Despite months of unease about the state of economies across the continent, Africans remain willing to spend money on all sorts of goods. But this year, they are making it clear that brands must have new strategies to get their money. According to the Euromonitor 2023 consumer trends, more consumers are sticking to a budget, looking for cost-effective solutions that are environmentally friendly by proxy, at the same time these customers seek instant gratification. These trends are the most poised consumer to shape the continent this year.
This is an opposite reflection of consumer sentiment during the holiday shopping season and the whole of last year when especially since many African countries experienced near-record-high inflation. For example, mid-last year, Ghana experienced a significant increase in inflation, reaching a rate of 31.7% in July, the highest since 2003. This resulted in a surge in prices, particularly with commodities like food. Despite efforts to control inflation, these unforeseen circumstances persist, influencing how consumers spend their money in 2023. Here are the top three consumer trends shaping the continent this year.
Budgeting and sticking to it
According to Euromonitor, about 75% of global consumers fall into the group called the budgeteers. As economic shocks, record-high inflation, and supply shortages continue to drive up the cost of living, more people will either pay more for everyday essentials, trade down to lower-cost alternatives, or forgo items entirely. Although across Africa, inflation appears to have peaked last year and is already decelerating. However, situations unique to developing and low-income countries in Africa might continue to affect livelihoods for the rest of the year. Earlier this year at the world economic forum, the International Monetary Fund’s Deputy Executive Director, Gita Gopinath, said that prices will still remain high for most of 2023 because even though inflation is slowing down, there is no deflation. This means that commodity prices are still rising, just slower. For example, food prices have come down, but they are still about 30 percent above 2019 levels. In undefined times like these, inflation and high prices undermine purchasing power, and consumers tend to be more methodical with their money, developing diverse ways to stretch it.
Across Africa, consumers gravitate towards the informal markets, which provide convenient access to products in smaller quantities at more affordable prices. At informal markets, consumers can get a cup of rice, a single tea bag, or a single cigarette. Consumers are also using this strategy at modern retailers. And this budgeting is not only playing out with sizes or quantity. Consumers are also bulk-buying staple items in order to save money in the long run. In addition to pack sizes, consumers are looking for multifunctional products to reduce the number of products purchased. And are buying less-expensive substitute products for those products deemed too expensive. point is that saving money is top of mind, and even if inflation and the cost of living drop, budgeteers will continue to save in preparation for the unknown.
Affordable solutions that are indirectly environmentally friendly
With more consumers choosing affordable options, there is a tendency for them to gravitate toward sustainable choices. Eco-Economics refers to consumer behavior where the choices that save money also happen to be the ones that are environmentally friendly. This means consumers tend to be sustainable by default when faced with challenging situations. It is common to see more consumers turn to the familiarity and affordability of traditional plant-based dishes, which are also deeply rooted in local traditions. According to data from Euromonitor’s survey, 34% of consumers were willing to buy secondhand or previously owned items in 2022
It is crucial for brands to recognize and appreciate the importance of local traditions among consumers in the region. For example, Unilever recently launched the Knorr Mitted Shiro, a stew powder made with chickpea powder and spices in Ethiopia, which was a significant way of innovating within a market while honoring and celebrating local ingredients. This caters to the affordability needs of consumers seeking to reduce overall costs while enjoying a meatless meal traditionally paired with injera, an Ethiopian flatbread made from teff flour.
Indulging in pleasures, even with limited finances
While saving money remains a top priority for consumers in 2023, consumers still want to treat themselves whenever they can. In an era driven by rapid digital advancements and a society that highly values experiences, consumers are increasingly open to seizing moments of self-indulgence, even if it means opting for smaller-scale pleasures. They seek ways to reward themselves, uplift their mood, and enhance their overall well-being through purchases. According to Anje du Plessis, a Senior Analyst at Euromonitor, “This is where the Here and Now trend comes into play, as consumers seek instant gratification.” The “Here and Now” trend signifies a shift in consumer behavior and preferences, emphasizing the importance of seizing the present moment and finding happiness in small, meaningful experiences that align with their financial circumstances.
However, Du Plessis notes that consumers are still wary about overstraining their budgets, and companies need to balance consumer gratification with affordability. “Offering flexible payment solutions is one strategy brands and retailers, should offer consumers a way to purchase products without a big cash outlay. For example, brands can offer shoppers interest-free repayments over four installments. Another strategy is to offer mini- or travel sizes of luxury or aspirational products, making them more accessible to budget-conscious consumers. A good example is Mac Cosmetics, offering ‘mini’ variants of its cosmetic products at a price 35% cheaper than the full-size brand.”
