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It’s probably a little too late to sound warnings about the drop in GDP and how it is affecting the so-called ‘middle classes of South Africa’, but two recent articles have raised a few confusing and concerning points. A recent article in Moneweb indicated that South African shoppers are heading back to the malls in droves following the ‘goddamn pandemic’.

According to Belinda Clur, MD of research house Clur International, shoppers are heading back to malls in droves, increasing trading density levels in malls by 11.5%. This basically just means that brick-and-mortar shops are increasing their turnover and getting more bang for their space.

“The retail heartbeat looks strong, and the sector certainly saw a very impressive 2022 year.”

Online shopping also didn’t seem to signal the death knell for malls, and now we are spending like crazy again. In other words, people like Michael Mark at Truworths are making a killing. So, what’s the problem?

According to another report released at the same time, consumers are in trouble, and the same middle-class peeps are apparently getting poorer. According to the article in Bussiness Tech, South Africans are indeed spending more, but it seems it’s all debt. Eighty20, a data analytics firm, has shown that consumers are slowly drowning, with interest rate hikes forcing people to forfeit instalments on big loans such as vehicle financing and home loans.

The data shows that middle-class workers appear to be turning to credit card debt to help them fund their lifestyles. The total average instalment-to-income ratio for the middle class has increased by 7.4% over the last year meaning more than two-thirds of the average middle-class salary goes to servicing debt.”

Although the economics of this perfect storm is no mystery, it does however seem that our spending spree has little to do with ‘surviving’. It’s here that Revenge Shopping comes into the picture.

It would appear as if there has been a ‘modern renaissance’ after Covid, and now everyone is suddenly in love with life again and this means spoiling yourself a little. We are taking revenge on our finances.

There’s been a stark realisation of what you can think of as the fragility of life, and people are actually seeking La Dolce Vita or ‘the sweet life’ through balance, wellness, leisure experiences.

People have had enough of having to buy toilet paper to stave off the coming apocalypse, and now we are buying shoes, handbags, and going on overseas trips. The problem is that most of these people are using debt to do this, and while they are sinking deeper into a bottomless pit of interest rates and default ‘call centre calls’, the retail giants are smiling all the way to the bank.

The cause of this unbalanced approach to our finances is obvious, but what it will lead to is less clear. But surely we are headed for trouble when we are defaulting on our loans in order to buy new Adidas hightops. It’s all very highbrow economic stuff, and without an MBA you will probably never understand terms like super-regional index, large-centre-based stocks, and stimulating growth and inflation levels. Hell, I don’t, but it seems we are kicking ourselves in the nuts.

What I do know is that we should all have another look at our own finances in the coming weeks. With another massive fuel price hike looming in April, we’re going to have to choose between shopping for food or buying some kicks.

Don’t be foolish and spend money you don’t have on stuff you don’t need.

[sources:busstech&moneyweb]