Tag: consumers

No end in sight for consumer pain

By Ashley Lechman for IOL

There seems to be no reprieve for South African wallets as another hefty fuel increase is predicted for next week, as well as economists anticipating further interest rate hikes.

The Organisation Undoing Tax Abuse (Outa) said on Monday it predicts that motorists could be paying R1.75 more for fuel from July 6.

Citizens could soon be sounding the alarm bells, as the South African Reserve Bank, will also be looking to curb the spiking inflation in the country by raising interest rates once again at its next Monetary Policy Committee meeting.

The Reserve Bank has been on a trend of raising the interest rate since the start of the year, as the country recovers from the Covid-19 pandemic.

Adding to the pain felt to the wallets of many, the continuing crisis in Ukraine affects wheat and cooking oil prices, driving up the price of many food items.

In an effort to provide some form of relief, Outa has urged the government to extend the R1.50 general fuel levy.

“We really do need to see longer-term solutions, but for now, the short-term solution is the only space government can provide some reprieve, and that is in the fuel levy,” Outa CEO Wayne Duvenage said.

“Outa believes it would be prudent for the minister of finance to consider extending the fuel levy reprieve of R1.50 per litre.”

Minister of Finance Enoch Godongwana extended the general fuel levy relief on May 31 this year, saying it would be R1.50 until July 6, then drop to R0.75 until August 2.

“Petrol is extremely expensive now. It is impacting on inflation. It is impacting on commuter pricing. So instead of dropping it to R0.75 for another month, keep that R1.50 reprieve in place,” Duvenage added.

 

South Africa’s consumer, industrial and export-led sectors are expected to recover as global and local demand returns, says Henkel South Africa, who recently celebrating 70 years in the country.

Henkel South Africa is a subsidiary of Henkel AG & Co. KGaA. The company is a century old German company that became a successful multinational present in more than 100 markets. From a family business founded in 1876 to 145 years of success, Henkel operates globally with a well-balanced and diversified portfolio. The company holds leading positions with its three business units Adhesive Technologies, Laundry & Home Care and Beauty Care. As a recognised leader in sustainability, Henkel holds top positions in many international indices and rankings. Henkel employs more than 53,000 people globally – a highly diverse team, united by a strong company culture, a common purpose, and shared values.

We are extremely proud of our long, rich heritage in SA, supporting growth, economic development and opportunity across the communities we serve. Based on our history of success, we are now witnessing signs of recovery and future growth, following a difficult year for economies around the world.

Locally, I believe that there is a great deal of potential for the South African economy as the country has a lot of sectors with growth potential, but those that stand out are the consumer and industrial sectors, technology and innovation, and export-oriented areas like automotive.

Popular brands like Pritt, Pattex, Loctite and Schwarzkopf are now part of everyday life for millions of people in SA, and what we have noticed is that demand for essential products has proven resilient during the COVID-19 pandemic. However, to embrace a future that will no doubt be full of possibility and risk, we need to ensure we continue to innovate to stay a step ahead.

In its 13th South Africa Economic Update, the World Bank says the current global outlook is looking better after the 2020 collapse and South Africa is positioned to grow at the fastest pace in over a decade, bouncing back from 2020’s 7% growth contraction. While there is still “considerable uncertainty,” economic growth could rebound to 4.0% in 2021. More recently, other sources such as the South African Reserve Bank have even increased their GDP growth projections to above 5% for last year (2021).

Although South Africa has battled a third and fourth wave of COVID-19 infections, and a close watch is needed moving into the New Year, talk of a recovery is extremely positive. Henkel is also noticing signs of stronger demand returning, as it trends ahead of the recovery in other regions.

The automotive sector, in particular, was driving growth for most part of last year as new locally-produced models came on stream, together with general manufacturing on the back of infrastructure demand. Other industries doing well include beverages and packaging.

As a result, our commitment in South Africa remains strong and we are constantly seeking ways in which to invest further in the country, albeit through innovation, technology, skills development, or corporate social investment – our commitment is to keep growing.

Business risks include rising costs, driven primarily by raw materials, electricity and logistics, but also global supply chain shortages. To achieve purposeful growth we therefore need to intensify our efforts to step up customer and consumer proximity with faster decision-making mechanisms and to increase efficiency by constantly reshaping our operating models to be lean, fast and simple.

Furthermore, Henkel worldwide aims to strengthen sustainability as a competitive differentiator. Our aim is to reduce the carbon footprint of our production by 65 percent by continuously improving energy efficiency and by using electricity from renewable sources. In addition, we want to leverage our brands and technologies to save 100 million tons CO2 together with our consumers, customers and suppliers by 2025. We are working towards a circular economy and zero plastic waste in the environment.

We also realise the critical role we must play in our communities and we want to enhance our positive social impact on communities through responsible sourcing. We continue to maintain an intense dialog with our suppliers to promote sustainable practices and the respect for human rights along our value chain.

We supply a very wide array of consumer and industrial needs, and while we often fly below the radar from a marketing perspective, our technology solutions are holding many products together.

A key focus for the future will be on introducing sustainable solutions, both in our products and also towards socially driven initiatives. We will continue to contribute towards building a better world and society.

With both business and consumer confidence returning, Henkel’s diverse array of products – from household and industrial-grade adhesives to hair care – ensures we are well positioned for the next 70 years in SA.

 

The cocktail fuelling loan default fears

By Londiwe Buthelezi for News24

Interest rates might not need even to reach 2019 levels before many consumers start to battle with their monthly instalments, says debt counselling firm DebtBusters.

The company, which presented a five-year trend on consumer debt in SA on Tuesday, said it has already started seeing the impact of the rising interest rates among consumers who’ve approached it for debt counselling.

“We can already see the impact because what happened was consumers adapted to the new way, expanded their spending and their borrowing. So, I don’t think we need to wait for the interest rates to get to where they were a few years ago to see the impact,” said DebtBusters COO Benay Sager.

The SA Reserve Bank began increasing the interest rates in the country in November 2021 after five successive cuts in 2020.

For one-and-a-half years, consumers became used to the record-low cost of servicing their debts. Many took advantage of that and bought homes, cars and other assets. Data from the National Credit Regulator showed that SA consumers collectively owed R2.08 trillion at the end of September 2021, and they accumulated R150 billion of that from the last quarter of 2019.

After the first 25 basis points hike in November, DebtBusters recorded an 18% increase in the number of people making inquiries about debt counselling in the fourth quarter of 2021. This January, the number of people knocking at its doors has increased by 32% compared to January last year.

DebtBusters has not sifted its data to the point where it can tell how many of those are battling to service the debt they took out in 2020 or 2021. But it will start looking at that soon.

But before the last two interest rate hikes, people applying for debt counselling were already spending around 62% of their take-home pay on repayments. Those taking home more than R20 000 a month used two-thirds of their income towards debt repayments.
Bigger loan sizes and spiralling unsecured debt

From the third quarter of 2016, the prime lending rate was 10.5%, and it stayed around 10% for the most part until January 2020. Consumers who approached DebtBusters then were paying around 11% interest on average on their home loans and about 14% for their cars.

Loan sizes were smaller in those years than they are now. Their repayments were lower; yet, people were already turning to the debt counselling firm for help at those interest rates.

Now, the average size of a secured loan has grown by 32% between the third quarter of 2016 and the third quarter of 2021. First-time homebuyers in 2021 were buying for R1 million on average, whereas they spent under R900 000 on a home in 2019.

The average size of unsecured loans has grown even more rapidly at 45%. The use of unsecured debt products like credit cards, store accounts and overdrafts was 22% higher than 2016 on average but 43% higher for top earners.

Some people have started using these credit lines to honour their other debt obligations – a case of borrowing from Peter to pay Paul.

“Consumers are essentially borrowing more to sustain their debt obligations but also their expenses,” said Sager.

As larger loan sizes mean higher repayments, consumers turn to debt counselling much faster than they used to before. Back in 2013 and 2014, indebted consumers turned to DebtBusters when they had around nine credit agreements.

“Now it’s around six. What this means is consumers have more debt per credit agreement,” said Sager.

Declining incomes

Stagnant incomes are partly to blame for people turning to unsecured debt to pay their other creditors or their living expenses once debt repayments leave them dry.

People who applied to DebtBusters in 2021 took home 1% less in net income than in 2016 on average. Those netting more than R20 000 took home 5% less. Over that same period, inflation increased by 24%. So, on average, those approaching the debt counselling firm had 25% less purchasing power than they did five years ago.

“Even though inflation is reported to be between 5% and 6%, in reality, what consumers are feeling, particularly with electricity and municipal increases, is far higher than that,” said Sager.

 

SA consumers worry about price hikes, saving

Source: Supermarket & Retailer

South African consumers over the past year have felt great pressure on their finances and are the most concerned consumer market in the world about the escalation of prices in the near future, according to a survey conducted by auditing firm Deloitte.

The survey was released on Wednesday morning by way of virtual webinar. The survey’s data speaks in great part to the impact of the pandemic on the finances of South African households as well as other general economic pressures.

Another trend the survey noted was a willingness to spend by South Africans – particularly more on experiences than on mere products. Deloitte has been tracking data globally for over a year including at least 1 000 consumers a month in each of the markets across income earning brackets.

Deloitte consulting consumer industry leader Rodger George said the Deloitte survey found South Africans’ comfort with being outside the home and social activities have improved since the beginning of the pandemic.

However, the willingness to spend has not recovered at quite the same levels, pointing to pressure on South African consumers’ income, he said.

“If a fourth wave [reaches] SA, the confidence will drop again, people will stay at home and do [fewer] social activities and if that wave subsides, we will see that confidence start to come back,” said George.

He said South African consumers were concerned about balances on their credit cards, ability to repay debt and blitzes in their savings accounts.

Higher levels of concern in SA

“Consumers are financially strapped. If you compare middle-income consumers with other middle-income markets, there are higher levels of concern about the ability to honour debts and this shows [that] consumers’ finances are strapped,” George said.

He said while consumers in South Africa generally expect things to improve in three years, more than one in three South African consumers live beyond their means and rely on credit to stretch their income, especially as prices rise.

“Up to 78% or more people are spending all of more than their earnings – 34% use a credit card, [and] 86% are concerned that prices for goods and services they purchase are going up, compared to global average of 68%. Out of all the consumers globally, South Africans are most concerned that prices will go up,” George said.

He added that online shopping in South Africa showed a behavioural shift as just before the Covid-19 pandemic; only 12% of South African consumers were buying groceries online and by the third wave it grew to 60%. This is expected to have double-digit growth in the next five years.

He said 68% of South African consumers’ wallets get directed towards less discretionary spending, compared to a global average of 65%. Internet connections and data are now being considered non-discretionary and more essential and the majority of discretionary spending goes towards entertainment and travel.

“The SA consumer has expressed a keen interest in saving, but will typically spend as much on saving as they do on takeout. Thirty-five percent of consumers would like to buy a new vehicle. This part of the survey was done at the end of October 2019, before the virus was discovered,” he said.

George said the survey “does not make for a great spending season for retailers in December”, but that people generally feel safer about going on with their business and spending.

“Retailers are in for a hard time. They will have to be smarter about how they package their products. They may have to look at smaller gift packages and focus more on customer experience. But the way the data is looking, it’s going to be a tough Christmas for all,” he said.

George said the data on South African consumers for the past year showed that South African consumers’ mindset shifted towards well-being, pursuit of purpose as well as activity and earning more.

Consumers panic buy ahead of the festive season

By Given Majola for IOL

More consumers were panic buying ahead of the festive season and 66 percent of them were worried that supply chain disruptions would ruin their holiday shopping plans, according to a new global Oracle Retail consumer research study.

Oracle’s study, which polled 5 728 global consumers in September, showed that supply chain disruptions have left people feeling frustrated and that 66 percent of consumers were worried that this would ruin their holidays. As a result, 28 percent of consumers started their holiday shopping early, while 24 percent said they still planned to start their shopping earlier than usual.

Additionally, 27 percent of respondents were concerned that the items they planned to buy would not be in stock, 28 percent were worried these items would be more expensive and 38 percent feared these items would arrive later than anticipated.

Approximately 34 percent of consumers were considering buying more gift cards this year and this was also the gift 37 percent of respondents said they would want to receive the most.

The study found 26 percent of consumers said they planned to buy more fashion apparel, home goods and electronics. Beauty products were the gift of choice for 26 percent of the respondents, while footwear was hot on their heels for 22 percent of consumers.

 

More South Africans buying food on credit

By Neil Roets for Mail & Guardian

On 1 June, StatsSA announced that the country’s unemployment rate has continued to worsen, hitting the 32.6% mark for the first time since the study was launched in 2008. Among the youth, this figure is far worse, hovering around 46%. Brought on by the ravages of the pandemic where millions have lost their jobs or experienced pay cuts, the latest stats point to the ongoing crisis that is affecting us on micro and macro levels. Most notably, it’s the middle-class that has been the most affected, with a forecast from Transaction Capital stating that 34% are expected to fall out of this demographic band because of the previously employed having to switch to informal employment or take on short-term contracts.

With fewer consumers reporting earning wages of R22 000+ a month and more now receiving incomes of less than R8000 a month this trend is likely to continue. Among lower-income groups, those who earn the National Minimum Wage (R3 643.92) continue to experience extreme hardship; the cost of a Basic Nutritional Food Basket for a family of four costs R2919.47 leaving exactly R724.45 to cover everything else, putting them at significant risk of turning to debt to survive. Where can they go for help?

In response to this deteriorating personal finance landscape, government is considering introducing a Basic Income Grant. Aimed at those who are unemployed and aged between 19 and 59 its introduction follows the end of the Covid-19 Social Relief for Distress Grant of R350. Despite giving some short-term relief, the amount is far below the poverty line, which sits at about R561 a month. With a shortfall of a few hundred rands, many will have no other option but to seek support.

According to a recent Debt Rescue survey, this is most often in the form of help from family and friends (30%), savings (36%), selling assets (10%) or turning to expensive credit providers. To put the latter in perspective, PayCurve recently published its own survey, indicating that 80% of all South Africans make use of unsecured credit or payday loans. Both come at extraordinary costs given the interest incurred on the principal loan amount, especially if it comes from a loan shark that can charge between 50% and 112% in interest. This is completely unsustainable and puts South Africans in a dangerous place where debt is used to pay for debt — it is a deeply concerning and profoundly challenging situation.

Through whatever means additional funds are being procured, it has to cover a lot of expenses. Given the average Household Food Basket is R4 137.11 (Household Affordability Index) how are costs for electricity, water, transport, school fees and medical expenses covered, many of which have increased recently? Eskom’s 15% tariff hike is a case in point, as is the rising fuel price that has had a significant knock-on effect on everything that needs to be transported. We also saw South Africa’s inflation rate increase in March 2021 to 3.2%, and is something that will likely continue in the coming months, further affecting pricing and the end-user.

Credit providers are often the only “way out”. This is evidenced by the fact that, according to our April consumer data, 42% said that they had opened a store card to buy groceries. This is alarming and completely unsustainable; food is the one thing that should only be paid for in cash — sadly, it is not a new trend. In 2018 Debt Rescue reported on the same consumer behaviour as many turned to retailers to buy food on credit. Even though it was claimed that the funds were only granted to those who could afford it and would use it responsibly, the fact is many consumers are still using credit to buy their cornflakes and pay it off later.

Buying food on credit is symptomatic of a bigger problem. Consumers who have experienced a change in their financial standing, either through retrenchments or pay cuts, are in trouble and taking on more expensive debt is only going to make it worse. Often the only way out is to engage a debt counsellor who can work with them to get out of a devastating debt spiral.

The problems experienced by middle-class South Africans are evident in the responses to our April survey: nearly half (48%) buy meat and vegetables on deals, 18% have switched retailers and have opted for cheaper store brands (14%). A full 82% are also bargain-hunting. This is not surprising given that 89% said the cost of food and goods is significantly higher than 12 months ago.

This is simply untenable. Consumers who have been affected financially by the pandemic are battling and cannot make ends meet. With so many millions joining the ranks of the unemployed, there are only two options: credit or government grants. Both present a set of concerns and challenges, although the latter means more pressure on treasury’s coffers, which are already under siege from competing demands. Becoming reliant on government is not what we want or need. We need to find ways of re-stimulating the economy where small businesses are better enabled to hire, or hire back employees. According to the National Development Plan, small to medium sized enterprises (SMEs) are expected to account for 90% of all jobs by 2030. If this is the case, we have to find ways to help these businesses get back on their feet and grow so that they are in a position to employ again.

Depressingly, however, the end is not in sight, and we will likely see further bloodshed in the market. With one in 12 jobs lost, it is estimated that employment rates could take until 2025 to revert to pre-pandemic levels. What will happen between then and now is deeply worrying, not least as unscrupulous loan sharks swoop in on the most desperate in our society, offering financial “help” that will further bankrupt them and generations to come.

 

Source: Supermarket & Retailer

Consumer price inflation for 2020 was the lowest in 16 years and the second lowest in 51 years as demand remained muted on the effects of the Covid-19 lockdowns.

This could give stimulus to the SA Reserve Bank (Sarb) to leave unchanged or cut interest rates when its Monetary Policy Committee wraps up its first meeting of the year tomorrow.

Data from Statistics South Africa (StatsSA) today showed that the average annual inflation rate for 2020 was a muted 3.3 percent, the lower end of the Sarb target band.

StatsSA said this was the lowest annual average rate since 2004 at 1.4 percent and the second lowest since 1969 at 3 percent.

According to the Sarb, one of the reasons for low inflation in 2004 was a firmer rand, which strengthened from R7.56 to the dollar in 2003 to R6.45 in 2004.

StatsSA said annual inflation ended 2020 at 3.1 percent in December, slightly lower than November’s reading of 3.2 percent.

The monthly increase in the CPI was 0.2 percent, up from zero percent in November.

The main contributors to the 3.1 percent annual inflation rate were food and non-alcoholic beverages; housing and utilities; and miscellaneous goods and services.

StatsSA said that three food groups recorded above average annual and monthly price increases in December as meat prices rose by 7.3 percent from a year ago and by 1.2 percent from November.

Prices in the oils and fats category climbed by 10.2 percent over 12 months and by 1.6 percent over one month.

Inflation in sugar, sweets and dessert products recorded an annual rise of 8.4 percent and a monthly rise of 1.1 percent.

 

Source: Supermarket & Retailer

The global retail sector is in an unprecedented state of flux and as the end of the year approaches, Nielsen has identified a range of evolving consumer groups as well as four Holiday/Festive consumer behavioural resets related to this crucial holiday period.

Nielsen Retail Intelligence MD for Sub-Sahara Africa Kelly Arnold comments; “As the end of the year approaches, upcoming festivities are going to look very different for consumers depending on where they live, what restrictions they face and how COVID-19 has changed their spending habits. However, the reality is that the ‘golden quarter’, the crucial holiday trading period is already underway and with the continued spread of the virus and ongoing restrictions, this year’s festive period will be unlike any other.

Evolving consumer groups

Against this backdrop Nielsen has identified five different consumer groups that indicate how financial and physical restrictions could manifest leading up to the festive season:

  • Constrained and restricted consumers have suffered income loss as a result of COVID-19 and have less money to spend and also have less freedom to physically congregate and shop for their holiday needs due to local restrictions to travel, business openings and social interaction. As a result of limited physical shopping, they may have less opportunity to shop around for the best deals and assortment.
  • Constrained but free consumers have also suffered income loss and are likely to have a savings mindset as they prepare for the festive season but because they have no physical restrictions, they will have more freedom to celebrate with others and to seek the right products and price points to suit their needs.
  • Cautious middle consumers have not yet been impacted financially and their celebrations are not limited by local physical restrictions. They are more likely to be cautious spenders and may prioritise occasions and gift giving with only those closest to them.
  • Insulated but restricted consumers have not been financially impacted by COVID-19 but festivities will be impacted by local physical restrictions. Smaller gatherings may curtail normal spending and encourage self-indulgent celebrations. Financial flexibility will drive these consumers to splurge in some ways to compensate for experiences that are no longer possible (e.g. travel).
  • Insulated and free consumers have also not been financially impacted by COVID-19. While their social interactions may not be restricted, their typical celebrations may be affected by those unable to be with them this year. These consumers are likely to spend the most freely and to exhibit pre-COVID-19 holiday behaviour.

New purchase behaviours

To help chart the behaviour of these consumers, Nielsen has also identified four emerging patterns to help predict the drivers of pandemic purchase decisions in future. When applied to the context of the many upcoming holidays and year-end festivities, these reset patterns now highlight some important new behaviours that could emerge this season:

  • Basket reset – holiday spending and gifting will be refined based on what and who are considered essential for each consumer. This will require retailers and manufacturers to redefine what’s festive and capitalise on the broadened assortment of what consumers might consider “giftable” this year. From a necessity that can no longer fit the budget, to a product that has been harder to get in stores this year, there will be big shifts in what defines a “gift”.
  • Homebody reset – gatherings will be smaller and more intimate with many planned at the last minute. This might see the introduction of so-called ‘Single-Serve Celebrations that cater to needs for convenience, health and budget consciousness by offering serving sizes and packages conducive to small or socially distanced gatherings.
  • Rationale reset – consumers will spend more on themselves, prioritising self-care this year. Retailers might then look to engage with empathy and recognise the trade-offs consumers will need to make. There is also scope for just-in-case solutions that cater to consumers who may be waiting to see whether they are able to physically celebrate a festive occasion or not.
  • Affordability reset – online shopping will power more holiday consumer behaviours than ever before creating a need to convert impulsivity. With limited physical touch-points with consumers, it’ll be vital to create spontaneity, even in an online environment.

Within this new Festive framework Arnold points out: “It’s clear that celebrations are going to look very different for many consumers depending on where they live, what restrictions they face and how COVID-19 has impacted their purchasing power. Despite the diverse global spectrum of holiday celebrations, COVID-19 has forced many consumers to re-think their holiday plans in similar ways, based upon known levels of virus-related constraints and this will have far-reaching consequences for both brands and retailers.”

By Vukani Mngxati, CEO for Accenture in Africa

COVID-19 is a global pandemic, evolving at unprecedented speed and scale. It is creating a universal imperative for governments and organisations to take immediate action to protect their people. Self-quarantine. Social distancing. Community spread. These formerly obscure terms are now everyday words. New habits and behaviours are forming that in many cases are not likely to go away after the crisis passes.

And while the impact to the economy is not fully known, both direct-to-consumer (D2C) and business-to-business (B2B) organisations are scrambling to meet the immediate needs of their marketplaces. In particular, those who have viewed digital commerce as a secondary channel now need to reorient every aspect of their business towards a digital commerce mindset. There exists an opportunity to double-down on digital commerce, augmenting existing offerings and creating new lines of service.

While this represents an opportunity to grow revenue, attract new customers and drive channel shift, it depends on digital channels and capabilities having appropriate scale and stability to handle the crush.
Reassure your customers and employees

There is unprecedented confusion on what, where and how to buy things, as customers are concerned about who to buy from, whether they are paying a fair price or even whether they will be able to find the essentials they need.

Unfortunately, some businesses who proved to be opportunistic and exploited customers by loading prices of critical items, contributed to this issue. This may have yielded profits in the short term, but in the long term, they will lose market share as customers are increasingly gravitating towards companies that are truthful, transparent and driven by a clear purpose.

These principles extend through customer channels and their engagement with retailers, as well as into B2B relationships and how companies work with their distributors, wholesalers, or manufacturing direct suppliers. This is amongst other confirmed by a study that was released in collaboration between the World Economic Forum (WEF) and Accenture in January 2020, which indicates that companies who execute stakeholder-eccentric leadership, display stronger financial performance.

If this was the case then already, this pandemic that currently affects the whole of mankind, has no doubt brought the need for human-centredness to the fore. Companies who can demonstrate these attributes will deliver a differentiated level of customer service and make themselves more relevant and connected to their customers – old and new – on an ongoing basis.

Stabilise your digital channels, platforms and infrastructure

With the closure of cafés, restaurants, bars and hotels and the grounding of airlines, much of this demand will need to be met by the grocery sector, online. That’s the new reality as mass quarantines and unpredictable retail stock availability cause online commerce to skyrocket. While this represents an opportunity to grow revenue, attract new customers and drive channel shift, it depends on digital channels and capabilities having appropriate scale and stability to handle the crush. Businesses must flex quickly to capture the opportunity, and systems must be prepared to withstand the increased loads.

Reconfigure and extend your offering for seamless online delivery

With the closure of retail establishments, and the disruption of supply chains, the rules for merchandise and inventory have fundamentally shifted. Historical data on what sells online vs. offline is out the window. Companies now have a lot of inventory that they are sitting on in retail outlets that they need to figure out how to get online.

Businesses that have historically invested in digital commerce sales tools will likely have an easier time adjusting to this new, digital first economy, while those that have only made moderate strides will be more greatly disrupted. For example, traditional auto auction houses are shutting down, while on-line auctions are fast becoming the norm – even in a reduced volume business, those that are digital-prepared are seeing increases. As businesses are realising the value of e-commercialising, this will in all likelihood also lead to a decline in the need for brick and mortar operations.

Power up your value proposition through power networks

All evidence points to the fact that the economy will continue to decline and that there will remain a requirement for social distancing for time to come. For this reason, customers will keep on abandoning brands they’ve been loyal to and migrate to companies who can deliver what they need in the fastest, easiest and most cost-effective manner. Better yet, if they can get it all from one single, service provider. This will require businesses to move beyond just creating ecosystems, to establishing power networks through symbiotic partnerships and collaborations to collectively expand their value proposition all together. At the same time, it is an enabler to establish lean and mean operations in an uncertain economic climate, whilst accelerating growth exponentially.

Leverage new behaviours for new growth

Naturally, the national lockdown forced business and society to start doing things differently. Gyms are helping their customers to stay fit through online fitness programmes. The healthcare industry is using virtual assistants and hotlines to respond appropriately to the COVID-19 crisis. Restaurants are providing online cooking classes. Consulting businesses and academies are providing information and counsel through webinars, online learning tools and systems. Businesses are enabling their staff to work remotely and are using online platforms such as Microsoft Teams to conduct meetings. Parents are using online mechanisms to educate their children, and tertiary students are tapping into online learning.

All these new behaviours can be leveraged for new business growth. For example, as South Africa has just moved to level 3 of the national response to the COVID-19 pandemic, only a portion of our children are able to return to school, and only some tertiary students are able to return to their educational institutions. This necessitates an extreme acceleration of the virtualisation and digitalisation of education, supplemented by substantially increased access to the internet, especially for those learners in disadvantaged and rural areas.

Unlock the potential of emerging trends

There is a myriad of trends that are emerging in this COVID-19 world, that present businesses with new potential avenues for growth. Health and safety are for example currently the first and foremost priority for both business and society and will in all likelihood not just remain a trend but become part of the new normal. Whilst discretionary spend is generally bound to decrease significantly, people on the higher end of the market who have been robbed of the pleasure of traveling for leisure, may be more likely to spend money on luxury items such as jewellery, to spoil themselves. In addition, every single person now requires enhanced access to the internet, more efficient technology and mobile devices to live, work and play from anywhere, at any time. This is a time to conceptualise novel solutions for at-home activity, at-home education, at-home entertainment and at-home workspaces.

Reassess relevance and reframe your strategy

Some of our industries that have been hit the hardest by the COVID-19 pandemic are the tourism, entertainment and beauty sectors. Businesses in these sectors have no choice but to reassess their relevance and adjust their strategies accordingly. While people are no longer able to go out and explore the whole wide world, the tourism sector will have to innovate ways to bring the whole wide world to them, by i.e. creating virtual tours or expanding their offering to include entertainment such as gaming. Entertainers can leverage online platforms to create worldwide events and distribute their material digitally. Hairdressers and beauty salons can provide ‘how to’ channels on a subscription basis and develop e-commerce channels for their customers to get the necessary products quickly and effortlessly.

Unlock the value of data to engage consumers optimally

As the landscape we find ourselves in is changing faster than ever before, the wants and needs of customers are also evolving at an unparalleled speed. The businesses who will be able to successfully deliver on these wants and needs, are the ones who are ever attuned to exactly who their customers are, what their preferences are, and what they may also need in future, before they even know it themselves. To this end, it is critical to acquire the most suitable technology to intelligently collect and interpret client data. However, in this ultra-competitive online race, it is no longer sufficient to simply deliver what customers want and need, it is also important how you deliver it. The businesses who will grab and retain their target audiences’ attention, will be the ones that leverage high technology to create immersive virtual spaces and continuously deliver the most engaging digital experiences.

Embrace e-commerce as a necessity, not just a priority

In conclusion, in this brave new COVID-19 world, digital commerce is no longer a priority, it is a necessity for the very survival of business. But whilst establishing their e-commerce facilities, business should never lose sight of what is first and foremost for their customers: Trust, relevance, convenience and economy.

Eskom goes to court to force tariff hike

Sources: EWN; IOL

The power utility has approached the courts to review the National Energy Regulator of South Africa’s decision to deduct a R69-billion bailout from Eskom’s approved revenue for the current tariff period.

Eskom on Tuesday said it must hike consumer tariffs to avert a complete financial meltdown.

The parastatal said this meant it would need steeper tariff hikes from the approved 8.1% this financial year to 16%.

The energy regulator’s decision to classify government’s R69 billion bailout to Eskom as revenue means Eskom will get less from consumers.

For this reason, the parastatal wants higher consumer tariffs over the next two years.

Eskom’s Hasha Tlhotlhalemaje said that besides increased tariffs this year, it would also need more than the 5.2% hike approved for next year.

“And this 5.23% increase, which 2.2% is accounted for by independent power producers, leaves Eskom with a 3% nominal increase. Now any household, let alone Eskom, cannot function that way.”

She said Eskom remained well aware of the financial situation of consumers but stressed the company needed to be sustainable.

Consumers fight back
By midnight on Monday, when the deadline expired for the public to comment on Eskom’s proposed tariff increases to the National Energy Regulator of SA (Nersa), energy activist group DearSA, sent Nersa over 171 896 comments it had received on its website from consumers.

Energy expert Ted Bloem said: “If we allow Eskom to succeed, we will see a substantial jump in the current tariffs.

As the increase is over and above Eskom’s annual tariff hikes, in reality your electricity costs will double within two years,” he pointed out.

Bloem will be representing the public and opposing the tariff hike application at each official Nersa hearing, to be held in all the provinces.

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My Office News Ⓒ 2017 - Designed by A Collective


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