Discretionary thrift at the bottom of the pyramid

Abstract

The purpose of this research is to investigate the concept of discretionary thrift amongst low income consumers. Flatters and Willmott (2009) identified discretionary thrift as an advancing trend amongst affluent developed nation consumers. These consumers temper their spending habits depending on product or occasion; there are certain products for which consumers are willing to pay a premium (behaviour associated with materialism) and there are others that consumers are looking to save money on (behaviour associated with frugality). Thrift for low income consumers, especially in emerging market settings, is not considered discretionary; rather, it is portrayed as ‘necessary’ to ensure survival. This study followed a descriptive, quantitative design and surveyed 154 individuals considered to be at the bottom of South Africa’s income pyramid. There is sufficient evidence from this research to support the proposition of discretionary thrift amongst low income consumers. Low income consumers were found to save money by paying as little as possible (behaviour associated with frugality) for fast moving consumer goods with low functional and status risk and were found to willingly pay the required premium (behaviour associated with materialism) for socially visible aspirational brands of clothing and fast moving consumer goods. The level of frugality and materialism expressed with respect to these products was not influenced by age or level of education. However, the level of frugality expressed with respect to these products was affected by an individual’s gross and disposable income.