Tag: retail

 

When you need to buy a new kitchen gadget, a designer lipstick, a branded razor, a calendar and that vital cable for your television — what’s the one easy place you can turn to?

That’s right, there isn’t one in Australia. You’re facing hours going shop-to-shop, picking up second-rate products from a local mall or ordering from various websites with delivery fees on each item and mixed rules on returns.
Amazon is the game-changer our retail landscape needs, one that transformed shopping in the UK and US years ago. Despite the hand-wringing from the retail sector that has dominated reporting on the online giant, this is mostly good news for the consumer.
You will be able to buy what you want, when you want it. It will typically be affordable. Existing brands will have to work harder to compete. It will be the arrival of Uber, or Aldi, all over again.

I lived in the UK more than four years ago, and buying books, travel accessories and homeware couldn’t have been easier. Every Christmas now, I log on to Amazon and select the perfect toiletries, chocolates, booze, games, DVDs, hiking gear and toys that I want for all of my relatives, adding wrapping and a message where needed. It’s the work of minutes.
In the four years I’ve been in Australia, waiting for Amazon, the company has grown enormously, and it’s in fashion that investment bank Morgan Stanley now sees the biggest threat.

Its report “The Amazon Effect in Australia” says $800-million will be wiped from the earnings of chains including JB Hi-Fi and Harvey Norman, but the single biggest impact will be on Wesfarmers. The nation’s largest retailer, which owns Target and Kmart, could lose more than $428 million in earnings by 2026.
The report said department stores would be the sector worst hit, as Amazon generates up to $12 billion in sales by 2026.

Online retailer Catch Group this week announced it is having a makeover to ensure it becomes number two in Australia after Amazon, rebranding Catch of the Day as Catch.com.au and turning it into a marketplace.
Amazon Fresh will take on the grocery sector, and it is aggressively building its Amazon Prime video membership service, making inroads into streaming and refusing to stock Apple products in favour of its Fire TV sticks. Amazon entered the Artificial Intelligence field in 2014 with its Alexa speaker. This week it emerged that its shares (and those of Google) have just reached $US1000, putting them in an elite club of mega-companies.

In December, it opened the first Amazon Go store at its Seattle headquarters, a convenience store with a tracking system of sensors, algorithms, and cameras instead of cashiers or checkout lines.

Australians haven’t migrated to online shopping in the landslide once predicted. Figures released by the National Australia Bank last week showed the Online Retail Sales Index — a measure of spending on retail goods — fell by 0.8 per cent in April. But even if you prefer to visit a store and try clothes on, it’s being able to get those small essentials without the painful search that will hook you in.

And Amazon is moving offline, too. In December, it opened a prototype Amazon Go grocery store at its headquarters in Seattle, Washington, which uses a tracking system of sensors, algorithms, and cameras instead of cashiers or checkout lines. The eCommerce giant opened its first physical bookstore in New York last month — its seventh in the US. Amazon Books, like the Go store, does not accept cash, with Prime members using the app on their smartphone to pay and non-members using a credit or debit card.

Maxim Group today predicted a future in which Amazon will run everything from petrol stations to credit lines, Dow Jones reports.

“Consumers will be able to save money at the Amazon gas station because they belong to Amazon Prime, much like Costco members today,” said Maxim’s Tom Forte. “They will also be able to pick up and return their merchandise ordered online at the Amazon gas station.”

They’ll book their travel on Amazon, and have the firm send their suntan lotion ahead to the resort so it’s there when they arrive, he added.

But just as with Uber and co, there are serious questions over Amazon’s omnipotence. Critics say the retailer has a monopoly and is destroying small businesses — book stores, boutiques, grocery stores. There are also questions over how it pays tax.
There have been regular accusations that the company mistreats workers, with reports in December of “intolerable conditions” at a Scottish warehouse, with badly paid staff forced to sleep outside in tents to save on commuting costs.

A Sunday Times investigation found temporary workers at the warehouse were being penalised for taking sick leave and put under immense pressure to hit targets, and that water dispensers were often empty despite the intense physical nature of the job. Unions said workers were falling ill from overwork.

In the US, where Walmart is buying up smaller online retailers as it battles to compete with Amazon, there have been dozens of stories about inhumane conditions at its warehouses. But workers who spoke to Mental Floss in 2015 said conditions were relatively typical for warehouse work. In 2012, after an expose on the searingly hot summertime conditions, Amazon announced plans to spend $52 million to install airconditioning.
The company is now recruiting for hundreds of jobs in Australia as it prepares for its highly anticipated debut. It has broadly positive reviews on job sites Indeed and Seek, although there were complaints about difficult management, tough targets and short lunch breaks.

Amazon is a massive tech corporation and — mirroring Facebook, Apple and Google — there are justified concerns over its practices and treatment of employees as it grows.
However, it is time Australia caught up with the rest of the Western world and actually knew what those were.

By Emma Reynolds for www.news.com.au

The death of retail as we now know it is greatly exaggerated. Retail isn’t dying; it’s evolving. Just like it has done before. There has always been disruption in the retail sector. A major disruption occurred in the late 1800s when Sears introduced the catalog and brought the entire store into the homes of U.S. consumers. This gave Sears the same advantage over brick and mortar stores that ecommerce sites have today. Sears was simply responding to the needs of its customer since 60 percent of the U.S. population lived in rural areas at the time and didn’t have convenient access to stores. Sears would bring the store right to them.

The same principle of meeting customer needs holds true for the current retail evolution, which is being driven by a confluence of change. Changing consumer attitudes, behaviors, and demographics; ongoing channel and digital disruptions; and increasing competition for consumer mindshare and dollars are forcing a shift in long-held paradigms – continuing the status quo is no longer an option.

It’s now about customer engagement, not customer acquisition. Rather than a multichannel strategy, the strategy now needs to focus on the customer and finding new ways to deliver the products they want, when they want them, whether online or at a physical location. It’s no longer about brands, big logos, and price promotions, it’s about engaging consumers with experiences, personalization, quality, service, and value.

The traditional retail business model that has stood the test of time over the decades is now transforming at the speed of light. Retailers competing to stay in the game are turning their ecosystems on end, breaking down old-school beliefs, and reinventing themselves. Amidst all of this change, however, is one constant that has been a guiding principle of retail since it began and that is: know thy customer. Those retailers and brands that survive and thrive are those that base their decisions on the needs and wants of their customers; those that know their customers best and act on that knowledge.

Knowing Thy Retail Customer

Consumer Economy:

More than eight years after the Great Recession, the U.S. economy is improving at a slow and steady pace, but the consumer landscape has been fundamentally reshaped. Consumers entered 2017 with more confidence in their financial situation than they have had in years, but their attitudes and behaviors around spending have changed.

Even though incomes are improving, real income is still comparable to where it was in 2007, and that is impacting consumer spending decisions. The growth in single-person households has also decreased the number of dual-income households. Healthcare costs are growing exponentially and will continue to erode disposable income. National student loan debt is at an all-time high-and is expected to double in 10 years, causing Millennials to delay marrying, purchasing cars, buying homes, and making other major purchases. Retail sales and overall consumer spending, key drivers of economic growth, are suffering as a result of lackluster income growth and increased expenses. Looking at sales across the broad set of industries tracked by NPD, we see spending slowing in many categories, particularly in traditional bricks-and-mortar channels.

When consumers do spend, they have a variety of options vying for their dollars, including many that are not tangible products. Consumers are exhibiting an interesting shift in spending to the experiential, demonstrating their desire for something more, and something different – like activities, travel, and entertainment. For example, the U.S. government reports that from 2010 to 2015 consumer spending on sports and recreational vehicles increased by 45 percent, spending on foreign travel by 36 percent, and on hotels and motels by 43 percent. Spending outside of measured consumer goods categories is typically increasing faster than total consumer spending on average.

A Multicultural/Multigenerational Mosaic:

Today’s retail consumers collectively represent a multicultural, multigenerational mosaic. By 2044, the U.S. Census Bureau projects that more than half of all Americans will belong to a minority group, which is any group other than non-Hispanic White alone. By 2060, nearly one in five of the nation’s total population is projected to be foreign born. Overall, Millennials are more diverse than the generations that preceded them, with 44.2 percent being part of a minority race or ethnic group. Even more diverse than Millennials are the youngest Americans: those younger than 5 years old. In 2014, this group became majority-minority for the first time, with 50.2 percent being part of a minority race or ethnic group.

Millennials and Boomers are still the sweet spot demos for many retailers. Millennials have now surpassed Baby Boomers as the nation’s largest living generation and they are coming of age, working, developing careers, and raising families. Some 1.3 million Millennial women gave birth for the first time in 2015, and they now account for the vast majority of annual U.S. births, according to the U.S. Census Bureau.

Baby Boomers are refusing to be pushed aside by the younger generation or ignored by retail, and still account for the bulk of consumer spending growth in major products and goods categories. As Boomers age, over the next 10 years we will see dramatic growth in the population of consumers over age 65, influencing spending in new ways. As consumers retire, they have less disposable income and spend less. More than half of households over the age of 65 are in the bottom 40 percent of income. Also, older consumers tend to spend disproportionally more on services and experiences instead of products.

To know thy consumer is to also understand that within each of these demographic groups are sub- segments that think and behave differently from others in the same group. The needs and wants also vary. Fortunately with the use of data, insights, and analytic solutions, like consumer segmentations, retailers can get to know their customers up close and personal.

Onward and Forward

Whether driven by want or need, consumers will always be in the market for goods and services. Retail, in whatever format —physical or virtual — will continue to exist. Retailers and brands that are in it to win it will recognize the need to rethink the retail experience they provide. They will build business models that offer experience, service, and value to their customers and reflect the diversity of generations, life stages, and other influences that make up our world today.

By Marshal Cohen, Chief Industry Analyst – Retail, The NPD Group

The future of South African retail

The South African Council of Shopping Centres (SACSC) recently invited Daniel Silke, one of the country’s leading political analysts and futurists, to speak to South African retailers and property management teams at a recent networking breakfast.

Silke shared about his insights for the 2017 economic year, highlighting that South Africa’s near-term future remains in the balance.

“This is a year in which South Africa will either emerge from the bonds that have held us back, or it will be a year that will continue to provide concern and even possibly set the scene for a fairly combustible near future in advance of the 2019 general election,” Silke says.

Silke also adds that South African retail was changing and retailers need to “buck up” and accommodate these methods of retail.

“Previous warnings and predictions about retail going online are becoming true. The use of technology across the board, not just in retail, in every aspect of society is changing the bricks and mortar offerings of retailers.

“In South Africa, we are behind in terms of Internet connectivity. When we do embrace this technological wave like the United States has, we will see how dramatic technology affects every aspect of business in the country. The shopping centre and retail industries in SA need to ‘buck up’ and realise that internet-based retail such as Amazon is going to enter the country in a very big way. Retailers need to tailor their products for the future.”

Speaking about the recent Budget Speech, Silke said that Gordhan’s speech didn’t offer anything stimulatory for the economy with regards to retailers.

“Many were hoping for leniency; unfortunately more money is going to be taken from not only the wealthy, but from all citizens earning within the tax bracket. Middle class income earners will also see their contributions to SARS upped this year simply because the tax brackets have not kept up pace against rising inflation; we call this ‘bracket creep’. This means subtly that the middle-income earners will contribute, if not more, than the ‘super rich’. This will certainly have a dampening effect with regards to their retail spend. The good news is that there was no VAT increase this year-if there was, then I would argue that it would be a very poor year for retail in South Africa.”

Silke believes that the country needs to become investor-friendly again if the economy is to improve and unemployment is to decrease.

“We need both domestic and international investors. Domestic investors are ‘sitting on piles of cash’ and are reluctant to invest that cash because they are uncertain about the policy framework within the country. We have also seen a reduction in foreign investment over the past 18 months or so. With regards to making the country viable for investors, I get concerned about the reliance on the State to get things right. The history of the country mentions that the State is in charge of making South Africa equitable.

“I do not have a problem with that. I have a problem with the fact that State-owned enterprises and the like have proven to be inefficient and they have proven to sap money out of the pockets of the South African tax payer. We need a de-regulation on State-owned enterprises. We need to make these enterprises efficient in order to free up spend and curb the current government’s ‘heavy hand’ with regards to spending and make South Africa investor-friendly again.”

The impact of Brexit could make for a gloomy Christmas for retailers after latest indications of a slowdown in the sector ahead of the festive period.

Retail Ireland, the Ibec group that represents the retail sector, said its Retail Monitor for the third quarter of this year showed a fall in consumer sentiment and a slowing down in sales.

Retail Ireland said the Government now needed to prioritise support for the sector and take steps to ensure shifts in currency do not hamper the economic recovery and the jobs associated with it. Adding a warning over wages, it said there needed to be “a renewed effort is needed to keep labour, energy, regulatory and insurance costs in line”.

Retail Ireland director Thomas Burke said: “While sales values grew by 1.1% in the third quarter of the year when compared with the same period last year, the steady decline in growth rates quarter on quarter is a cause for concern.
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“The 23% slump in the value of sterling since the beginning of the year has prompted more consumers to travel North to shop, with new figures also showing a surge in online shopping in the months following the UK vote. Central Bank statistics show that e-commerce transactions recorded on Irish debit and credit cards jumped by 20% from €1bn to €1.2bn between July and September as sterling fell. This was way above trend and is likely to have mostly gone to UK based online retailers.”

He said the Irish retail sector was working to adjust its prices even though it was still selling products that were purchased at a much different exchange rate a number of months ago.

Mr Burke said retailers were squeezed by consumers demanding price reductions and UK-based suppliers seeking price increases.

In department stores, despite total sales values increasing by 1.5% compared to Q3 last year and total sales volumes rising 2.3% over the same quarter last year, the devalued sterling exchange rate has driven Irish shoppers across the border and online to UK-based websites, while there has been a decline in UK tourist spend.

The pharmacy sector grew by 1% in value terms and 1.3% in volume in Q3 compared to last year, but RI said the overall growth was driven by modest prescription volume growth and strong over the counter healthcare sales due to an extended hay fever season.

The third quarter was broadly positive for the DIY and hardware stores, but the books, newspaper and stationery market was disappointing with CSO data suggesting the market was down 5% in both volume and value. As for supermarkets and convenience stores, sales values and volumes were up 2.5% and 3.1% versus last year.

Meanwhile, a dispute between the the Musgrave group and Unilever is over.

The country’s largest grocery group and Unilever had been at loggerheads over pricing but in a joint statement both said: “Following a satisfactory conclusion to recent commercial discussions, Musgrave and Unilever are pleased to confirm that supply of all Unilever products to all Musgrave stores recommenced on Monday.”

By Noel Baker for www.irishexaminer.com

Can retail save our economy?

The question of retail’s power to restore SA’s economy was addressed by various speakers at this year’s Beyond Retail event, hosted on 13 October 2016 at The Bay Hotel rotunda in Camps Bay.

With the disclaimer that South Africa is going through turbulent times yet growth in consumer spending sparks economic expansion, Dr Azar Jammine, the polymath who speaks six languages and is director and chief economist at Econometrix, spoke first. He began by stating thus far the news is positive with retail sales growing 3% this year, making his short answer ‘yes’, but questioned whether it will continue to do so undoubtedly.

He set the scene by describing the current economic context and spoke of the fact that this year’s Budget Speech didn’t expressly focus on the retail sector. He expressed his views on the 2016 Budget Speech below:

The economic context

The world’s population is growing drastically and is expected to reach 9-billion by 2040. SA follows the global trend.

Urbanisation is also taking hold, with China the pinnacle example, as well as Africa, which is relatively non-urbanised overall so there’s still huge scope for future urbanisation. This equates to good long-term economic growth potential. The resulting shift in demographic trends also needs to be addressed by retailers and marketers alike – who lives where when?

Life expectancy has also seen a marked increase over the past decade, particularly among females – Jammine says to add the difference between your birthdate to your spouse’s and add six. That’s how much longer wives are now expected to live beyond their husbands. Much of this success locally can be attributed to the reduction in Aids-related deaths following the nationwide roll-out of free ARVs in 2005.

Jammine admits there’s definitely lots of doom and gloom regarding the economy of late, but there are reasons to be upbeat:

  • The local drought is hopefully over, with our annual October rains just around the corner;
  • There has been increased tourism into South Africa from across the globe;
  • The electricity supply constraint has dissipated;
  • Inflation was lower than expected;
  • Interest rate hikes are no longer a certainty;
  • The petrol price is falling and actually lower now than it was a year ago;
  • Businesses still have solid balance sheets;
  • Commodity prices have recovered from January lows; and
  • The rand is still cheap and costs are rising at a slow pace, creating a wonderful opportunity for exports.

Jammine forecasts gradual depreciation over the next few years and says, “In all seriousness we need to stop blaming Zuma for everything,” as much of SA’s recent economic slowdown has been based on global factors. Luckily the IMF says both global and local conditions should improve slightly over the next few years, and Africa is still seen as the last bastion for global growth.

Jammine also pointed out two seldom recognised sources of inequality beyond educational disparities – these are global monetary policies and the impact of improved corporate governance and related factors like executives’ remuneration over that of the working class, which breeds antagonism yet also creates an affluent middle-class or upper-class minority, important for the retail sector.

All taken into account Jammine cautions against being too positive for the short-term future as indebtedness is still high.

He says: “Be sober about prospects over the coming year. Retail is undoubtedly an important prop, but we need to do more.”

By Leigh Andrews for BizCommunity

The first edition of the International Sourcing Fair (ISF) – reaching African markets in home, hospitality, office and retail – will take place at the Ticketpro Dome in Johannesburg, South Africa, from 13 to 15 September 2017. This landmark three-day event is set to transform the face of buying across Africa, as the continent’s increasingly sophisticated consumer culture continues to accelerate unprecedented economic growth.

Exclusively a trade platform, ISF will provide a forum where international suppliers can make direct connections with potential retailers, buyers and procurement teams from South Africa and other selected African countries.

Developed and managed by Thebe Reed Exhibitions, ISF is part of a high-profile décor and design event portfolio that also features prestigious shows such as Decorex SA and 100% Design South Africa.

According to Carol Weaving, MD of Thebe Reed Exhibitions: “Thebe Reed is focusing on expanding and developing trade shows in Africa, so launching ISF to add to the strength of the existing décor and design portfolio made absolute sense.”

As the only event of its type catering for Southern Africa and Africa, ISF will provide an exclusive forum for sourcing and buying retail and commercial products aimed at the home, office, gift and hospitality markets. Those attending the show will include retail and hospitality buyers as well as importers, decorators, interior designers and online retailers, among others.

ISF will include the following product categories:
• Art and framing, mirrors
• Bathroom products, accessories
• DIY, building, hardware
• Craft and ceramics
• Furniture
• Giftware, stationery and wrapping
• Glassware
• Home appliances and gadgets
• Home decoration and accessories
• Kitchenware and tableware
• Office and desktop
• Outdoor and garden

Right time, right continent
“We are launching ISF at a point when rapid development, strong growth and increasingly powerful technology are opening up prolific business opportunities throughout Africa,” explains Cairey Baxter-Bruce, Head of Business Development for the portfolio. “Bringing buyers and suppliers together in the spirit of collaboration will help both groups to unlock maximum value from the continent’s renaissance.”
The statistics testify to the strength of this rationale. Currently, there are an estimated 50-million middle-class households across the continent and a growing number of global players are taking active steps to capitalise on Africa’s growing spending power and emerging consumer culture. In South Africa, for example, 30 new shopping centres are set to open their doors by the end of 2016, while 25 retail developments are underway in Nigeria. Not only are Africa’s retail and consumer goods sectors booming, but the world’s premier hotel and restaurant brands have also identified the continent as a hotbed of opportunity.

Serious players, global reach
In response to these macro-economic drivers, ISF is expected to attract exhibitors from a number of countries globally including Turkey, Portugal, Italy, Greece, Brazil, India, China, Malaysia, Indonesia, Korea and Taiwan. They will be joined by a small group of local exhibitors in the specially curated South African pavilion.

Added value, measurable benefits
Thanks to Thebe Reed Exhibitions’ proven expertise, those attending ISF will benefit from:
• An array of retail and commercial products for the home, office, gift and hospitality sectors sourced from international suppliers
• A visitor focus on selected African countries with developing retail and hospitality sectors
• A customised business match-making programme to facilitate trade
• Exclusive exhibitor packages including accommodation, travel and business networking opportunities
• An exclusive local and African hosted buyer programme including VIP access, accommodation, travel and business networking opportunities
• Marketing and promotion to an existing database of over 30 000 buyers
• A marketing spend of over R2million and existing relationships with key industry partners and media

For more information about ISF, please contact Cairey Baxter-Bruce on +27 (0)11 549 8300 or e-mail isf@ThebeReed.co.za. The soon-to-be-launched Web site will be hosted at www.intsourcingfair.co.za.

The science of retail shopping

According to studies by leading consumer manufacturing companies, the majority of people look and then turn to the left when they enter a store. This is a very good example of how, despite an increasingly sophisticated and tech-savvy society, people remain habitual creatures.

It also presents a conundrum of sorts to retailers and the way they design their shops – how do you stay ahead of your competitors without alienating customers and their ingrained habits?

Getting the tried and tested basics right will create a solid foundation and leave room for innovation; solidifying and enticing your shoppers.

First impressions

The adage “first impressions last”, remains true when it comes to shopping. Also known as the decompression zone, your shop’s threshold area is the space where your customers transition from the outside into what you have to offer.

It is the area where quick and critical decisions are made like how well put-together or haphazard your shop is and what the overall design aesthetic is trying to communicate. Customers will in all likelihood miss products and other signage as they take in the overall shop experience.

To the left it is

As we’ve already established, shoppers will then start walking to the left. The first wall or space they enter will have to be very impactful. It will provide the perfect platform to display your most important products, whether it’s big ticket items or sales products that you have to move quickly.

The bottom line is to make use of people’s left handed autopilot setting to create an experience with a bang.

Pave the yellow brick road

The trick is to keep your shoppers going, exposing them to the entire shop and its products. A well thought-out path is an effective way to strategically control the traffic in your store while avoiding potential congestion.

Stores often have a circular path to the left to get customers to walk through to the back of the store and come to the front again. These paths are often a different colour or texture with the promise of great products along the route.

However, make sure that you don’t rush your customers. With all the effort and time put into merchandising products, the last thing you need is customer hurrying along merrily without even giving it a second glance.

Create natural breaks on your road through special signage, seasonal displays or even a live promotion for the day. Special display fixtures – featuring products near the end of or in between aisles – also encourage impulse buys particularly if they complement other products in close proximity.

If your store doesn’t have specific aisles you can also, on your shopping path, group products together that are a natural fit. Also, remember to keep high-demand or products or promotion at eye level.

Lastly, ensure that you are constantly rotating or “re-designing’’ these displays without taking away the familiarity of the store layout.

The end of the line

Till or checkout counter placement can leave you with quite a headache. A good rule of thumb is to place it at the end of your path or shopping experience. In big stores individual checkout counters per department are also very convenient.

If possible, design a big enough counter for shoppers to place their products and personal belongings. Also, take advantage of the wall behind the counter to create interesting and engaging displays as well important exchange and return policy notifications.

With all the above boxes ticket, it’s important that you continue to evolve your store as new shopper needs arise. Furthermore, ensure that you observe customers and what they are drawn to, avoid, how they move and continue to tweak your design.

By Robbie Johnson, retail manager at Drive Control Corporation (DCC)

Emojis: a new retail opportunity

From smiley faces to hearts and hugs, emojis (emotive icons) have become an intrinsic part of our everyday lives.

Hot on the heels of its European success, this week saw emoji-africa announce its exclusive distributorship of officially branded emoji products to the sub-Saharan African marketplace.

“Emojis influence how we communicate, providing us with the means to express ourselves in everything we do,” says Paul Hubers, co-founder of emoji-africa.

“Emoji branded products take the feelings and emotions we share when using digital icons into the world of physical and tangible products.”

Having enjoyed a very successful uptake in Europe, Hubers is confident that the same will hold true locally.

“Officially branded emoji products are found on shopping streets and at retail stores across the continent,” he says. He adds that the reason for its success lies in its evergreen potential.

“Emojis are neither a passing fad nor are they connected to any movie or action hero. As a result, potential for long term sustainable uptake is huge. This makes it an obvious choice for local retailers interested in exploring not only new products, but a lucrative and viable additional revenue stream as well.”

Through its joint venture with Durabo Holland, and its extensive network amongst leading European retailers, emoji-africa is able to offer an extensive range of official emoji products, including but not limited to entertainment, homeware, BBB (bath, bed, textiles), toys and gadgets, back to school items such as stationery, storage, wrapping and luggage.

Available soon at leading retail outlets including the likes of Mr Price, Musica, Toys R Us, Checkers and Pick ‘n Pay, together with various online outlets, what has up until now been simply a fun way to communicate is about to become a much bigger part of everyday life.

Image credit: www.emoji-africa.com

The South African retail industry has changed dramatically over the last decade. Improved and up-to-date infrastructure in the country has given rise to a more competitive environment dominated by a number of major players and several aspiring smaller retailers. The improved roads network has benefited the retail industry facilitating an efficient distribution of goods to most areas of the country including townships and rural areas.

Malls have mushroomed not only in traditional inner-cities but in suburbs and townships too. Urbanisation continues to increase in South Africa with the country now having 64.3% people living in urban areas compared to 52% in 1990. Rapid construction of high-density housing in the surrounds of major urban areas has led to the demand for and increased developments of malls in these residential areas.

South Africa has the 6th largest number of shopping centres globally according to the South African Council of Shopping Centres (SACSC), consisting of over 2,000 shopping centres with a floor area covering a whopping 23 million square metres. With more and more malls opening in South Africa, retailers are desperately seeking strategies of how they can gain market share in the fiercely competitive market.

Research has shown that a retailers’ global competitive advantage may be reflected through efficient sourcing and supply management techniques, or well-developed operational procedures. A major criterion for evaluating these advantages is the effectiveness and essentially measured by the most important retail metric-sales volume. Sales volume later translates into revenue and profits and ultimately a gain in market share.

The recent craze of mall openings in South Africa has seen most retailers scrambling for space hoping that the extra square metres could gain them a bit more market share. Research in developing markets such as Malaysia has shown that hypermarkets are one of the fastest growing formats there. In commerce, a hypermarket is a superstore combining a supermarket and a department store. The result is an expansive retail facility carrying a wide range of products under one roof, including full groceries lines and general merchandise.

In theory, hypermarkets allow customers to satisfy all their routine shopping needs in one trip. In South Africa, hypermarkets recently have been seen as more attractive through their offer of more variety products and services. Food retailers such as Woolworths, Pick n Pay and Checkers have therefore continued to expand via this format, but the question is “Are Hypermarkets effective in a South African context?”

Grocery shopping behaviour in South Africa can be described as a routinized and functional behaviour. It is also be best described as being heavily dependent on location related factors. In a country like South Africa where the number of road vehicles per 1000 people is 165, then does a retail format which is heavily dependent on customers travelling potentially long distances with big loads of groceries suffice? In the main cities where these hypermarkets are located in big malls, it is next to impossible for the predominantly working population to make more than one trip from home to the mall especially during the week. It therefore implies that these malls only get the footfall on weekends when customers have time to travel.

South African consumers have different reasons for preferring different store formats, either modern hypermarkets or traditional supermarkets. In the case of hypermarkets, the main motives for preference, in decreasing order are: low prices, the possibility of buying everything in the same place and the general appearance of the store. Research has shown that most South African customers are bargain hunters. Defined as people who look for a place to buy something at a price that is cheaper than usual, bargain hunters view hypermarkets as cheaper because of their ability to source in bulk and hence enhancing their ability to pass on lower costs to customers.

The truth is, this probably never happens in some of the South African retailers who do not operate franchise models due to constraints imposed by systems which prevent them from operating a multi-priced system allowing their retail outlets to sell the same item at different prices at different locations. For those retailers who try and implement this multi-price system, it becomes such a nightmare to manage the analytics in the long run especially considering that most of these retailers use one supply chain and therefore one costing method for all merchandise they sell.

Retailers by using the concept of store image, consider the way consumers see their stores in their minds, based on tangible and intangible attributes. Therefore, some South African retailers have been working on using their store image as a “marketing tool”, or as a “competition tool”. They have used store images to provide themselves with useful indications about the most and the least appellative attributes to consumers, and therefore, getting further insights for designing strategies about their marketing mix.

In conclusion, the hypermarket is still the preferred kind of store by consumers in South Africa, even though the consumers buy in several establishments and not exclusively in the hypermarket, which indicates that there is no single loyalty to a type of format. Although the majority of food and household products are offered in supermarkets and in small retail outlets, hypermarkets offer obvious benefits to their customers. The impact of hypermarkets has also been felt in other types of retail, namely toys, stationery goods and house-hold appliances. Competition gets more intense in other sectors, such as clothing and furniture where there has been an influx of international retailers seeking new markets in Africa.

By Girland Chibaya for www.cnbcafrica.com

The changing face of retail

The local online shopping pool has increased drastically in size since 2014, with savvy South African consumers taking advantage of this quick, easy way to scratch their retail itch. E-commerce in South Africa is to reach a milestone this year, by reaching 1% of overall retail, according to research by Arthur Goldstuck of World Wide Worx.

This amounts to consumers spending over R9-billion online. But by the same token, the average busy consumer doesn’t want to waste time on a site that doesn’t provide enough information or, worse, under-delivers.

The challenging economic climate in South Africa due to a weaker rand, increasing costs of energy and higher interest rates, has added pressure to consumers. Because of this 3,2=million South Africans are shopping online, and are driven by lower product costs, faster and flexible delivery and safer ways to pay.

“Millennials are the main online shopper, and most of them do research before making a purchase,” explains Michael Richards, MD of SiteMeUp Online Marketing.

“This means that well written content with thoughtful planning into user navigation is required to improve the user’s experience.”

A well-designed site also needs to carry across the companies brand message quickly in order to give the user peace of mind that they are on the correct site and they will find what they are looking for.

“Our research has shown that 50% of beauty shoppers don’t know which brand they want to purchase, so we have channels of communication set up to answer any queries, and help them make an informed choice,” says Dr Nikolic, executive director of SkinMiles.com, a new online store selling high-quality skincare products at competitive prices.

Goldstuck states that South African ecommerce is relatively conventional, and has not seen the level of innovation brought to bear on most product categories in major Western markets. This indicates that there is tremendous potential in this market for new business models and even underexposed product categories.

With this in mind South African ecommerce entrepreneurs’ can tap into the over 3 million online shoppers in South Africa with their innovative and stress-free Web sites.

One of the most important global trends in e-commerce is the focus on the customers’ journey and ensuring that their needs are met from start to finish.

“We want our customers to feel as if they have been given the same personalised service as if they’d been for a consult and received the advice from an expert in the skincare field,” says Dr Nikolic.

“The personal touch is very important to us and we feel that we meet that need for individual attention with the Face2Face skin assessment and the personal contact with me. I check each assessment and examine every photo sent to me before providing a tailor-made skin regime.”

Another concern of the online shopper is having peace of mind that their personal details will not be used fraudulently. A recognised and secure payment gateway is essential. Many Web sites are Secure Socket Layer (SSL) encrypted and use a strong protocol version and cipher suite.

Credit card payments are processed on a Payment Card Industry Data Security Standard (PCI DSS)-compliant gateway with 3D secure transactions, where users require a One Time Pin (OTP) to complete the transaction.

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