Africa-Press – South-Africa. South Africans across all income segments spend over 70% of their disposable income on groceries, retail, travelling, eating out, and fuel.
However, lower-income South Africans and higher-income individuals have significantly different priorities.
Groceries are the primary spending item for the mass market, the mass affluent, and everyday affluent individuals.
In comparison, higher-income individuals dedicate a larger share of their spending towards retail and travelling.
Discovery Bank and Visa revealed this in their third annual SpendTrend 25 report, which analyses South Africans’ spending behaviour.
The latest edition incorporates data from over a million South Africans and 2.6 billion transactions, making it the most comprehensive report on spending.
It revealed that South Africans remain under immense financial pressure despite declining inflation and interest rates, with spending growth slowing year-on-year.
Discovery Bank CEO Hylton Kallner explained that average spending per card is flat year-on-year and trended downwards throughout 2024.
The report also details different spending habits among South Africans, covering the mass market and high-net-worth individuals.
The high-net-worth segment spends three percentage points more on travel and one percentage point more on dining out than the South African average.
On the other hand, the everyday affluent group spends one percentage point more of their share of spend on dining out and takeout and only two percentage points less of their share of spend on travel, compared to the national average.
In contrast, the mass and mass affluent segments allocate 4% and 5% less of their total spending to luxuries like travel and retail, respectively.
This highlights how consumers with lower spending power focus more on essentials like groceries and fuel, leaving less discretionary spending on travel and retail.
The different spending habits of South Africans across income segments can be seen in the graph below.
City living shapes spending
For the first time, the SpendTrend report included data from secondary cities such as Bloemfontein, Gqeberha, and East London.
This enables Discovery Bank and Visa to compare spending habits across South Africa’s major metros – Johannesburg, Durban, Cape Town, and Pretoria – and these select secondary cities.
In South African cities, food, including groceries, eating out, and takeout, accounts for the largest portion of spending.
However, Johannesburg residents spend a lower share on groceries and more on shopping, eating out and takeout compared to those in Durban and Cape Town.
Residents of coastal primary cities like Durban and Cape Town have a wider variety of social activities outside of dining out.
People in Bloemfontein, East London, and Gqeberha spend a more significant share on food and fuel but less on travel and eating out and takeout compared to those in Johannesburg, Durban, and Cape Town.
The one common spending habit among all South Africans in all cities is food, including eating out. As this becomes more convenient, Discovery Bank expects it to grow further in the future.
Spending on eating out and takeaways grew by 12% in 2024, outpacing grocery spending growth at 8% year-on-year. This increase isn’t just due to food inflation – demand for convenience is shaping consumer habits.
People are dining out more often and ordering takeaways more frequently, leading to higher overall spending per card, even as the average grocery basket size declines due to more frequent, smaller purchases.
While food prices fluctuate, spending on food and groceries continues to grow faster than food inflation because food demand remains price inelastic, Kallner explained.
This means people buy it regardless of price shifts. To manage rising costs, consumers are likely to prioritise value-based spending or switch to more affordable alternatives, such as store brands instead of name brands.
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