Sefalana sees pressure on consumers worsening
Lewanika Timothy | Monday August 10, 2026 06:00
Sefalana, which sells over P12 billion worth of fast-moving consumer items annually, said its stores were seeing healthy foot traffic across the country, but thinner baskets were being filled, with only necessity items. That trend is beginning to hit the group’s margins.
In its latest financial results covering the 52 weeks to April 2026, directors revealed that the way shoppers were spending their money was beginning to form a recognisable pattern as the years go by, with lower-margin products replacing discretionary purchases, squeezing retailer profitability.
“Consumer spending is evolving. Customers continue to manage their available income cautiously, prioritising essential and necessity purchases. “As a result, demand for higher-margin discretionary and luxury products softened, leading to a less favourable sales mix and an overall dilution of gross margins across several business segments,” the directors said.
Since the COVID-19 pandemic, consumers have faced mounting financial pressure as the cost of living has generally risen, driven largely by supply chain disruptions and geopolitical tensions that have pushed up the prices of essential goods.
The cost of daily essentials like grains, milk, sugar and wheat products like flour have been trending higher. BusinessWeek reported last year that retailers were beginning to increase the prices of essentials by small thebe additions every week and sometimes daily to try and conceal the inflationary movement of the prices of goods on the shelves.
Whilst Sefalana managed to sell P12 billion worth of products, pointing to healthy foot traffic to stores, consumers opted for value packs and combo deals, which affected margins as these promotional sale packages do not carry much gross profit.
“Consumers are visiting our stores more frequently than previously, but basket sizes have fallen. “The consumer is still somewhat cautious and tends to focus more on value packs, necessities and private label products, rather than luxuries. “This has a drawn-out dampening impact on gross margins,” the directors reported.
The latest results suggest that while households continue to visit supermarkets regularly, they are becoming more selective about what goes into their trolleys. Rather than making large monthly shopping sprees, consumers are spreading purchases over several visits, buying only what is immediately needed and opting for cheaper alternatives where possible.
The trends are in line with the budget line theory, which posits that as household incomes fail to keep pace with the cost of living, consumers maximise the value of every pula by shifting spending away from discretionary goods and towards essential items.
Rather than abandoning consumption altogether, households use substitution, in this case substituting premium brands for cheaper, private label products and value packs to manage shrinking cash flows.