Almost four months into 2023, consumers have experienced an avalanche of economic challenges.
This includes the cost-of-living crisis, persistent load shedding, large interest rate hikes, minuscule fuel price decreases, and South Africa’s grey listing status.
Some economists argue South Africa has already entered a technical recession, given these grim circumstances.
According to Mishaan Ratan, Chief Marketing Officer from Africa's first on-demand subscriptions platform, Rentoza: “During times of recession, the economy slows, businesses often struggle to stay afloat, leading to staff reductions and retrenchments.”
Ratan says these factors temper South Africa's economic growth and have real and tangible effects on consumers feeling the economic pinch.
A Financial Sector Outlook study by the Financial Sector Conduct Authority revealed that over half of South Africa’s credit-active consumers are over-indebted.
The South African Reserve Bank (SARB) stated that South Africans spend approximately 75% of their salaries on debt payments.
“Given the bleak economic reality, now is an opportune time for consumers to change how we access these essential products like mobile devices, gym equipment, appliances, and even baby goods,” Ratan says.
According to Ratan, a subscription provides a unique advantage in these volatile global and local conditions.
“Subscription pricing does not change regardless of interest rate hikes or global conditions. In fact, we have been decreasing our subscription costs as our business has grown.”
‘’When consumers subscribe to a product and can no longer afford it, they can just cancel it and return it, unlike other consumption methods, like credit agreements.”
Ratan says the bonus of a subscription is that added costs like repair replacement and maintenance are bundled in.
‘’When you own a product, you are responsible for it, and its value depreciates. When you need to upgrade, you must go through the whole cycle again, whereas, with a subscription, you can upgrade whenever you want. All we do is swap out the product for the one you want.’’
This differentiated approach allows consumers to acquire products at a fixed cost without getting into debt.
“Accessibility is at the heart of our business. We want everyone to access the products they need and want without having to be subjected to high-interest credit options. We are not a credit provider; therefore, we do not do credit checks,” he says.
For Ratan, although more complex and unstable economic times are ahead, subscriptions remain reliable.
“Subscribe to the lifestyle you want and is a good way to avoid being subjected to unpredictable conditions.”
BUSINESS REPORT