New research: SpendTrend23 reveals consumer spending insights from Visa and Discovery Bank
In a landmark collaborative initiative, Visa and Discovery Bank have compiled a new research report to uncover and understand behavioural changes and spending insights among consumers in South Africa.
SpendTrend23 analyses Visa's world-class data set in combination with Discovery Bank's deep analytics to understand shifts in consumer spending behaviour before, during and after the COVID-19 pandemic.
Visa and Discovery Bank presented the original research at a live event on 8 March 2023
At the launch event at the Discovery Head Office in Sandton, Lineshree Moodley, Country Manager for Visa, South Africa, and Hylton Kallner, Chief Executive Officer of Discovery Bank, unpacked the research and findings in detail. They revealed how consumer spending habits - which are generally considered predictable over the short term - change drastically when the COVID-19 pandemic hit.
Major shifts in spending behaviour across the globe led many businesses to fundamentally restructure their business models. The report delves into South Africa's comparative rate of recovery post-pandemic, and provides insights into consumer spending habits that can help shape business growth in the years to come.
View and download the SpendTrend23 report.
More about SpendTrend23 report - the most comprehensive report of its kind
The SpendTrend23 report comprehensively analyses data from Visa's world class data set with deep analytics from Discovery Bank to uncover and understand behavioural changes and insights pre- and post-pandemic among consumers in South Africa.
In doing so, it can:
- Provide a view on South Africans' spending habits and the rate of recovery post-pandemic.
- Show how South Africa managed the pandemic as a country.
- Provide a view on how these trends may evolve and manifest in the remainder of 2023.
The study employs a quantitative research design to compare spending data between Discovery Bank and South Africa, highlighting trends across three areas:
- How much people spend.
- What people spend on.
- How people spend.
The data was analysed by client group and stratified by card type using Visa's extensive payments database. Discovery Bank's transaction-level data provided a more detailed understanding of consumer behaviour and payment trends, such as favourite stores, geolocation information and consumer age groups. This allowed for a more comprehensive understanding of how payment trends have evolved over time.
What did SpendTrend23 find?
Between 2019 and 2022, there have been major shifts in spending behaviour across the globe, such as an acceleration of the digital and online spending trend - disrupting businesses and leading many of them to fundamentally restructure their business models. This highlighted a gap in knowledge and market insight that Visa and Discovery Bank took the opportunity to explore.
SpendTrend23 indicates that many South Africans experienced extreme difficulty and disruption during the pandemic. However, they seek a return to normality, as the data suggests strong recoveries in spend and segmental disruption.
Among other insights, SpendTrend23 found that South Africans' spend has not just bounced back, but is now over 20% higher than pre-pandemic levels. Spend on categories such as groceries, eating out and travel are the key drivers for increased spend.
Groceries and eating out: Level 6 loadshedding raises spend on takeout by 60%
- Higher food inflation is driving higher grocery spend. This most impacts the mass client group, who are currently spending almost double on groceries than they did in 2019.
- Eating out and takeout spend has increased significantly as people are returning to restaurants. Loadshedding is an additional factor driving eating out - people eat out 60% more at loadshedding levels 5 and 6.
Travel: Discovery Bank clients travel far more than others - but spend less on flights
- People are spending more on travel than they did pre-pandemic. While the levels of travel are similar, increased spend can be attributed to higher flight prices.
- South Africans are now spending on average 14% more on leisure and 24% more on business travel per trip, with spend on flights in particular making up the majority of travel costs in 2022.
- Discovery Bank clients' travel spend recovered at almost double the rate of the average South African. However, Discovery clients largely spend less on flight tickets than other South Africans thanks to their extensive Vitality Travel benefits.
- The top international travel destinations for South Africans in 2022 were the UK, USA, UAE, Namibia and France.
- Data showed a drop in driving trip distances and number of trips, which is consistent with the hybrid working models adopted by major companies.
Digital payment methods: contactless and digital wallet payments are on the rise
- Consumers who were compelled to use online shopping and contactless payment methods during the pandemic are continuing to do so now.
- Interestingly, geography does not affect whether a consumer is inclined to spend online or in-store, with equal affinity between consumers in metropolitan and in rural areas. However, age is a factor, with consumers between the ages of 31 to 40 more than 70% more likely to shop online when compared to a consumer in their fifties.
- People are twice as likely to buy clothing online than they are to buy groceries online.
Expected SpendTrends for 2023
Based on the extensive research, Discovery Bank is predicting the following trends to continue or change in 2023:
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