Post

Basics are the new luxuries

Posted by Flux on 

1 July 2024

What we learnt:

The data about spending behaviour suggests that shopping is short-term and focused on basic needs (phones, laptops, fridges). A new trend of groceries as the new luxury splurge is growing. “Luxury purchases are getting pretty boring… because regular life is basically a luxury on its own”, says Tiktoker @sonicradio.

The average monthly income for this cohort is R13,500, which suggests that these purchases were either from savings or using credit. They choose to spend their money on top-of-the-range brands. Apple products featured strongly. It is unclear whether this was due to a belief that this brand is superior to the others or whether it is a status symbol. The purchase of expensive shoes also alludes to wanting to display their wealth.

Many of the items purchased are the tools with which one can operate a side hustle.

What does the research/experts say:

According to March 2024 research from Credit Karma, US Gen Z and Millennials’ financially irresponsible era is over as many adopt the “no-buy” financial trend. One-third of Gen Z and millennials admit to having a shopping addiction, 73% of Gen Z and millennials who have been financially irresponsible say their financially irresponsible era is over, and one in five Gen Z and millennials are participating in the “no-buy” year in 2024. 

Electronics, fashion and experiences top the list of what to spend on. Fashion using the BNPL platform Clearpay still dominates spending at 75% of Gen Z spending. According to a 2021 Consumer Report by 5WPR, this generation prioritises spending on electronics and technology, 52% of Gen Z in the US prioritising electronics and technology

According to eMarketer, Gen Z is the generation most likely to use buy now, pay later services to make a purchase. They also embrace other emerging digital payment technologies like mobile wallets, contactless solutions, and peer-to-peer payment apps. 

Our research cohort suggests South African Gen Zers are more responsible with their money than their Western counterparts.

What can businesses and policymakers do about this?

Whether they do it for status or practicality, these young consumers invest in top-end brands such as Apple. Local brands that can convince these shoppers that their products or services are worth spending large quantities of money on stand to gain new customers. Demonstrating their superior quality is one way to achieve this.

Employers can support young employees in developing healthy financial habits by providing workshops or resources on budgeting, saving, and responsible spending. 

Responsible saving and spending is in the best interests of policymakers. A country needs its young people to spend money – to contribute to economic growth. With Africa experiencing a youth bulge, this is even more important. Strengthening the manufacturing sector will help young people resist spending money on overseas fast fashion and e-commerce platforms like Shein, for example, and spend their money on locally manufactured, good-quality products instead. Financial literacy education will also assist young people to be able to save and spend on what is important to them. Politicians who are ostentatious about their wealth set a poor example for young South Africans – promoting conspicuous consumption and living beyond their means.

By Flux Trends 

The data and quotes mentioned above refer to a project that we are in the midst of, in conjunction with Student Village called “The 30/30/30 Project” whereby we collected insights from 30 South Africans, under the age of 30, 30 years into our new democracy.

WHERE TO FROM HERE?

Use these and many more insights from the 30/30/30 Project Report to BUILD your team, by booking a Bridgebuilder Workshop. 

Close the generation gap and dive into the future of work and how to manage it.

Contact Bethea Clayton at connected@fluxtrends.co.za  or +27764539405, if you are interested in exploring any of these options with your team or clients.

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