Segmentations that combine internal and external data improve decision-making and drive growth

South Africa’s consumer market is one of the most complex in the world. It combines characteristics of both developed and emerging economies. On one end, it has world-class retail and banking systems, with vast informal trade and financial exclusion on the other. Two families might live a stone throw away from each other, yet their access to income, credit, education and digital tools could differ dramatically.

For business leaders, this duality makes South Africa both a challenge and an opportunity, but certainly a place where a “one-size-fits-all” approach almost guarantees failure.

In this context, segmentation, which is the science of dividing consumers into groups with shared characteristics and needs, becomes indispensable. But not all segmentations are equal, and traditional demographic categories such as age, gender, or income are simply too blunt to capture the nuances of South African life.

❝ To succeed, companies must embrace multidimensional segmentations that reflect how consumers actually think, behave, and make choices in a volatile economic and cultural landscape

“To succeed, companies must embrace multidimensional segmentations that reflect how consumers actually think, behave, and make choices in a volatile economic and cultural landscape,” says Steve Burnstone, CEO at Eighty20.

Economic Volatility and Consumer Behaviour

South Africa’s economic volatility magnifies the need for businesses to have a clear segmentation approach. Household circumstances shift rapidly with inflation, unemployment, or even currency fluctuations, with these factors directly shaping purchasing behaviour.

Exchange Rate Sensitivity: A weakening rand increases the cost of imported goods, forcing consumers to adjust spending priorities, and this does not only impact lower income households; even middle-income households can swing between indulgence and austerity depending on price pressures.

Inflation and Affordability: When inflation peaked at 7.8% in 2022, many households traded down to private-label products, smaller pack sizes, and discount retailers. Although inflation has now eased to just above 3.0% in 2025, habits of frugality and value-seeking persist.

High Unemployment: With overall unemployment near 32%, and youth unemployment around 60%, many households depend on a single income to support multiple dependents. This financial fragility shapes everything from purchase frequency to brand loyalty.

Informal Economy Influence: According to Stats SA, around 8 million South Africans earn their income through informal channels. This includes small informal businesses, spaza shops, and contract work. Their incomes are irregular, but their spending can be substantial. They represent an enormous, often untapped market segment that demands flexible pricing, mobile-based engagement, and micro-credit solutions.

In this shifting landscape, segmentation cannot be static. Yesterday’s “middle-class” consumer might now be trading down, while an emerging entrepreneur in the informal sector could be an overlooked growth opportunity. Businesses must revisit and refresh their segmentation continuously, grounding it in real-time data to remain aligned with fast-changing realities.

❝ Credit access is one of the most powerful ways to understand South African consumers. It shapes not only what people can buy, but how they perceive value, risk, and opportunity.

Navigating South Africa’s Nuanced Credit Landscape

Credit access is one of the most powerful ways to understand South African consumers. It shapes not only what people can buy, but how they perceive value, risk, and opportunity.

The market is deeply layered with formal banking coexisting alongside informal lending systems such as mashonisas, stokvels and community credit. Consumers often mix these forms of borrowing, using various sources for different needs. For example, a salaried worker might use retail credit for clothing, informal loans for emergencies and a bank for savings. Each decision shaped by convenience, trust, and accessibility rather than income alone.

Understanding these nuances requires segmentation models that integrate financial behaviours: debt levels, repayment patterns, credit mix, and resilience to financial stress. This helps banks and retailers to identify not just who can afford a product today, but who is likely to remain a sustainable, loyal customer tomorrow. Such insights are critical in designing responsible lending, tailored rewards, and inclusive growth strategies.

Toward a holistic segmentation approach

To capture South Africa’s consumer reality, segmentation must integrate economic, behavioural, credit and cultural dimensions. It must also anchor internal customer data to external market context. The test of a modern segmentation is not only how well an organisation knows its customers, but also how those customers compare to the wider market. It requires understanding differences by region, life stage, income resilience, attitudes and identifying where the business is under or over-penetrated.

This outside-in lens answers executive questions that internal data alone cannot:

• Market structure and share: What is our true market share and revenue mix by segment and micro-segment?
• Penetration and white spaces: Where do we under-index relative to segment size and value potential?
• Competitor strongholds: Which segments are competitors winning with, on which attributes and why?
• Growth pathways: Which levers such as product features, pricing, channel mix, and messaging unlock each priority segment?

The Eighty20’s National Segmentation (ENS) was built to enable this holistic view. The ENS consumer profiling tool is a compliant and privacy-secure solution that combines a client’s internal data, such as transactions, channel usage, tenure, and product holdings, with rich external market data from the best available sources. These include demographics, socioeconomic context, mobility and media signals, and financial behaviours. In total, the tool draws on more than 1,000 variables. The outcome is a consistent map of the market and your customer base on the same segmentation schema.

Businesses adopting multidimensional segmentation gain a competitive edge by integrating. This approach cuts through complexity to identify what matters most, enabling more effective marketing and deeper consumer relationships. Eighty20’s experience shows that properly understood complexity yields radical clarity, which drives smarter strategy, inclusive growth, and stronger performance in South Africa’s dynamic market.

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