Kenyans now have less cash to spend according to findings by a Nielsen survey. The Nielsen’s Consumer Confidence Index (CCI) Survey for 2020 Q2 shows that consumer confidence fell by 11 points to 88, with many now shelving spending intentions, and saving less. Only 20 per cent of interviewed Kenyans said they have spare cash, down from 27% in the last quarter.
Dwindling disposable income resulted in changes in spending habits, with only 15% of Kenyans preferring to purchase what they want now, compared to 24% in the previous quarter. Part of the reasons why most are postponing spending is dwindling confidence in job prospects in the coming year. According to data from the Kenya National Bureau of Statistics, Kenya has already lost over 287,000 jobs in 2020 Q1.
COVID19 guidelines, including the recently lifted restrictions on movement, lowered consumer sentiment. Further, rising inflation in 2020 Q1 led to declines in household spending, with many expecting higher food prices in the next 12 months.
“Before the Covid-19 lockdown Kenyan food inflation rose from 1.1% in 2019 Q1 to 10.6% in 2020 Q1 with sharp declines in household spending in March and April 2020. The implementation of certain lockdown measures, with movement restrictions aimed at curtailing the spread of the Covid-19 pandemic, has undoubtedly had a significant impact on consumer sentiment,” says Nielsen East Africa MD Faith Wanderi.
The uncertainties of the pandemic have now shifted focus to catering for essential living expenses and pumping extra finances to home improvements. As a result, fewer people are putting money aside for savings and investments. 79% say that they invest additional funds on home improvements, while 67% put the money to savings, down from 80% in the previous quarter.
Low Consumer Confidence During COVID Could Alter Long term Spending Behavior.
Concerns on increasing food prices, as well as a gloomy outlook on job prospects in the next year are forcing Kenyan consumers to cut expenses. 68% are holding off purchases for household items, while 62% are cutting costs by pursuing cheaper loans and insurance policies.
Bargain hunting is the new norm for clothes, as 57% are now spending less on outfits, while over 50% of consumers cut on outdoor entertainment.
Nielsen warns that the new behaviours will outlive the pandemic, forcing manufacturers and retailers to adapt to the new consumer reality. “Manufacturers and retailers will need to adopt a range of agile and innovative responses that meet the new shopper reality amidst this sea of consumer change,” says Wanderi.