Just buy it

Analysing the consumer market in South Africa is complicated. We have a huge income discrepancy: the vast majority of people earn very little, whereas a small percentage earn a lot. Depending on the retail category, this uneven distribution means that one brand might be an everyday purchase for some and out of reach for others.

‍At the same time, retailers and companies position themselves to target particular audiences. This is normally linked to price, and therefore the income of the consumer group in question.

For any aggregated group of consumers, it’s a given that the average transaction value at a particular retailer will increase as the group’s income increases. But how consumers in an income group perceive a retailer depends on what they spend at all the other retailers they shop at.

‍Take the apparel industry. In a recent research note, we ranked the average transaction values of 22seven users at 150+ clothing and footwear retailers within four income brackets, to determine how consumers in each bracket engage with those brands. In other words, by comparing the relative transaction values of all the clothing brands within a particular income bracket, we were able to evaluate whether a retailer is perceived as ‘value’, ‘aspirational’ or ‘luxury’.

Look at Mr Price, for example. Average spend at MRP increases as income increases, but this amount is low compared to what the same shoppers spend at other clothing retailers – a trend that is consistent across income groups. We can therefore deduce that MRP is perceived as a value brand for all shoppers.

H&M is different. Consumers in lower income groups spend a bit more here than at other retailers, which suggests an aspirational positioning. But spend by higher income groups is comparatively low, suggesting a value position for these shoppers.

And then we get Nike. It’s a standout brand because median spend ranks in the top five of all retailers across all income groups. In other words, irrespective of how much people earn, they’ll spend more per transaction at Nike than they will at almost all the other footwear and clothing stores they visit.

This is just a taste of the full report, which we believe is the most detailed retail-level decomposition of the South African apparel market available to investors and retailers. It’s also an example of the depth of our research – our ability to isolate and evaluate consumer spending in any category, down to brand level. Interested in taking a deep dive into your industry? Contact us to find out more.

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