuel brands (Shell, Sasol, Total Energies, Astron) launch their own proprietary programmes,” she says.

The Truth and BrandMapp Loyalty Whitepaper series has continuously seen that the number one benefit enjoyed by South Africans is cashback. The top three benefits enjoyed by economically active consumers are related to cashback or points converted into cash. The most preferred benefit for mass market consumers is airtime and data, followed by cashback and points converted into cash.

Read more in Daily Maverick: Cash is king as consumers favour loyalty programmes offering immediate relief at till point

South Africa is not alone in its consumers’ preference for cashback rewards. A recent poll by Annex Cloud showed that 46% of its global followers preferred cashback incentives and 36% preferred points-based programmes. The only benefits which male consumers prefer more than their female counterparts are airtime and data, airport lounge access and NFTs or digital collectables.

What are consumers spending money on?

Source: Discovery Spend Trend 2024

Groceries, retail, travel and fuel remain South Africa’s biggest spend categories, making up nearly two-thirds of total spend.

Groceries: In 2023, South Africans shopped online more, with a 10% rise in spend per active card and a 3% rise in transactions per active card compared to 2022. Online grocery spend per active card also grew by 10%, fuelled by more options and better delivery services. Average spending on eating out and takeout rose by 8% in 2023, highlighting its enduring popularity and convenience.

Fuel: Discovery Insure data reveals that clients are travelling more post-pandemic. In 2023, they drove more compared to 2022, but with a twist: despite making 10% fewer trips, they’re covering 40% more distance on average each month. This trend could be attributed to lifestyle changes due to increased return to office movement last year in South Africa. Vitality Drive reports that over 75% of clients who work from offices are now commuting at least three days a week. Interestingly, while consumers tended to refuel on Tuesdays in 2022 to avoid the impact of numerous fuel price hikes, their favourite refuelling day last year was Friday.

Travel: In 2023, domestic travel in South Africa exceeded pre-pandemic levels, despite significantly higher costs. The airline industry improved, expanding flight options on existing routes and opening new ones for increased traveller choice and accessibility.

The study, which was carried out in conjunction with Visa, is based on data from 2019 to 2023 and has been expanded to include the key South African cities — Durban, Johannesburg and Cape Town, as well as five emerging market cities and six developed market cities, comprising 60 million credit cards, and 13 billion transactions.

The 11 other cities included in the study were Accra (Ghana), Ho Chi Minh (Vietnam), Lagos (Nigeria), Rio de Janeiro (Brazil), Sao Paulo (Brazil), Barcelona (Spain), Lisbon (Portugal), London (UK), Los Angeles (USA), San Francisco (USA) and Sydney (Australia). DM