South African consumers focus on value in weak economy

Weak employment, household financial pressure and persistent uncertainty are weighing on South Africa’s three-year consumer trend, keeping spending cautious, selective and value conscious.

The Bureau of Market Research (BMR) at the University of South Africa has released its Consumer Market Outlook: 2026 to 2028, which it finds is cautiously positive but constrained.

Chief researcher Dr Requier Wait said the outlook is for households to remain selective in how and where they spend, placing greater emphasis on affordability, value, convenience, promotions, loyalty benefits and trust.

The outlook is not being shaped by a single economic trend or shock, according to Wait. Instead, the BMR identifies the interaction of global uncertainty, domestic structural constraints and changing consumer behaviour as the defining context for the market.

Energy and fuel price volatility, inflation and interest rate sensitivity, AI and data-driven transformation, value-seeking behaviour, digital and omnichannel retail and climate, water and infrastructure risks are all expected to influence consumer sentiment, confidence and buying behaviour until 2028.

Global geo-economic issues, including conflict, extreme weather events, societal polarisation and disinformation, are also among the risks shaping the outlook.

Policy uncertainty remains elevated. In South Africa, this means concerns over weaker investment, slower job creation, exchange rate volatility, imported inflation, fuel and food price pressures and higher financing costs.

For businesses, this creates a market that is recovering gradually, but remains cautious, price-sensitive and uneven across income groups and product categories.

“Taken together, these forces point to consumers becoming more cautious and selective, with confidence remaining uneven across households, and spending becoming increasingly deliberate, value-driven and experience-focused.”

The outlook combines the May 2026 BMR-Unisa Economist of the Year consensus expectations for 2026 with BMR retail sales forecasts through to 2028, with the following findings:

The researchers said South Africa’s macroeconomic environment is more stable than during the immediate post-pandemic and high-inflation period, but economic growth remains too weak to generate a broad-based consumer rebound.

Economic activity is expected to remain positive, but not sufficiently strong to meaningfully reduce unemployment or support a broad-based consumer acceleration.

There is uneven spending in the consumer market: employed and higher-income households are likely to have greater capacity to spend, while unemployed and financially stressed households remain highly price-sensitive and focused on affordability and essential spending.

Against this backdrop, the report identifies value-seeking as a dominant consumer behaviour theme for 2026.

Consumers are expected to compare prices more actively, seek promotions, use loyalty rewards, trade down to cheaper alternatives, buy private label products, shift between formal and informal channels and delay discretionary purchases.

The study noted value-seeking does not only mean buying the cheapest product.

“It reflects a wider assessment of price, quality, convenience, trust, availability, delivery cost, loyalty benefits and perceived usefulness. For retailers and consumer brands, this means competing on value architecture, not only price, including pack sizes, promotions, loyalty benefits, private label, channel convenience and clear communication of product value.”

BMR forecasts indicate total real retail trade sales growth is expected to remain positive, increasing from 2.1% in 2026 to 2.6% in 2028.

The strongest growth is expected in household furniture, appliances and equipment, together with textiles, clothing, footwear and leather goods. General dealers are expected to remain resilient, supported by scale, convenience and essential household spending.

Food-related specialised retailers and hardware, paint and glass retailers are expected to remain under pressure in real volume terms.