NIQ State of Retail: Signs of recovery in some sectors, but consumer spending remains cautious

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The Tech & Durables (T&D) sector, meanwhile, remained under pressure. GfK South Africa’s latest panel market data for the first half of 2025 reveals that weak smartphone sales continue to drag the T&D sector down. Total T&D spending declined 1.1% year-on-year to R60.5bn, with underlying market dynamics suggesting that consumers are rebalancing their spending priorities.

“Declining fuel prices, interest rate cuts and relatively low CPI have helped ease some cost pressures for consumers, freeing up a little more discretionary spending,” says Zak Haeri, managing director for NIQ in South Africa. “However, persistently high food prices and unemployment remain a challenge for many households. As a result, consumers are still spending cautiously, trading down to cheaper brands and channels, and hunting for bargains and promotions.”

FMCG market: Traditional trade, snacks and tobacco enjoy a strong H1 in 2025

Growth segments in the FMCG sector for the first half of 2025 included beverages (up 10.4% to nearly R47bn), liquor (up 7.5% to around R63bn), snacking (up 9.3% to R23.6bn) and tobacco (up 16.2% to R13.4bn). These categories all saw impressive volume growth, with snacking sales volume up 12.2% and tobacco sales volume increasing by nearly 20%. Food, the biggest category, was up 6.6% to R117bn and saw a 5% volume increase.

Nearly three quarters of all FMCG retail sales went through modern trade channels such as supermarket chains, franchised grocery stores and e-commerce platforms. However, traditional trade outlets (which include independent superettes, spaza shops and taverns) are growing at a much higher rate. Compared to the same period last year, modern trade sales rose by 5.1% in value and 2.1% in unit sales, while traditional trade surged by 14.8% in value and 16.4% in unit sales.

Private label growth slowed in the first six months of 2025, growing 7.5% compared to the 8.8% increase in sales value recorded over the same period in 2024. Independent brands, meanwhile bounced back with 8.6% growth versus the 4.7% recorded in the first six months of 2024. As a result, private labels’ share of the market declined slightly from 18.5% in the first half of 2024 to 18.3% for the first half of 2025.

Says Haeri: “Consumers continue to manage costs by buying in bulk, trading down to value options and chasing promotions. Independent traditional retailers performed especially well for the first half of 2025, which is testimony to their flexibility, resilience and understanding of their customers’ needs. Slower growth for private labels suggests that major brands are successfully defending market share through price promotions, marketing campaigns and product innovation.”

Slowing telecom sales continue to depress T&D market growth

The T&D market once again showed a decline in sales value and volumes due to cooling sales in the Telecom sector. The Telecom category is the largest T&D segment by value, accounting for 54% of spending, and includes the all-important mobile phone market. Telecoms sales value for the first half was down 8.1% and unit sales decreased by 9.6%.

Major Domestic Appliances and Small Domestic Appliances posted consistent growth, with sales value up 6.4% and 6.3% respectively for the first half of 2025. In the Major Domestic Appliance segment, unit sales were up 8% as consumers replaced worn-out functional appliances. Meanwhile, consumers splashed out on small appliances like juicers, cooking gadgets and electric blankets to enhance their lifestyles.

IT hardware continued its recovery with 5.8% growth in sales value and a 14.5% increase in unit sales. This confirms that the replacement cycle began in 2024 and is accelerating, supported by increased consumer confidence and demand for productivity-enabling devices. Before this surge, many consumers and small businesses had last upgraded during the pandemic in 2020.

Consumer Electronics remained relatively flat (down 1.2% in the first half), indicating saturation in entertainment tech and a shift away from discretionary spending. A unit sales increase of 2.3% suggests that when consumers buy, they are purchasing at lower promotional price points.

Meanwhile, Office Machines saw the steepest decline (-21.7% in value and -30.2% in units), underscoring a structural shift away from reliance on print infrastructure and work-from-home setups.

“The upgrade urgency that drove growth in the smartphone segment appears to have dissipated. In the face of economic caution and a slower pace of smartphone product innovation, consumers are holding on to their devices for longer,” says Haeri. “The overall T&D market reflects a more value-conscious and strategic consumer, who prioritises long-term utility and home-centric investments.”

Mixed outlook for consumer spending

Haeri says: “Our data for the first half of the year shows a mixed picture. On the one hand, consumers remain strategic and frugal in their spending, but on the other, we see them making some small discretionary purchases in the FMCG sector.”

He adds that brands will need to focus on targeted promotions, reach into traditional trade channels, and develop carefully segmented offers for value-conscious and premium customers to win in this market. Retailers, meanwhile, should aim to maximise basket sizes with targeted promotions and loyalty programmes.

“For the T&D sector, it is essential to capitalise on consumer replacement cycles with innovative products, clear messaging on utility and value-for-money offers,” says Haeri. “In segments such as panel televisions, it is also important to make the most of promotional periods such as Black Friday and the festive season. Brands and retailers should align their offerings with consumers’ rebalanced priorities, particularly in categories that support digital lifestyle, energy efficiency and convenient living.”