This is the picture we are faced with. Consumer confidence is low. The rand has been fluctuating since the middle of 2016. South Africa has been downgraded to junk status. The clothing retail sector has hit its worst ever number, contracting at 0.3% in June 2017. The pharmaceutical industry saw contracting sales of -1.9% over the past year, the first contraction since May 2014. It seems the impact of a tough economy has hit all brands, all businesses and all consumers. We cannot deny this truth.



There is a silver lining though, something we could have never predicted.  The latest news has revealed that retail sales rose 2.2% to R186bn in the second quarter of 2017, and analysts are debating whether in fact South Africa could rebound from the recession with a second quarter of growth.  Despite the retail sector being hit hard and low consumer confidence, there is hope for growth and consumer resilience.  While consumer confidence remains damped, Muscat, FNB Analyst said the interest-rate cut in June and July was expected to provide modest relief, although he expected tax hikes in the February 2018 budget to affect the sector.  Stefan Salzer, partner and MD at Boston Consulting Group SA said: “We expect consumers to carry on focusing on necessity spending, meaning pressure will continue to grow for retailers and customers.”  Investec expects household consumption expenditure to remain subdued, with growth projected at 1% compared to 0.8% reported in 2016.



With this mindset, what is it that we can actively do, to drive business and grow sales.

  1. Keep the basics in order

When times are tough, competitors get tougher.  Brands and businesses are competing aggressively for the same consumer, who now has less disposable income.  In this environment, being out of stock, losing space onshelf, and a general lack of visibility can have dire consequences.  Your brand should not and cannot afford to lose a single customer due to negligence. Brand loyalty is not affected by a recessionary environment for pharmaceuticals, but brand switching due to out of stocks is a reality that can lose you a customer for life.

Sales fundamentals (good merchandising, availability, stock pressure, price visibility and point of sale) are always important – but more to non-negotiable at times like these.

  1. Focus on customer value – price is key

Customer equity is a balance sheet figure which is loosely defined as the total of lifetime values of all your current and future customers – the sum total of all the value you’ll ever realize from customers. Because customers create all value, this means that customer equity is virtually the same number as the “going concern” value of your business.


What is valuable to your customer?  Price point or value?  Should you lower your price to meet a certain rand value, or is a gift with purchase the right value equity offering?  When it comes to value, consumers expect quality, price or added value as a choice and this differs by category and by consumer segment.  Whichever it is that your customer needs, it’s critical to know this and then apply timeously.


  1. Build on brand equity

In tough times consumers buy what they trust, even if it costs more.  By buying a brand, a consumer buys the promise of delivery and assurance.  The thinking is “I have limited money, I cannot chance it on what is potentially a product which may not deliver”.  This is especially true for consumers in the lower income bracket, who have just one chance to get it right, and cannot waste money on buying the ‘wrong’ product only to have to replace it with the ‘right’ one

If you have a well-established brand, now is the time you will bear the fruits of your hard work.  Regardless of how counter-intuitive it is, keep supporting your brand, even if it means your growth is limited – remember that you could be declining much faster without brand support.

  1. Keep marketing spend low, but don’t switch it off

Marketing spend should be monitored very carefully in times of economic uncertainty.  It is not recommended to cut all spend, but strategic and careful management is absolutely essential.  Reduce your promotional spend but don’t cut it out completely.  Don’t invest in new packaging designs.  Keep marketing campaign simple and to the point.  Focus on consumer touch points – at the shelf where buying happens, and online where information is drawn.   Choose ATL platforms carefully, with a focus strategy,

  1. Understand the risk in new launches

Launching a new product is risky at the best of times. It costs 5 times more to acquire a new customer than to retain a current one, and in a market where consumers are not likely to trust unknown brands, building a positive customer experience is expensive.  Education, promotion and customer service for a new brand drives awareness, all of which are more expensive in a tight economy.  A new launch is something that should be steered clear from unless there is evidenced consumer demand and a very strong marketing support plan.

  1. Explore new channels for marketing and sales

Consider where your product is currently listed.  If you’re a pharmaceutical brand, consider improving your online visibility through SEO, Google Ads or Social Media channels. World Wide Worx recently released that 40% of South Africans now have internet access and according to POPIMedia, 65% of those people shop online, with 40% using their mobile to do so!   In South Africa, 26% of Facebook users who click on ads make a purchase, and 60% of people say that easier access to online support channels would improve customer service.


Your website UX, how mobile friendly it is and your social media channels matter now more than ever.

7. Consider Market Research

Anyone serious about business is in it for the long haul.  Seasoned business people know that economies peak and trough.  Weathering the storms successfully is the mark of a durable and sustainable business.  Following a recessionary environment, on the back of uncertain global stability both economically and globally, business who aim to succeed, need to reacquaint themselves with a new consumer.  This consumer is harder, has different wants and needs, and could be significantly changed by the experience of recession.

Focus groups and consumer research can give insight into this consumer, enabling your business to build more on point strategies to deliver innovation, products that make consumer sense, and sales.


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To conclude, there is no one answer, no one size fits all that is a quick fix to resolve business and brand concerns.  We are all in this together and together we must lift each other up and grow and build.




Great Blessings lie ahead for the one who knows the secret of finding opportunity within each crisis.


Stay positive.  It’s not naivety.  It’s leadership.