SA consumer environment changing
2011 has proven, so far, to be as much of a roller coaster as 2010 and 2009. The complexity of the business environment grows with each additional piece of legislation.
Each quarter produces another round of poor GDP figures and weak market-related news. Trends in this tumultuous economic environment are somewhat difficult to read.
The South African consumer is currently faced with challenges. The continued increase in electricity prices, the introduction of tolls on Gauteng highways, the increase in the cost of food and fluctuations in the cost of fuel have influenced the individuals’ ability to spend.
South African corporates have even more challenges to manage. These include changing legislation, above-inflation salary and wage increases, low business confidence and sluggish markets in many sectors.
Corporate and private organisations are in an interesting head space as they watch developed markets enter an age of austerity while at the same time seek opportunities to leverage emerging-market foreign direct investment.
In interactions with many of our clients, Coface South Africa has noticed four interesting corporate consumer trends.
Frugality
Many of the companies Coface South Africa works with are exercising caution in their business operations. The trend has moved from revenue focus to bottom line focus with the emphasis on lower turnover but higher profits.
Coface South Africa first began tracking this increased productivity trend in 2009 as companies realigned and consolidated processes to ensure higher productivity. This strategy is working for them and is expected to become ingrained in their business behaviour in which companies will focus on increasing or maintaining profitability while containing costs.
Transparency
The crisis has highlighted above all the critical role that transparent and accurate business information plays in business. Pre-crisis, many companies that Coface South Africa worked with placed a high value on the relationship with clients rather than on their financial figures.
The recession has changed this. Companies now focus on financial figures rather than on the individuals running the company. This change in business consumer behaviour has resulted in a greater emphasis on transparency which has protected many of our clients from potentially risky business deals.
Service
Coface South Africa has been tracking another interesting trend in business consumer expectations around goods and services. Value for money has become paramount in business interactions. The concept of “value” has changed from the pre-recession market where customers expected to pay a premium for premium products. Current market expectations are for excellent products backed by excellent service at reasonable prices.
There is a service culture developing which permeates all operational elements of businesses. This is measurable at an individual and corporate level and is becoming one of the key differentiators of successful companies.
Company Values
The recession has in many cases been termed a conscience crisis with gross violations of basic moral code and corruption. As such, more emphasis is being placed on the value-drivers of organisations with preference given to those companies adhering to ethical and social drivers such as compliance and corporate social investment.
Opportunities for South African businesses lie in flexibility and focus. The ability to leverage the unique strengths of a business within the changing perceptions of consumers while being open minded about controlled risks such as investment opportunities in growing markets will assist in ensuring business success in the short to medium term.
