The South African economy recorded zero growth for the first quarter of 2023, following a fourth quarter of negative growth in 2022. The country is pointing towards a technical recession (defined as two consecutive negative quarters of growth)[1], despite Finance Minister Mr Enoch Gondwana ruling out the possibility just a few weeks ago[2].
The FNB/BER consumer confidence index (CCI) also fell to -23 points in Q1 2023 (down from -8 in Q4 2022), indicating increasing financial strain among consumers.[3]
Yet as the economic climate sees consumers becoming more price conscious and thrifty, businesses in South Africa are facing unprecedented operational costs, resulting in price hikes to consumers.
According to Chief Operating Officer, Craig Pitchers, at leading national courier service The Courier Guy, South African businesses find themselves in a uniquely challenging position.
To build stronger and more resilient companies that can withstand the economic storm, Pitchers recommends that businesses focus on what he calls “The 3 Cs of building a recession-ready business”.
Costs
Pitchers believes there are many creative ways to lower operational costs, but says it is critical that cost-cutting does not negatively affect the quality of a business’ final product or service delivery.
He suggests outsourcing certain non-core activities to reduce overhead costs and free up internal resources to focus on core business activities.
“The Courier Guy offers competitive and transparent pricing options for business clients nationwide, that reflect the quality and reliability of its services, including special rates for selective industries or delivery volumes,” he adds.
Customers
With studies showing that it is between five and seven times more expensive to acquire a new customer than keep an existing one[4], another good way to get recession-ready is to ensure that business strategies place a heavy weighting on client retention.
To keep clients happy and satisfied during a recession, Pitchers says companies must prioritise excellent customer service and a personalised experience.
“By focusing on customer satisfaction and loyalty during a recession, businesses can ensure they keep their existing customer base, while also attracting new customers through positive word-of-mouth and reputation,” he says.
Collaboration
Another robust recession-proof strategy is for businesses to be agile and adaptable, so they can pivot their business strategy if need be, by shifting focus to a new product or service, or targeting a new audience or market.
For Pitchers, this goes hand in hand with the final ‘C’ for collaboration, which involves identifying suppliers in your industry or related industries that can help you to stay up to date with market trends and identify new opportunities.
“The power of reliable, loyal and like-minded partnerships in times of economic crises should never be underestimated. By depending on each other, businesses can provide a more comprehensive solution and increase the value proposition of their services.
“In addition to its delivery services, The Courier Guy offers last-mile delivery services for businesses that require assistance with the final leg of their supply chain.”
Pitchers concludes: “With the economic sentiment suggesting a muted national outlook for the year ahead, it more important than ever to be creative and open to new ideas that can help your business survive and thrive.”