There is no shortage of discussing customers' bulk purchases and the drivers behind this. South Africans and bulk buying come from a strong background in bulk purchases, whether driven by bulk promotions or bulk packs – urged by the need for value. While this behaviour may not come from habitual purchase patterns, marketing campaigns, concerns about their purchasing power, and a sense of group influence, mainly driven by the current economic climate, strongly influence this behaviour.
Bulk buying remains a conundrum in the South African market, having the customer need for value, but having the pressures of affordability, balancing the offset between the drivers and the challenges that bulk purchases face. Some of these decisions are naturally driven by looking for certain benefits, whether in product attributes or price driven. It is well known that larger pack sizes provide customers with significantly more price value than smaller ones. However, job losses and inflation have placed pressure on customers' wallets, with customers only having a certain amount of disposable income, a concern shared across various LSM groups.
The key benefits are straightforward Bulk purchases; however, we also need to understand the challenges in the current market to keep in mind how we will address the customer's need.
Drivers in Bulk Purchases
1. Availability concerns (Daymon Trend: AlwaysON)
Bolstered by pandemic shortage concerns.
2. Price stability concerns (Daymon Trend: Value Matters)
Driven by recent inflationary shifts, with customers buying a product in larger quantities to have an attainable price benefit.
3. Sustainability (Daymon Trend: ONEWorld)
Fewer quantities of products needing packaging as one master pack gets used.
4. Value (Daymon Trend: Value Matters)
Price benefit in the quantity of product due to packaging offsets.
5. Convenience (Daymon Trend: AlwaysON)
The convenience of having products available, often commodities such as toilet tissue, coffee, milk and staples.
Challenges in Bulk Purchases
1. Smaller Families and Shrinking households (Daymon Trend: IDentity)
'Shopping for one person makes bulk shopping pointless.'
2. Higher price per unit (Daymon Trend: Value Matters)
'Prices too astronomical to bulk buy, but if a deal is exceptional, I will.'
3. Lower disposable income (Daymon Trend: Value Matters)
'I used to prefer to purchase in bulk for specials, but I don't have that cash available anymore.'
'I lost my employment, so we don't have ready cash to shop in bulk as we used to.’
4. Loadshedding concerns – especially on fresh (Daymon Trend: AlwaysON)
'With load shedding, I don't do bulk shopping.’
5. Smaller homes – storage space (Daymon Trend: IDentity)
'Storage of bulk is a problem.'
In April 2022, 27% of customers said they would likely buy a product in bulk due to the critical pressures they were expecting in price hikes, where financially possible, to ensure enough commodities at a specific price in anticipation of massive price increases. This number will likely have increased as the pressures on pricing have increased, with CPI currently being at 7.6%, compared to March, which was at 5.9%. Regarding comparative behaviour, 34% of customers said they bought more bulk than they did a year ago, mainly driven by their need for value.
With the astonishing price increases evident over the last six months, I bulk buy when I find excellent specials on items I consume regularly.
The current pressure is that some customers only buy bulk on promotions and others state that it is too expensive to buy in bulk due to the price increases. Some customers also mentioned no longer buying frozen or fresh items in larger quantities due to load-shedding – and having to consider potentially paying more for smaller amounts to avoid wastage. A keynote was with customers saying they buy bulk when they find excellent promotions on products they consume regularly. Buying in bulk for one person is not worth it.
While bulk purchases seem to remain to be a growing behaviour, with customers looking for affordability and then further needing to consider sustainability, products like Smart fill entering the market enables customers to have the benefit of 'bulk' buying:
- Providing value
- Buying in larger or smaller quantities depending on the need and income available
- A more sustainable approach to packaging
While the search for value and bulk buying will likely persist and become thoroughly entrenched, innovations in packaging and promotional tactics will aid customers. Especially in the South African economic climate, to experience value in their purchasing decisions and add value to their lifestyle.
"Definitely, with less income in our household, we look for the best deals."
Sources:
Daymon Proprietary Customer Research, South African Customer, LSM 5-10, n = 500, April 2022
Daymon Proprietary Customer Research, South African Customer, LSM 7-10, n = 1500, Aug 2022
Source: Statistics South Africa
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- Roelien Havenga – Director of Business Intelligence (Africa & Latin America)
- roelien.havenga@daymon.com
- Bianka Bothma – Daymon Business Intelligence Analyst
- bianka.bothma@daymon.com
- Chrystle-Dee Grey – Daymon Business Intelligence Analyst
- chrystledee.gray@daymon.com
- Kym Wright – Daymon Innovation and Insights specialist
- kym.wright@daymon.com
Sample, Quantitative Research: (LSM 5 – 10, n = 1500, Sep 2022)
