Tag: retail

Online grocery shopping sees a surge 

By Ross Jenvey, founder and general partner at Kingson Capital 

There can be no question that Covid-19 has changed the way the world operates. Some trends are temporary, and some are more permanent, with the common question nowadays being: what will the new normal look like? As investors in early-stage technology companies, we at Kingson Capital are trying to establish what trends are likely to stick around long term after lockdown truly ends and identify the right companies to invest into that will benefit.

We believe that e-commerce will permanently benefit from people wanting to, or being forced to, socially distance themselves. One of the sub-sectors in this space is online grocery shopping. Adoption risk is common in most early stage companies, where new technology is built to change the way things are done, but people are often resistant to adopt the change. However, once forced to try something different, as many people have been in the last six months, the inertia is broken, and they often refuse to go back to the way they did things before.

Data released by Pitchbook on the US online grocery market shows that the early stages of lockdown in 2020 allowed grocery sales to regain some of the market share it had lost against restaurants and take-aways. More sophisticated technology, coupled with a slew of online grocery shopping options offered by stores and independent tech companies, have seen global online grocery delivery & pickup   increase from $1.2bn in August 2019 to $6.6bn in May 2020, a 450% increase in just nine months.

Pitchbook Research furthermore predicts that in the US, online grocery shopping is going to grow from 4.9% of total grocery spend in 2019 to 11.6% by 2025, a 2.4x increase in wallet-share. No matter how you look at it, this represents significant growth. The poster-child of the online grocery shopping industry in the US is Instacart, which raised $225m in a VC-funded round in June 2020, ballooning its valuation from $7.9bn in late-2018 to $13.7bn. Delivery Hero is a similar company, listed in Germany, and in the just over nine months to mid-September 2020, its share price has increased 28% (to a valuation of €18.0bn) as investors continue to take a positive view on this sector.

In South Africa, we are seeing equally positive developments. The main local players – OneCart, Checkers 60/60, Bottles, Quench and Zulzi – have all completed or embarked on funding rounds in 2020 led by JSE-listed companies. The main differentiation between these players is based on multiple versus single retail platforms that a customer can choose from. We are also aware that several of these players have seen anywhere between 200-500% growth in their daily orders since lockdown was implemented in March 2020. Google search analytics has shown that after an initial surge, the reduction of lockdown restrictions in South Africa has correlated with a reduction in online searches for “Online Grocery and Delivery services”. However, that search is still roughly twice as popular as pre-lockdown levels, and the growth in order volumes referred to above talks to the stickiness we would expect, as people become repeat customers. This is the kind of growth that usually attracts competition, and one place we foresee it coming from will be UberEats, after Uber bought the Mexican grocery delivery app business, Cornershop, in October 2019. New apps will also likely spring up.

Research released by the South African Council of Shopping Centres in May 2020 posted an expectation that retail sales will be down as much as 15% from current levels, and there will be slow recovery in shopping centre activity as GDP and employment both contract. Their survey revealed that 22% of respondents were not comfortable with visiting shopping centres and preferred online shopping, and 32% said they were regular online shoppers. This will likely accelerate the trend towards e-Commerce, as retailers try to protect their market share by pushing into this space, to the benefit of the incumbent tech solutions in the market. Interestingly, the major South African retailers such as Woolworths, Pick n Pay, Checkers and MassMart have all recently partnered with or acquired e-Commerce on-demand service providers. The ultimate winners will be the providers that can win consumer trust with consistent excellence in fulfilment and on-time delivery percentages.

Online grocery shopping is likely to be one of those sticky trends which will benefit greatly from the new way the world will work post-lockdown. Pitchbook analysts seem to think this will happen globally, and we think that South Africa will show equally exciting growth, even though we have traditionally been late adopters of e-Commerce. It’s also a sector that is creating jobs, since the shoppers and drivers employed now in this industry are new jobs, and the low skill requirements of the jobs is important in a country like South Africa. Necessity often brings about change, and consumers clearly need to operate differently in the new world they will find themselves in.”

By Denise Lee Yohn for Harvard Business Review

Retailers need to stop expecting business to return to “normal.” There’s no going back to how it was anytime soon. Even before the Covid-19 pandemic and economic crisis, brick-and-mortar retailers had been fighting a fierce battle against Amazon and other e-commerce players. Those challenges have now accelerated at staggering speed.

The latest data from McKinsey shows that consumers are likely to keep the behaviours they’ve adopted amid stay-at-home orders, such as more online shopping and fewer mall visits. Retailers can’t afford to be in a wait-and-see mode. First, they need to reimagine their baseline requirements and then turn their attention to taking their customer experience to the next level.

A new baseline
To start, retailers have to adapt their brick-and-mortar operations to comply with health-and-safety regulations and meet basic customer expectations. This includes mask wearing, ensuring physical distancing, and controlling the number of employees and customers in stores, instituting contactless transactions, improving speed of service, and introducing more self-service options.

Retailers also need to offer a simple and seamless e-commerce experience — from browsing to researching, selecting, purchasing, and returning/exchanging. Customers will no longer tolerate sub-par digital shopping experiences like they may have before the crisis. Retailers have to make sure their sites are mobile-responsive, offer integrated services such as “buy online pick up in store” (BOPIS), and deliver a consistent, reliable digital experience across devices and channels.

For a select few retailers, such as trendy fashion stores or pop-up restaurants, executing at this baseline level is sufficient. If demand for a product is so high and/or urgent — for example, as it had been for Shake Shack burgers, Nike shoe drops, or the latest Apple release — customers will still venture out to a brick-and-mortar location. Camping out overnight or waiting in hours-long lines to shop may eventually return as a super fan’s pastime. But that’s no longer a strategy to rely on – enhanced in-store operations and a well-functioning digital presence are table stakes.

Rethinking the in-person experience
For several years now, some retailers have been putting as much if not more priority on the in-store experience than on the products they sell. From Restoration Hardware to Bass Pro Shops and even Walmart, retailers have learned that holding events or offering special experiences and services in-store not only attracts customers, but also encourages them to linger longer, buy more products, and spend more on those products.

As a result of Covid-19, all retailers will have to make their in-store experiences even more extraordinary for those who can visit in person. They have to give people a reason to visit that is so compelling, it justifies their exposure to health risks and overcomes the inertia of the behaviours they adopted during the shutdown.

To get started, retailers can consider how premium movie theatre brands such as Cinepolis emerged back when Netflix and other home movie-viewing options threatened the movie theatre industry. These new experiences didn’t simply improve what had been previously offered to customers and address the shortcomings of existing options. They made visiting a theatre better than watching at home — offering luxury reclining loungers, specialty food and beverages delivered seat-side, and lobby areas with bars to hangout with friends before and after movies. Retailers that offer an exclusive, superior experience like luxury cinemas once did can draw people out of their homes.

Elevated in-person customer service is another way to compete and win over online players, but retailers must think differently about service. Service can no longer be defined as a support for sales and be limited to generic efforts, such as greeting customers, handling complaints, and managing returns and special requests. Even personal shoppers, technical experts, and certified installers have become expected from most retailers of bigger ticket, more complex product categories.

Best Buy used this approach several years ago to rebound from its losing battle with Amazon. It introduced an advisor program that allows customers to get free in-home consultations about the products they should buy and how they should be installed. The service is intended to facilitate long-term customer relationships, not necessarily to close sales. As a result, it lured customers away from online options and positioned Best Buy as a trustworthy, more personal brand.

Digitally native customer experience
This new emphasis on innovation and service needs to extend to the digital customer experience as well. Most retailers with roots in brick-and-mortar simply try to replicate their in-store experience online, but such efforts are fruitless and misguided. Beyond the transaction basics discussed earlier, customers don’t expect a virtual experience to be like an in-person one — nor do they want it to be.

Investing in some of the unique capabilities of digital — including real-time inventory management, predictive analytics, AI-powered search, and personalisation and co-creation functions — can create completely new and different shopping experiences. Take, for example, social commerce, which not only enables companies to sell through social media channels but also incorporates social interactions; peer support, reviews, and recommendations; multimedia content; personalisation; gamification; and more. A retailer can use these new capabilities to create a social, interactive, immersive experience wherever customers are — that’s something no physical outlet can provide.

To get inspiration and insights for designing an online shopping experience from the ground up, retailers might want to examine the evolution of other brick-and-mortar industries and institutions. When Covid-19 forced churches to shut down their weekly services, most simply transferred their church services online using digital conferencing solutions like Zoom. But Cincinnati-based Crossroads Church seized the opportunity to re-imagine its pastors’ weekly sermons. Now they film pastors delivering messages at different locations to help reinforce that week’s message (for example, talking about the importance of a strong foundation at the site of a historic church). Similarly, retailers can take advantage of the greater flexibility and new contexts that digital affords by, for example, depicting a single clothing item on multiple models to show what it looks like on different body shapes and sizes or using videos to demonstrate how real customers actually use a tool.

They can also take inspiration from how digital enables immediacy and interactivity for online education platforms such as edX and Coursera. Students studying software programming can upload their coding projects and get them automatically graded, so they receive instant feedback; psychology students can use an app that goes with their class to track their habits and better notice patterns in their own behaviour. What might this look like in the retail context? Possibilities include AI-enabled answers to customers’ questions in real-time, instant video chat with a personal stylist, and apps that track usage of current products to make recommendations for new ones. Ideas like these arise when retailers think beyond adapting the in-person experience online.

This isn’t the time for the retail industry to try to simply ride out the storm. With a more proactive, progressive approach to both digital transformation and a new era of customer experience and service, the future might look less bleary.

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By Londiwe Buthelezi for Fin24

Even though the ongoing nationwide lockdown has sent many of its tenants’ operations on a tailspin, property giant Redefine says South Africa’s retail sector is showing a better recovery trajectory than markets like China where shoppers continue to stay away from shopping malls.

The owner of shopping centres such as the Centurion Mall and the East Rand Mall told journalists during the presentation of its interim results on Monday that while it expects demand for retail space to change as the coronavirus (Covid-19) and lockdown changed people’s way of doing things, South Africans are still showing love for malls.

Redefine Financial Director, Leon Kok said looking at photographs of the group’s shopping centres and malls taken over the past long weekend, they resembled a “normal weekend” with people visiting in droves, but still keeping the required level of social distancing.

Shoppers flock back to malls

“I can’t believe the numbers of people that were going to shopping centres… Surprisingly, I would say that in our centres, between 40% and 70% of the centres’ [shops] were open,” he said, but acknowledged that since restaurants and gyms will remain closed for the foreseeable future, this will affect foot traffic.

Richard Cheesman, senior analyst at Protea Capital Management said most people’s observation of shopping centre activity over the past weekend would probably correlate with what Redefine reported. But in the medium-term, as the current economic situation dampens consumer spending, Covid-19 will weigh on the local real estate industry as many other commentators have predicted.

“You would expect an initial bounce back after the lockdown. This may moderate going forward. Some areas are still not open such as entertainment and sit-down restaurants. Eventually the market should stabilise at a below average level,” he said.

Stanlib’s Head of Listed Property Funds, Keillen Ndlovu, said what set South Africa apart from other markets is that South Africans love to shop.
“We are a shopping nation and the malls opened (for Level 4 lockdown trading) at the beginning of the month after most people have just been paid. Most of all, we have low levels of online shopping at about 2% of total retail sales. So, people have to go out and shop,” he said.

In comparison, online shopping in China now accounts for over 30% of total retail sales compared to South Africa’s 2%, and even if people wanted to shop more online in the country, delivery of many items has not been allowed during the lockdown, he added.

But rental income will still be low

South African’s willingness to go out shopping again will be a welcome relief to landlords, as it could help convince their retail tenants to keep their rented space. However, Redefine said it still expects to grant more rental concessions to tenants or that some tenants will not make it at all.

The group’s Chief Operating Officer, David Rice, said rental discussions were taking place between Redefine and many of its tenants, as some were not happy about paying rates and taxes. Rice said the group also expects the vacancy rate in its office portfolio, which climbed to 12.3% in the six months to February, to continue rising.

Ndlovu said unfortunately property companies are going into these negotiations with tenants in a “tenants’ market”.

“Landlords have to do the best they can to nurse ailing tenants. It costs more to lose a tenant than to retain one, even at a lower rent. There’s no demand for vacant space at the moment. Even if there was, there’s an opportunity cost of missed rentals when the property is vacant,” he said.

Last week, the recently formed Property Industry Group announced the availability of industry-wide assistance and relief packages for all retail tenants during South Africa’s 35 days of lockdown.

While this will provide a much-needed stopgap for many tenants concerned about their operational viability post-lockdown, the announcement puts pressure on the various unlisted property groups, many which are not part of the Property Industry Group and were not consulted on the proposed packages, says Soria Hay, head of Corporate Finance at Bravura.

The Property Industry Group consists of the sector’s three biggest players, namely the South African Reit Association (SA REIT), the SA Property Owners Association (SAPOA) and the South African Council of Shopping Centres (SACSC), and is the mouthpiece for the South African commercial real estate sector.

The intention of the assistance and relief package initiative is to preserve the jobs of retailers, suppliers and service providers, with a qualifying criteria for tenants to ensure that no staff retrenchments are made during the relief period. Assistance and relief is to be at the discretion of the landlord, but the package stipulates the minimum that qualifying retailers can expect.

The package is to be made available for the periods of April and May 2020 and will provide basic assistance and relief as well as interest-free deferment recovery periods for SMMEs and tenants providing non-essential services. Relief can consist of rental reductions (between 35% to 100% for the first month and between 25% and 50% rental reduction for the second) or rental deferments.

The Property Industry Group acknowledges that the relief package comes at a high cost for the industry. Group spokesperson, Estienne de Klerk says that it is time for bigger and stronger companies to step up and form a buffer to protect smaller retailers so that the sector can collectively come out stronger.

Unlisted property groups and independent shopping centres are not part of the Property Industry Group collective. As such these industry players were not included in the consultation process that took place when obtaining buy-in for the proposed package. Yet the relief initiative undoubtedly sets an industry precedent which could see independent landlords and property groups challenged to provide similar relief to their own tenants.

Although the listed property sector has not been immune to the challenges experienced by the retail sector preceding lockdown (in fact it was named as the worst-performing asset class of 2019) there is arguably better liquidity and wiggle room here in which to provide tenant assistance than within their unlisted counterparts. Just recently leading REIT, Redefine Properties, which owns more than 300 retail properties across the country, said that it was in a position of strong liquidity with which to face off the lockdown, with access to R2.8 billion in committed undrawn credit facilities. This is certainly not the case for several thousand medium and small retail operations in South Africa.

Prior to lockdown, retailers were already experiencing the negative COVID-19 impacts. For example, in the short “stay at home” period leading up to the original 21-day lockdown, struggling retail group Edcon was hit with a 45% income loss and a reduction of about R400m in sales from flagship stores Edgars and Jet chains. The group anticipates a further R800m loss in sales over the lockdown period and a question mark remains over whether the group will be able to pick up operations once the lockdown is over. The ripple effect if Edcon folds will be felt throughout the sector – listed and unlisted.

The Property Industry Group has only stipulated the relief package for April and May, and it will be a different ball game should timeframes become longer. For the unlisted sector – and their tenants – with less concerted relief efforts available, the playing field may grow more uneven.

Forever 21 has filed for bankruptcy

By Cortney Moore for FOX Business

Forever 21 is about to start aging.

The iconic youth-focused fashion retailer announced to its customers on Monday that it indeed is filing for bankruptcy despite its attempts to quash rumors about the business development in a newsletter 10 days prior. Under the U.S. Bankruptcy Code’s chapter 11, Forever 21 will remain open while it “takes positive steps to reorganize the business.”

Up to 178 stores will close throughout the U.S.—which is sure to hurt thousands of employees who rely on the retailer for a source of income. Operations are also said to halt in 40 countries.

Forever 21 sent out a newsletter to customers on Sept. 20, telling them not to believe the “misinformed” bankruptcy rumors.

For some devoted shoppers, the announcement comes as a shock. However, a number of brick and mortar stores have struggled to keep money flowing with the rise of ecommerce juggernauts like Amazon providing the convenience of speedy shipping.

Fashion outlets that have shuttered a part of their business or have gone out of business completely include other notable mall staples like Payless, Kohl’s, Dressbarn, Topshop, Ralph Lauren, Lord & Taylor and more.

Forever 21, which was founded by Korean-born American husband and wife Do Won and Jin Sook Chang in 1981, grew to amass a network of over 800 stores while becoming multi-billion dollar company. Despite this, the trendy fashion chain that covertly imprints bible verses regarding everlasting life on its shopping bags, couldn’t be spared from what some have dubbed the “retail apocalypse.”

Here are five reasons that may have contributed to Forever 21’s downfall.

1. Rapid expansion

In Forever 21’s “About Us” section of their website, it acknowledged that it was the fifth largest specialty retailer in the U.S. and was aiming to “become an $8 billion company by 2017 and open 600 stores in the next three years.” However, just like with any other business that aggressively expands, there is sure to be a whole lot of debt that comes with it.

The company also revealed that the average size of a Forever 21 store is 38,000 square feet while the largest is 162,000 square feet. A market study that observed the average rent paid by square foot in the U.S. for industrial space found that businesses classified under “special purpose” paid $6.50 per square foot. If that figure holds true for today’s standards, a 38,000-square-foot Forever 21 would cost about $247,000 for rent alone. Similarly, a 162,000-square-foot location would cost an astounding $1,053,000.

2. Bad publicity
According to a report by the social media analysis website Sprout Social, nine out of ten customers will stop purchasing from brands that lack transparency. These findings are a detriment to Forever 21 since the company has been embroiled in back-to-back lawsuits for trademark and copyright infringement for years.

Whether from big household name designers to small indie brands, Forever 21 has made a knockoff version for customer purchase. Gucci, Adidas and Puma are just a few big dogs that have attempted a courtroom battle with Forever 21. Pop singer Ariana Grande has filed a $10 million lawsuit of her own over the value brand “stealing her” image and likeness.

3. Fast fashion and the competition
Forever 21 might be known for their quick-turning duplications, but they are not alone in the fast fashion world. Competitors such as H&M and Zara have vied for the same consumer base that wants trendy clothing at an affordable or low-cost price point. Popular London-based ecommerce brands like ASOS and Pretty Little Thing have also taken a swipe at profits with their lucrative celebrity collaborations.

The Instagram famous Los Angeles-based brand Fashion Nova has also given Forever 21 a run for its money with shameless knockoff business strategy that churns out replicated designs in less than 24 hours.

4. Shifting consumers
Conversely, there is a buying base that opposes everything fast fashion stands for. These shoppers are generally concerned for the environment, whether it be through minimizing fabric waste or not supporting an industry that has brought on harsh working conditions. This desire for sustainable fair trade has allowed the secondhand clothing market to grow to an estimated $28 billion worldwide, according to a consumer survey from analytics aggregator Statista.

The call for body positivity in the fashion industry has also impacted Forever 21 despite the store having a dedicated plus size and curvy sections in U.S. stores. Outside the small pickings these departments have, Forever 21 highlights its ultra-thin models more frequently—which may have alienated its full-figured base that is said to have a buying power of about $46.4-billion according to business management consultants at Coresight Research.

Forever 21’s shipping of free diet bars over the summer also didn’t help the brand’s image.

5. Unfocused inventory
Although majority of Forever 21 stores offer various selections, the brand appears to have extended its reach too far. With its other lines like XXI Forever, For Love 21 and Heritage 1981, the retail store has carried a mixed bag of styles that are both overwhelming and in conflict with shoppers’ inner Marie Kondo call for minimalism.

The store has also dabbled in creating a home décor, tech accessory and cosmetics line that is cheap in price but lacking in durability. Forever 21’s sister brand, Riley Rose, which sells third-party beauty products never took off the way the company hoped. Even top beauty retailer Ulta is struggling with a shifting market that prizes skincare over makeup.

A January report in Business of Fashion said Forever 21 had its sights on doubling the number of Riley Rose stores. That doesn’t appear to be happening while the business reorganises its strategy under bankruptcy.

The role of mobile technology in retail

By Sandra Wrobel-Konior for Business2Community 

Technology is changing the way most industries do business, and retail is no exception to the ever-evolving advancements. Although some are afraid technology may be hurting the retail industry by moving everything online.

If you take a more in-depth look into the situation, you’ll see that tech is actually helping retail stores to grow and expand their expertise. There’s a number of new technology systems that are being implemented, and are worth consideration to remain a top competitor in the heavily competitive retail market.

Connecting with your shopper
According to a study conducted by CMO, 54 percent of retailers put customer experience in the number one slot on their priority list.

Beacon technology made its presence felt in the retail industry in 2017 for this reason. They are small devices placed at the front of the store and throughout to allow interaction with customers as soon as they walk through the door. They connect and send a signal to a customer’s Bluetooth capable device, and send highly accurate, relevant information and in-store offers in real-time to create a greater personal shopping experience for the customer.

A study done by Swirl states that 70% of shoppers who received beacon-related content on their phones agreed it increased their likelihood of making a purchase, showing impressive sales results for companies. These small devices are similar to online shopping apps, which allow customers to digitally connect to in-store deals conveniently from their mobile device to plan their shopping experience around real-time in-store offers as they shop.

The online consumer is looking for a great deal just as much as the in-store consumer, and it’s important to provide both with a superior experience.

Retailers also often turn to online checkout tools to help streamline the online shopping experience for consumers. With online shopping becoming the main avenue for all forms of shopping, it’s important for merchants to have a safe and secure checkout system for their online customers.

Modern systems create an efficient transaction process done entirely on the product page. It is hassle-free and user-friendly (recognising various languages), and does not push customers to a third-party site or payment service.

This approach also makes it convenient for consumers to order right from their mobile devices and provides a higher level of security; an important feature in the digital age.

Sensing your customer
74 percent of firms want their operations to be data-driven, but seldom follow through, with only 29 percent applying analytics to their internal processes. If implemented properly, consumer analytics tools could improve this statistic. They prove to be a major asset for merchants to track customer behaviours and better understand relevant trends.

These tools use a sensor that recognises and tracks the number of customers that come into a store, and narrows that data by month, week, or day to give a short-term insight into foot-traffic.

Other kinds of technology within the realm of these complex tools include the ability to track online orders to measure which items are in demand, and which items can be eliminated from the stores’ stock costs. By 2021, 85 percent of retailers plan to use intelligent automation like this to further improve their supply chain plan and eliminate increased costs.

Keeping it together with tech-driven organisational tools
The Internet of Things (IoT) has created an important opportunity for retailers to integrate a major type of technology into their operational strategy. All smart devices are connected thanks to the IoT, so the integration of the online retail shopping experience is a viable strategy for companies to capitalise on a broad connection to consumers.

For example, the IoT enables a shopper to scan or search for a product to be connected to the detailed information provided by the merchant about that product. The consumer then has access to relevant reviews and feedback for the specific product to help make more informed buying decisions.

In the long run, this helps increase sales and consumer retention, by providing shoppers with helpful services and information, thereby improving their buying experience.

Tech-driven internal organisational tools also make an impact on customer experience by starting at the source and improving internal retailer functions. Resource planning cloud systems that automate manual tasks help companies zero in on the strategic initiatives that propel the business forward. They also organise financial operations and leverage real-time consumer-related data for insights that improve decision-making and performance management.

Having strong internal operations rely heavily on tech-driven tools to meet customer demands and remain future-proof, especially in the modern digital age.

Takeaways
Depending on the type of store you operate, different technological tools may be more worthwhile than others. What matters is establishing a brand that customers can connect with.

In this day and age of social media and the internet, simple tech-driven strategies can help consumers to feel connected to a brand online, prolonging company success.

Below is a summary of what we covered and how technology plays a role in retail:

  • Customer experience should always be a top priority in the retail space.
  • Technology-driven tools improve buyer experience and increase efficiency.
  • Technological advancements in retail are lucrative to future growth in the digital age.
  • Internal operations need to be streamlined in order to reflect positively on customer experience.
  • The utilization of consumer data can have a major impact on a company’s success.
  • Consumer data-driven strategies rely on tech tools to ensure relevance and accuracy before the implementation of new strategies.

By Josh Hall for Prolific London

Retail sales rose by just 0.3 per cent in July, their lowest level since records began.

The figure was down significantly on the 1.6 per cent increase seen in the same month in 2018, and follows what was also the worst June on record.

The survey, conducted by the British Retail Consortium and KPMG, are based on responses from retailers making up an estimated 40 per cent of all British retail sales. Their records began in 1995.

According to the Consortium, “the combination of slow wage growth and Brexit uncertainty” are to blame for the collapse.

But the group also said that last year’s figures had been inflated by the World Cup.

KPMG head of retail Paul Martin said: “Shoppers are notably disengaged overall. The pressure continues to build between online and physical offerings, costs continue to rise and the demands of consumers continue to grow.”

Meanwhile as we reported yesterday the UK service sector recorded a slight and unexpected growth during July.

The performance put it out of kilter with other UK sectors, in which the outlook remains gloomy.

Online shopping has become increasingly popular amongst South African consumers. Convenience, competitive pricing, and a wide choice of products make online purchasing a no-brainer for tech-savvy shoppers, but retailers need to stay ahead of the curve when it comes to standing out against the competition.

Over the past year, a couple of popular South African retailers’ pricing has come under scrutiny where products were advertised as discounted from inflated list prices to give customers the perception of a bigger saving. In both cases, the advertising was ruled to be misleading. While unscrupulous practices like this may get consumers all riled up, the benefit of these kinds of cases being brought to the fore is that consumers have become more discerning when it comes to finding a bargain online.

Comparison tools and aggregator sites take the hard work out of shopping around and comparing prices. According to PriceCheck Founder, Kevin Tucker, comparison tools are just as important to retailers as they are to consumers. “Retailers are able to monitor price changes, price drops, promotions from competitors to allow them to stay relevant.” With more than two million visits each month, PriceCheck is South Africa’s number one product discovery and comparison platform.

Online purchasing behaviour indicates that consumers tend to go for trust over price point, particularly in the case of lesser known and international retailers. Consumers would rather pay a little bit extra at a reputable retailer than find a great bargain only to have to wait longer for delivery time, experience delays, or deal with poor customer service and a sketchy returns policy.

For this reason, comparison tools have become an invaluable tool for discerning shoppers, helping customers make informed decisions about their online purchases. Consumers love a good bargain, especially in tough economic times, and daily deals, sales and discounts create a sense of urgency and encourage impulse purchase behaviour. By listing retailers that offer a benefit to consumers, especially those that don’t have the financial backing of the big players in the e-commerce space, comparison tools add value to consumers while at the same time sending the listed retailers good quality traffic and qualified leads.

While building trust with consumers goes beyond fair and competitive product pricing, retailers need to consider the customer journey from start to finish. Tucker advises retailers to invest in online support through live chats or chatbots. “Real-time support can go a long way with consumers.”

He believes that providing as much information for the consumer to review is essential for retailers to maintain their credibility. “Delivery and returns policies, shop reviews, and payment methods all need to be clearly indicated to manage expectations and ensure that consumers are able to make the best buying decision possible.” he says.

By Deborah Williams for Retail Insight 

June 2019 UK retail sales have been the worst on record, with a 1.3% total basis decline, according to a report by the British Retail Consortium (BRC). June UK retail sales saw a 2.3% increase in 2018.

Covering the five weeks from 26 May to 29 June 2019, the report found that the decline brings the three month average into a decline of 0.1% and the 12 month average to an increase of 0.6%, the lowest since its records began in December 1995.

BRC chief executive Helen Dickinson OBE said: “June sales could not compete with last year’s scorching weather and World Cup, leading to the worst June on record. Sales of TVs, garden furniture and BBQs were all down, with fewer impulse purchases being made. Overall, the picture is bleak. Rising real wages have failed to translate into higher spending as ongoing Brexit uncertainty led consumers to put off non-essential purchases.

“Businesses and the public desperately need clarity on Britain’s future relationship with the EU. The continued risk of a No Deal Brexit is harming consumer confidence and forcing retailers to spend hundreds of millions of pounds putting in place mitigations – this represents time and resources that would be better spent improving customer experience and prices. It is vital that the next Prime Minister can find a solution that avoids a No Deal Brexit on 31st October, just before the busy Black Friday and Christmas periods.”

On a like-for-like basis, June UK retail sales decreased by 1.6% from June 2018. This is lower than the three month and 12 month averages of -0.4% and -0.1% respectively. The report stated that this represents the worst 12 month average since April 2012.

In-store sales of non-food items declined 4.3% on a total basis and 4.1% on a like-for-like basis, over the three months to June. This decline is lower than the 12 month total average decline of 2.8%.

Non-food UK retail sales declined by 2.1% on a total basis and 2% on a like-for-like basis, over the three-months to June. This is also lower than the 12 month total average decrease of 0.8%. The BRC said that this is the worst quarterly decline since February 2009.

KPMG UK head of retail Paul Martin says: “There are few places retailers can hide from the difficult trading conditions that have been hitting the industry for some time. June’s retail performance did little to ease that, with like-for-like sales falling 1.6% compared to last year.

“On the high street, consumers were eager to pull up a pew for the summer’s sporting events, with added interest in the furniture category. Otherwise, consumers largely turned a blind eye to offers in the physical retail space.”

Non-food online sales increased 4% in June 2019, against an increase of 8.5% in June 2018. The three month and 12 month average growths were 3.3% and 5% respectively. Non-food online penetration rate increased to 30.7% last month, from 28.5% in June 2018.

Martin adds: “With 4% online growth, shoppers were thankfully more engaged in this channel, making the most of the added convenience and continued aggressive pricing. Fashion performed particularly well thanks to end-of-season sales and upcoming holidays.

“Pressure on retailers continues to mount and is seemingly coming from all angles: economic, geo-political, environmental and behavioural. Consumer spend is only likely to fall further as things stand, and cost efficiency remains vital. The focus for most in the industry will be preservation and adaptation in order to see them through these tough times.”

Food sales experiences ‘above total average growth’ for June 2019 UK retail sales
Over the three months to June, food sales increased 2.4% on a total basis and 1.5% on a like-for-like basis – an increase above the 12 month total average growth of 2.2%.

IGD CEO Susan Barratt said: “A late start to the summer weather in June compared unfavourably with consistently drier and warmer conditions in 2018, so while year-on-year growth in food and grocery sales last month was small, it is still encouraging.

“If the recent pick up in temperatures is sustained, there’s hope for stronger figures in July. Shoppers feel slightly more positive at the moment, with the percentage expecting to become worse off financially in the year ahead falling from 32% in February to 27% today.”

By Alistair Anderson for BusinessLive

Edcon is a large employer, with 40,000 staff, while its operations also affect numerous suppliers and 100,000 workers indirectly.

Edcon has been battling to save jobs following some poor strategic decisions and mounting competition from newer retailers who have eaten into its market share over the past decade. In the past few weeks, it managed to sign a rental savings deal with a fifth of its landlords so that CEO Grant Pattison could implement a turnaround plan. This plan includes selling or closing underperforming businesses and flattening management structures.

Read more here: https://www.businesslive.co.za/bd/companies/retail-and-consumer/2019-04-14-how-edcons-survival-will-avert-retail-apocalypse/

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