South Africans also seeking greater retail value
Seeking value for money has become a top priority for South African consumers, who are likely to remain under considerable financial strain for some time to come, according to Lezanne Human, CEO for the country's popular coalition loyalty programme, eBucks.
As a result, Human believes, consumers will continue to seek greater and greater value for money in the retail market using whatever mechanisms and offers are available, including increased redemptions of loyalty and reward currencies.
While lower interest rates and falling inflation are likely to eventually restore consumers' confidence, Human is of the opinion that this will happen very slowly as income earners struggle to pay off accumulated debt and, at the same time, avoid taking on new debts or committing to too many major purchases.
With First National Bank's House Price Index for April 2009 showing that house prices have fallen back to levels last seen in late 2006, and average house prices being expected to drop by some 9.5% (compared to 2008), consumers are also feeling less wealthy as a large portion of their overall assets is tied up in their homes. This factor is prompting consumers to think much more carefully than before about spending money.
"Against this backdrop, many consumers have found themselves financially challenge during the past year, and they have already used a wide variety of strategies to help make ends meet until better times return," said Human. "In fact, over R1.3 billion worth of eBucks have been allocated, mostly via First National Bank customers, as consumers are making use of their loyalty points even more during the economic downturn."
This trend is just as evident in South Africa as it is in other recession-hit countries like the UK, where recent research into loyalty programme usage showed that 60% of consumers plan to take greater advantage of loyalty schemes to help stretch their buying power.
eBucks has also noted a trend toward consumers seeking greater value for money, with many members opting to use their rewards to purchase essentials rather than luxuries. There has also been a movement away from upmarket retailers to value-based retailers, with food becoming an increasingly popular purchase item when redeeming eBucks points.
Even those eBucks members who have not been as badly affected by the downturn as other less fortunate consumers have been using their loyalty points to buy gifts for others or for splashing out on luxuries that can't be justified in their normal monthly budget. In addition, the company has noted a recent change in members' appetite for risk, as many have shifted their redemption focus from the eBucks auctions to the eBucks online shop (which offers more tangible and guaranteed rewards).