Page 45 - IRMSA Risk Report 2021

MOTUS HOLDINGS LIMITED
GROUP EXECUTIVE: CORPORATE AFFAIRS
RISK AND SUSTAINABILITY
BERENICE

FRANCIS

EXPERT OPINION

Never in recent history has an event created such The shift is not just due to concerns regarding income.
uncertainty in global markets and behaviours. Whilst the An increase in remote working has led to lower fuel sales
2008 Financial crisis led to a recession due to the impact and a significant increase in e-commerce and online
on the demand side of economies, it didn’t have as severe entertainment. Consumers are also more aware of what
an impact as what Covid-19 has had on the global supply impacts on their health, and therefore more circumspect
of products and changes in consumer behaviour. regarding the brands they consider when shopping
online. The average size of online baskets has increased,
Lockdown regulations around the world have changed as more consumers choose to make fewer trips to their
the way in which people live, work and socialise. Some of local retailers. There is a rise in – and awareness of –
these changes may be temporary – for example: spending the value of local or community-based small business
less and reducing social interaction. However, many may production. Many countries are urging people to buy
be more permanent in nature – for example: the use of local to boost their flagging economies.
omnichannel or online retail, blended learning and online
meetings. Travel, particularly tourism, has been severely impacted.
While the recent lockdown regulations allow travel to
These trends cannot be predicted with any form of certain countries, consumers are choosing to holiday
certainty and have created new challenges for businesses locally, mainly due to concerns around the return of
when adapting to this new market and their client restrictions and uncertainty around the regulations of
expectations. other countries.

Given structural inequality in South Africa, consumers South Africa and its businesses have responded in
reacted differently depending on their socio-economic various and inventive ways. We are currently at our
circumstances. The consequences of how Covid-19 lowest interest-rate cycle ever. Businesses have changed
impacted individuals and their financial circumstances their interactions with customers, using online and more
also led to high segmentation of the market depending traditional methods of enticing consumers. Brands have
on: increased investment in online-purchasing experiences
• Disposable income and increased transparency around how they leverage
• Down-buying, even on essential goods and services their supply chain to ensure that consumers are getting
• Access to markets and channels to retailers value and remain safe. Consumer reactions to lowered
interest rates and the increased supply of goods at
In South Africa, the initial lockdown regulations were discounted prices may yet create another shift in
particularly strict, with the banning of sales of cigarettes expectations that businesses will need to monitor.
and alcohol, as well as limited online and physical retail.
Consumers, depending on their socio-economic status Since it is very difficult to predict consumer behaviour,
or living conditions, responded differently. For example: it is important for businesses to build capabilities within
while many people stopped smoking or drinking, the their companies to ensure quicker and more confident
black-market sales of cigarettes and alcohol soared. reactions when faced with changes. Businesses must find
new ways to engage with their customers so that they can
It is unclear whether consumer behaviour in these two be at the forefront of change. As consumers deal with the
products has changed permanently or temporarily. “New Normal” or the “Next Normal”, it is imperative that
What has changed is that all consumers, given concerns businesses not only keep track of changing customers’
around disposable income and debt, are more conscious needs but pre-emptively strike to influence their
of budgets and the amounts that they are spending on behaviour.
luxury or non-essential items. Based on a recent McKinsey
study, they plan to continue doing so in future.

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Sources: WEF Covid-19 Risk Outlook Insight Report, May 2020, in partnership with Marsh & McLennan and Zurich Insurance Group.
McKinsey and Company, South Africa Consumer Sentiment during the Coronavirus Crisis, 5 November 2020

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