Tag: retail

New venture may shake up shopping malls

Steinhoff Retail Africa, along with partner Shoprite, is set to disrupt the retail market, if they implement plans to own shopping centres.

Shoprite CEO Pieter Engelbrecht said this week: “If you look at all the brands that are currently in the company [Steinhoff] and you add ours, they could be opportunities in real estate where we could open shopping centres just with these brands on their own.

“Once we’ve combined we’ll make such a decision. But it could be a possibility because the combined value of real estate is huge between Shoprite and all these brands within Steinhoff Africa,” said Engelbrecht.

The creation of Steinhoff Africa Retail, known as STAR, will include Steinhoff’s African assets such as Ackermans, Poco South Africa, JD Group, Timbercity and men’s apparel retailers Dunns and John Craig, Pepkor South Africa and rest of Africa, and Tekkie Town, to name a few, and will result in Steinhoff acquiring a 22.7% stake in Shoprite.

Lucrative opportunity

Given the close relationship between Shoprite and Steinhoff, a move to combine the two groups’ own shopping centres could also mean Shoprite’s grocery brands, such as Checkers, Usave, Liquorshop and fast food brand Hungry Lion, could take up space in these shopping centres.
Engelbrecht added that because there was quite a big mix across the two groups, including furniture, food, liquor, pharmacies and electronics, this could be “quite a lucrative opportunity to explore”.

Earlier this month Steinhoff announced the details of the listing of its African and European assets into two companies, which would be listed separately.

This deal comes after a previous attempt to merge the two groups had failed. Under the new transaction, Engelbrecht said, it had panned out that Shoprite would stay “autonomous” and separately listed.

“For us that’s also more exciting as we as management believe that we should operate independently.”

But combining their brands in shopping centres could be one way to extract synergies and savings for Shoprite.

Keillen Ndlovu, head of listed properties at Stanlib, said “rental as a percentage of turnover and sales has been going up particularly in the bigger shopping centres. The bigger centres have been able to attract higher rents over time but unfortunately, the higher rental growth has not been catching up with sales and turnover growth.”

Slowing sales

This meant the cost of occupation for retailers had been rising with the average cost of occupation at 10% of sales as at the end of December 2016 from 8.5% as a percentage of sales between 2004 and 2016, Ndlovu said.

“Given the slowing sales and economic environments in general, this is likely to make it harder for landlords to bargain for rental increases from retail tenants. Therefore, rental growth is likely to slow down,” he said.

For Shoprite’s full year to end-July 2017, the cost of new operating leases rose 9.6% to R3.8-billion from the R3.5-billion in the previous quarter, “mainly due to a net 109 new corporate outlets opened during the year”, the company said.

And for the group that is focused on letting every rand fight for its life, a reduction in costs in the current trading environment will be welcome.

“We must drive our own strategic focus to create value for shareholders, but wherever there are synergies or saving or opportunities that we can share with the STAR group we will not be adverse to it at all,” Engelbrecht said.

Source: Business Live

Back-to-school season has long been a critical sales event for retailers, but 2017 may go down as a year that defies the trends as shoppers play a waiting game for sales.

Kids started back to school this month, but as of early August just 45% of shoppers have checked everything of their list, according to the National Retail Federation’s annual survey conducted by Prosper Insights & Analytics. It’s the lowest number since 2012.

However, 2012 was a record year for back-to-school spending as shoppers indulged in pent-up demand following the spending lull of the Great Recession. In all consumers shelled out a whopping $83.8 billion, according to NRF that year and are projected to spend $83.6 billion in 2017, up more than 10% from 2016.

And 2017 is off to a slow and worrying start. Many began early, according to NRF, researching needed items, perusing online class lists and comparing prices. But traffic has slowed in August and it’s anybody’s guess if it will pick back up.

What are shoppers waiting for? Discounts, suggests Prosper Insights & Analytics (and fellow Forbes contributor) Pam Goodfellow. This trend follows that of the winter holiday season, where consumer play a game of chicken with retailers, waiting and watching prices drop as the deadline gets closer.

In this regard, back-to-school 2017 could be a preview for the holiday season to come. Already, early reports indicate retailers could have a banner winter holiday season, particularly when it comes to e-commerce, where sales are projected to rise some 16.6%, according to eMarketer.

“People are confidently spending more and really spreading out their shopping throughout the season,” Katherine Cullen, director of retail and consumer research at NRF, told Retail Dive in an interview. The association still expects spending to be higher in aggregate this year than last, but with so many waiting, back-to-school is beginning to look a lot like Christmas.

By Laura Heller for Forbes.com 

Retailers across America have been closing stores in droves this year amid years of declines in sales and customer traffic and an increasing threat from Amazon.

So far in 2017, retailers have shut down more than 6,300 stores. UBS says the sneaker retailers Foot Locker and Finish Line could be the next to start closing stores.

UBS’ findings come following Friday’s dismal second-quarter results from Foot Locker that caused shares to plummet by nearly 30%. The company announced earnings of $0.39 a share on revenue of $1.7 billion, both of which were shy of Wall Street expectations. Additionally, same-store sales sank 6% versus a year ago. Foot Locker shares have plunged 57% over the past three months.

On Foot Locker’s quarterly conference call, chairman and CEO Richard Johnson said he wasn’t worried about Amazon. Here’s Johnson (emphasis ours):

“For our part, we will continue to invest in creating compelling experiences for our customers. At the premium end of the market, most of our customers don’t want to just buy a specific product they see on a screen. They want that product to have a connection to an experience they find meaningful and want to participate in. That experience could be a special event in a store, being notified of or discovering a video on our website or YouTube channel of an athlete or celebrity wearing or discussing the latest product, an interaction with their friends while touching and feeling the product, or simply a conversation about sneakers with one of our stripers or other store associates. For that reason, we do not believe our vendors selling product directly on Amazon is an imminent threat. There is no indication that any of our vendors intend to sell premium athletic product, $100-plus sneakers that we offer, directly via that sort of distribution channel.”

But in a note sent to clients on Monday, UBS analyst Michael Binetti downgraded both Foot Locker and Finish Line and said it’s “almost certain” that the sneaker retailers would lose market share to Amazon. He lays out three reasons he thinks things are about to get a lot tougher for the industry.

First, Binetti sees Nike stepping up its efforts to push sales directly to the consumer. That is especially worrying for Finish Line, which, according to Nike’s October 25 analyst day, sees 68% of its sales come from Nike. Binetti adds, “For Foot Locker in particular, while many of its stores are among the most compelling retail experiences in our US specialty coverage group, we think the company will have to significantly accelerate closure of its lower tier stores to properly absorb market share shifts to the brands own DTC businesses (and to Amazon).”

But the sneaker retailers’ problems don’t stop there. It appears consumers are now choosing to buy their Nikes on Amazon versus going into brick-and-mortar stores like Foot Locker and Finish Line. “UBS Evidence Lab survey shows that in ’17 for the 1st time, more consumers prefer to buy Nike on AMZN vs at FL,” Binetti wrote.

There was a “significant YOY increase in the percent of consumers who prefer to buy Nike product ‘on the brand’s own website,'” Binetti notes. “The combination of an accelerating shift of purchase to both Amazon and the brands’ own website — and the subsequent reduction in purchase intent through athletic specialty retailers like Foot Locker — makes it hard to see the path back to accelerating market share gains for Foot Locker.”

Finally, both Foot Locker and Finish Line have a large presence in malls that have lost the anchors Macy’s and J.C. Penney.
Specifically, Binetti says, “We think FINL is at particular risk (more so than FL anyway) of further deterioration in sales & traffic trends in its stores due to high exposure to lower-tier locations.”

As a result, UBS downgraded Foot Locker from “buy” to “neutral” and Finish Line from “neutral” to “sell.”

By Jonathan Garber for www.businessinsider.com

How Zuma killed Stuttafords

Stuttafords officially closed its doors on Monday, 31 July after 159 years of operating in the South African retail market.

The retailer filed for business rescue in October 2016, after it could not recover from the pressures of the low growing economy and the significant devaluation of the rand following the axing of former Finance Minister Nhlanhla Nene.
A final bid to buy the last two operating stores in Sandton and Eastgate was rejected by the landlord, Liberty. Chief executive Robert Amoils told Fin24 that all staff at the two remaining stores will be retrenched and have their full retrenchment packages paid.

The business is currently undergoing a winding down process which will take a few months to complete. A sale of Stuttafords intellectual property is being finalised by the business rescue practitioners.

Amoils had explained to Fin24 that the business had been on the right path, but simply ran out of time to correct things. “I believe the path we set was correct. I believe the repositioning we did was consistent with what international trends have shown to work,” he said.

“Simply, we ran out of runway, we ran out of time. The market downturn was so swift, so severe and was paralleled with significant [rand] devaluation and political uncertainty.”

Amoils explained that the rand devaluation impacted the business model negatively because commitments were made to buy international brands almost a year in advance. But director at Norton Rose Fulbright and senior insolvency lawyer Haroon Laher said that the downfall could not be pinned down to the economy only.

“I think there were a number of factors. There was a lot of tension between the shareholders which obviously is tension in the house, so to speak. That did not contribute to a successful business rescue.”

Stefan Salzer, partner and managing director at Boston Consulting Group said that generally the retail sector is under pressure. Particularly in recessionary conditions consumers tend to cut down on spend for discretionary items such as clothing, household appliances and furniture.

“It is tough not to buy food but it is very easy not to buy a TV or buy the latest fashions from Stuttafords,” he said.
Salzer explained that over the past two to three years international clothing retailers had been entering the market, posing another complication for Stuttafords. Amoils previously told Fin24 that the arrival of international players like H&M, Zara and Cotton On had cut into their customer base.

That, coupled with increasing financial pressures on consumers and changing credit regulations did not contribute positively to the environment for clothing retailers, said Salzer.

Indeed, the devaluation of the rand impacted Stuttafords profits, he explained. An item that cost $3 would end up costing more at a later stage due to the sensitivity of the currency. This cost could be borne by the consumers, in the final price charged for the item, or the retailer would have to carry the expense and let profit take a knock.
Stuttafords purveys international brands and this set it in a disadvantage to other local retailers which rely on South African produced and sourced products, explained Salzer.

International players
Salzer said that international players are also clear on what they are, and on what they are not.
These retailers also differentiate between “basics” and fashion items and price these accordingly. For example a basic white T-shirt would be just that. Contrarily South African retailers would sell a “basic” white T-shirt with some print on it. Additionally, South African retailers often do not match pricing for basic and fashion items appropriately. Something considered basic, would be priced as a fashion item.

Local retailers also need to adopt fashion faster as international retailers do, he said. International retailers also have the advantage of scale, they have access to global brands at larger volumes.

South African retailers should also learn to introduce a “theatre of shopping” to inspire people to buy. Some retailers just put items on shelves, which is not as inspiring as having a styled manikin, he explained. A consumer could walk into a store with the idea to buy a T-shirt but then leave with a dress because the product was represented in an emotive and inspirational way, said Salzer.

International players also follow a different model when it comes to planning and buying merchandise, explained Derek Engelbrecht partner and consumer products and retail sector leader at EY. Global brands have a sense of urgency and frequency with which they change offerings.

“That is probably one of the key reasons the department store has battled. In gold old fashioned department store planning, the business would put new things on the shelf when the seasons change.”
“Global brands have worked hard and long to perfect the model where they are able to put items on the shelf every four to six weeks,” he said.

Develop a niche
Globally, the department store is facing challenges, explained Salzer. The way forward is to develop niche or specialist stores. Given South Africa’s mall culture, retailers do not necessarily have to stock all kinds of items under one roof, when a consumer can get these products a few meters away in a different store.

Salzer added that if some retailers still want to diversify their offerings, they need to be clear on the overall theme they are offering, like quality, convenience or affordability. For example a retailer could offer clothing items and cars, if the overall expectation of the offering was quality.

Engelbrecht explained that retailers can no longer be all things to all people. “If you follow approach of being all things to all people at some point your customer will leave you,” he says.

“If you identify the niche or the consumer you are targeting, while it may not appeal to all people, at least you are guaranteed that you created something unique. That is probably where the slow demise of the department store as a concept comes from.”

Engelbrecht also pointed out the importance of retailers adapting to the world in which they operate in.
Before entering business rescue, Amoils said Stuttafords had managed to reposition itself as a provider of cutting edge fashion and offered affordable branded luxury. The customer base was also more reflective of the South African consumer, with over 60% of Stuttafords’ market being black. The group also started focusing on targeting younger, tech-savvy consumers. “We perpetually evolved and I think we did a good job in the last five years,” says Amoils.

By Lameez Omarjee for Fin24

Brave new world of retail bad for workers

South African grocery retailers are taking their cue from global players, and as a result the retail workforce may be under threat as technology continues to rattle the sector.

About three years ago the biggest retailer in the world, US-based Walmart, embraced smaller-format stores as its superstores began falling out of favour with customers, and signalled it would employ a more rationalised workforce.

This year, the group announced a further reduction in staff as it focused more on e-commerce business. About 18 000 people lost their jobs out of a workforce of 2.3 million employees globally.

Similarly, UK-based retailer Tesco cut 1200 staff jobs in its head office after cutting 1 100 jobs in its call centre.

Walmart competitor Amazon has only 34400 staff, although it said in January it expected to add 100 000 people to its workforce in the next 18 months.

Andre Roux, head of the future studies programme at Stellenbosch University, said technology had been a significant disruptor in recent times, but several other issues were influencing the way companies were seeing the labour force.

“Robots can work for up to 40 days in a row for 24 hours a day”.

Robots would gradually replace human labour, he said.

“No one owes anybody a job. There’s no entitlement. You are only going to be employed if you can make an efficient contribution,” said Roux.

The fastest-growing employment was self-employment, as opposed to working for one organisation for many years.

“The whole idea of cradle to grave or womb to tomb is becoming more and more outdated,” Roux said.

“In the future, people will probably work for 20 or more organisations during their careers – just a couple of years at a time.

“That has implications for how one builds up one’s pension fund. It becomes one’s own responsibility.”

But in a country such as South Africa, which was part of a developing region, there was a disjuncture between adopting first-world ways of doing business on the one hand, and dealing with issues such as an unskilled labour force on the other.

“Although we are a developing country, these days you’ve got to be as good as the best.

“We have to follow new trends but at the same time be aware of our own unique challenges.

“As it is we have a surplus of unskilled labour and a shortage of appropriately skilled labour.”

According to the Quarterly Labour Force Survey, South Africa’s unemployment rate was 27.7% in the first quarter of 2017, the highest unemployment rate since September 2003.

In the current retail climate, Pick n Pay’s self-service checkout points may be the biggest threat of all to labour.

Bones Skulu, general secretary of the South African Commercial, Catering and Allied Workers Union (Saccawu), said the union was challenging the installation of self-service checkouts.

It would continue calling on workers to embark on industrial action in response to technology that had the potential to replace labour.

He added that Saccawu was expecting further job cuts by Pick n Pay across various divisions.

For those on the shop floor, the changes are telling. Perceptions among staff are that more work has to be done by fewer people.

By Palesa Vuyolwethu Tshandu for Business Live

Consumers travel far and wide for bargains

People are deserting retail stores’ butchery aisles, cutting out the middleman and turning to buying meat in bulk. Seemingly, it is proving to be a great saving.

“If I were to buy the same amount of meat at retail stores, I’d need a loan the following day, meat is so expensive,” says Bongani Qansane, of Germiston, who spends R1,500 a month on meat.

“Once a month I make the trip to Heidelberg.

There’s an Eskort butchery where I get my pork cheaper than at retail shops, and I go to a Karan Beef butchery in the same area for beef and mutton. It’s great value for money.” Sipho Dube teams up with a friend to buy wholesale.

“I spend R400 a month and an additional R40 for fuel so I’m saving big time.”A mother of two says she travels close to an hour with her friends every two months to Eskort.

“We buy and freeze,” she said, estimating that she spent 40% less than she would pay in retail shops. “Not only is the meat cheap, it’s fresh. I’m glad I made this decision.”

Pieter Prinsloo, of the Red Meat Producers’ Organisation, said last year’s drought contributed significantly to the increase in meat prices. He said meat was more expensive at retail shops because “its convenience shopping”.

“If you take lamb, for example, you can buy it wholesale for around R70 a kilogram. The cheapest at a retailer would be about R99 a kilogram.

“You can buy beef wholesale from a farmer for R48 a kilogram. That will give you a 30% saving,” he said.

Zeyn Adrian Jenkins, of Durban, said he paid around R350 for 10kg of chicken quarters in Durban. “It’s R200 in Pietermaritzburg and Port Shepstone.”

For six Soweto women, bulk buying allows them to keep meat on their tables for longer.Thoko Nkosi explained that they put away R150 a month for 11 months. Come the festive season, they can afford to stock up on meat.

“Last year, we were able to buy a beast for about R6,000 and we told the butcher how we wanted it cut. We all walked away with different cuts of meat — from rump steak to T-bone steak, ” Nkosi said.

“If I hadn’t joined the group and I walked into a [retailer] with R1 600, I would only get enough meat to last me about two months.”

The Times found stewing beef at a City Deep wholesaler in Johannesburg was priced at R65.95 a kilogram. Pick n Pay sold it for R79.99. It went for the same price at Spar and Checkers sold it for R10 more.

A kilogram of brisket was sold for R65.95 at the wholesalers, for R87.99 at Pick n Pay, R92.99 at Checkers and R98.99 at Spar.

An Alberton butcher said it was important to note that it was not only the price of meat that could differ from one place to another but also the cut and grade.

Source: Supermarket & Retailer

 

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

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