A slowdown in economic growth and concerns about employment and inflation data have led consumers in South Africa to tighten their purse strings and pursue frugal, essential, and affordable purchases. Recent regulations in South Africa, such as the COFI Bill, aim to improve transparency and consumer protection. While these changes enhance service quality and financial inclusion, they also raise compliance costs, which businesses often pass on to consumers. This has impacted affordability and contributed to low consumer confidence. Consumer preference for private labels over more expensive national brands is on the rise, and consumer packaged goods (CPG) brands are developing smaller, sachet-sized products, with eco-friendly packaging and price transparency, while maintaining a sense of aspiration and identity. In the true spirit of "local is lekker," middle-income families are opting for shorter, value-packed getaways to destinations like the Drakensberg or Garden Route over international vacations. More affluent travelers are becoming selective, seeking experience over excess. So, consumers want brands to get the memo loud and clear — affordable does not mean a compromise in quality.

Despite rising costs, businesses can still create standout customer experiences through innovation and empathy

Think thoughtful innovation over radical acceleration.
When the future feels uncertain, the instinct is to pause and delay technology investments to keep budgets under control. But this pause might come at a cost. The businesses that survive are those that experiment faster, not because they know exactly what will work, but because they’re willing to adapt and learn. Putting a pause on digital transformation won’t work, nor will adopting technology indiscriminately. The idea is to circle the right problem and apply the right technology to solve it.

Double down on optimizing an omnichannel strategy.
Consumers are now so digitally fluent that they don’t distinguish between browsing methods, price comparing, ordering, and purchasing. The fusion of physical stores and digital platforms — mobile apps, WhatsApp shopping bots, click-and-collect offerings — is not innovation; it is basic hygiene. Shoppers are on a single purchasing journey, and they want consistency and unification in every channel. During an economic downturn, customers become cautious with their spending and value reliable experiences; therefore, it becomes even more urgent to meet them where they are.

Move fast, leverage the right technologies, and iterate often.
Some businesses get cold feet adopting new digital initiatives, but launching an AI-assisted app can become the engine that drives new customer acquisition, brand loyalty, and business resilience. This is true in any given economic scenario but assumes even greater importance when pure-play physical and delivery models come under pressure. Digital channels, underpinned by the right technologies, can unlock revenue streams. The idea is to keep the business impact in mind, not big bang transformation.

These bold innovations from South Africa are setting new standards in customer experience:

• Woolies Dash’s “Next Hour” delivery now powers over 70 percent of online food orders, redefining convenience. Meanwhile, TFG’s cutting-edge Riverfields Distribution Centre automates picking and dispatch, handling 450,000+ shipments weekly - setting a new benchmark in retail logistics. Shoprite’s Sixty60 app is a poster child for hyperlocal e-commerce, setting a benchmark for speed, UX, and delivery. Meanwhile, Spaza shops are increasingly being digitized through fintech and last-mile logistics platforms, such as Yebo Fresh.
   
• Digital investments are reshaping how travelers plan, book, and experience travel – from dynamic pricing to virtual concierge services.
   
• In travel and hospitality, platforms such as Travelstart and LekkeSlaap integrate personalized offers, AI chat support, and frictionless booking. Virtual reality previews, smart room personalization, biometric check-ins, and loyalty programs powered by data analytics are reshaping the guest experience. Forward-looking players such as Tsogo Sun and Sun International are using tech not just to attract but to retain and delight customers.
   
• Tiger Brands and Pioneer Foods are experimenting with online storefronts, while smaller challenger brands, such as Native Child and Yoni Tribe, thrive by owning customer relationships and gathering first-party data.

Businesses can turn challenges into opportunities with these bold strategies:

Source locally. In the consumer-packaged goods industry, we are seeing greater vertical integration and supplier collaboration. Localization doubles up as a response to consumer preferences for “home-grown” products and cushions against currency volatility.

Rationalize the physical store portfolio, with a focus on improving conversion rates. This means identifying “dead stock” or underperforming categories and SKUs (stock keeping units) that take up inventory and space.

Introduce “affordable” tiers of products: Pick n Pay’s “No Name” is outdoing competitors as demand for budget-friendly options rises. Traditional players can launch their own “value” line and cash in on the success of high-volume sales of private labels.

Tie up with service integrators, identify areas that are ripe for optimization, and improve margins without having to invest in large-scale digital transformation.

Use Human Capital Management (HCM) applications to boost productivity and institute effective performance management. Businesses in South Africa are integrating agentic AI to empower frontline and operational teams with real-time, autonomous decision support and personalized development pathways.

Build an AI-powered supply chain that will optimize inventory, reduce wastage, and predict demand accurately. For instance, Woolworths could leverage data and achieve breakthroughs when it began using machine learning to forecast demand based on weather patterns and regional behavior.

Use AI for dynamic pricing, to analyze real-time data and adjust prices to hit the sweet spot between profitability and customer satisfaction. Stores can charge more for in-demand items or offer discounts for different preferences.

To seize these opportunities and continuously evolve CXOs must embrace strategies that harness AI for transformative growth.

South Africa’s connected consumer — armed with mobile data and rising digital expectations — is forcing CXOs to rethink their operating models. AI isn’t just a cost saver; it’s a growth driver. Leading executives are shifting from transactional KPIs to experience-led strategies. AI helps them analyze sentiment, predict churn, and personalize offerings in real time. The goal: anticipate needs before they’re voiced.

Future-ready, with purpose

The businesses that will lead the next decade are not necessarily the biggest, but the most adaptable, empathetic, and digitally fluent. Now is the time for retailers to move beyond discounting and into meaningful value creation, for CPGs to meet frugality with innovation, for hospitality brands to turn local loyalty into lifetime value, and for CXOs to drive outcome-based AI initiatives.