Tag: retail

Source: Supermarket & Retailer 

The “latest month” (5 weeks ending 3 April 2022) shows sales of R53-billion representing a 10.1% month increase versus the same period last year.

This data emanates from NielsenIQ’s Market Track the largest retail (grocery) data source in the country and the only currency used by all South Africa’s major retailers.

This benchmark data comprises more than 10 000 branded retail outlets (e.g. supermarkets and garage forecourts) and more than 143 000 independent stores (e.g. spazas and taverns) across South Africa’s nine provinces and measures more than 80% of all retail grocery transactions.

Private label pounces

Total Private Label (retailer own brands) sales are now bigger than the two largest manufacturers in South Africa. This is borne out by NielsenIQ analysis which shows that the private label sector now commands 15% of all grocery sales in South Africa.

This equates to R77-billion in annual sales (12-months to 3 April 2022) and saw 8.6% growth in March 2022.

Inflation nation

Rising inflation has become a hallmark of the COVID-19 era and has been exacerbated by the ‘perfect’ storm of the war in Ukraine and most recently the floods in KwaZulu-Natal – a key South African manufacturing and logistics hub.

Annual consumer price inflation rose to 5.9% in March – from 5.7% in February – placing it just below the upper limit (6%) of the South African Reserve Bank’s monetary policy target range.

Transport, housing and utilities and food and non-alcoholic beverages were the most significant contributors, with transport contributing 2.1 percentage points to the annual rate. Fuel prices rose by an eye-watering 33.2% in the twelve months to March with petrol prices climbing by 32.6% and diesel by 35.1%.

Cooking oil prices on a slippery slope

Indonesia’s decision to suspend palm oil exports in the face of domestic shortages has pushed vegetable oil prices to new highs. The prices of palm, soybean, European rapeseed and even its Canadian GMO counterpart, canola oil, have also reached historic highs.

“Given that vegetable oil is a raw ingredient in a wide range of products, varying from prepared meals to personal care, we are likely to see a negative knock-on effect of rising oil input costs,” says Nooy.

NielsenIQ data shows that South African cooking oil sales figures have unsurprisingly experienced a massive increase of 21% over the last year (52% during the past month). It has also experienced the highest price increases amongst the top 20 products measured in its data panel.

As a result, the rate of price inflation on cooking oil is currently double that of the next category.

In addition, an in-store average shelf price check by NielsenIQ revealed that the average price of cooking oil was R42.76 per litre the week before the war in Ukraine started (20 Feb) and is now R54.70 per litre (vs the latest week 1 May) which represents an increase of R11.94 per litre.

Top products

Beer is South Africa’s number one FMCG product category in terms of sales and has experienced significant growth over the last 12 months, while soft drinks are down from the number one position, having experienced 8% annual growth and 12% in the last month.

Cigarettes are the third largest product category has grown by 63% over the last 12 months and 8% in the 5 weeks ending 3 April 2022. NielsenIQ South Africa MD Ged Nooy cautions it’s important to view the data in context.

“The globally unprecedented prohibition on the sale of liquor and cigarettes during the 2020 and 2021 COVID-19 lockdowns in South Africa have resulted in those sectors experiencing high growth rates off previous low, and in certain months, nil bases.”

The only product in the Top 10 displaying negative sales figures is sugar; sales of which have declined by 2% over the last year.

Adding to this bitter pill is that the South African Cane Growers Association reports that the local sugar industry has lost more than R223-million after the unprecedented floods in April 2022 that caused damage to thousands of hectares of cane crops.

Keeping a lid on it

Long Life Milk and Instant Coffee sales are currently experiencing flat sales and low inflation. This follows a boom in sales of these items during South Africa’s lockdowns when consumers were primarily working from home and were stocking up on these items, instead of the coffee breaks they would normally take at their offices.

Now that consumers have moved to a hybrid working model, or returned to the office full time, sales have plateaued. The Beverage category has also only experienced a 2% price increase.

This category has been able to curb price increases thus far due to a decision by Government to delay an increase in the sugar tax. There have also been considerable pack dynamics at play with consumers shifting pack sizes as opposed to forgoing their favourite cooldrink, for example.

Nooy points out; “The retail sector has benefited from South Africa’s successive lockdowns. This stems from consumers prioritising in-home consumption, such as home-office related snacks and beverages and homemade meals, as opposed to out of home dining at restaurants.

“Government support measures including social relief grants have also contributed to boosting spending in the retail sector.

“However, the next 12 months will be interesting as the retail sector returns to normalised sales with the inclusion of liquor and cigarette revenue back into the mix which will allow for real year on year growth measurement and show a clearer picture of the true state of retail in South Africa,” says Nooy.

Here’s how much we spent on Black Friday

Source: Business Insider SA

Black Friday 2021 was a much bigger deal than the damp squib that was 2020, early data shows.

As of Monday, data points to an increase of between 15% and 30% in sales for Black Friday 2021, year-on-year, depending on how you measure.

Individuals seem to have spent less, but more people were buying, and they were spending big on electronics in particular.

Here’s what we know about Black Friday 2021 sales results and data in South Africa so far.

FNB: sales were up between 15% and 19%
On Monday, First National Bank said its own cardholders had spent 15% more on Black Friday this year than they had in 2020. Based on transactions from other bank customers via its Speedpoint card terminals, spending was up 19% year-on-year, it said.

FNB cardholders spent R2.5 billion on Black Friday, the bank said, and it processed more than R2 billion in transactions via its terminals.

Its numbers also suggest the extended sales period went better than before, with a 25% increase in transactions over the course of November, compared to 2020.

Online transaction values up 30%, and big spending on electronics, says PayFast
Online payment gateway PayFast said on Monday it had seen a 30% increase in the value of transactions it processed on Black Friday, compared to 2020 – even though individuals spent less.

PayFast recorded an average basket of R1,208, which is down from R1,243 the previous year. But more people were shopping online, with a 34% increase in transactions.

Spending on electronics was up 120%, it said, “indicating shoppers’ willingness to spend more on big ticket items like TVs, appliances, and consoles”.

 

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.

 

By Greg Gatherer, Account Manager at Liferay

In today’s competitive world, brand loyalty is no longer a guarantee for digital businesses. Customers are increasingly making purchases based on the experience that companies offer, rather than on the products or the prices. This means that customer experience has become a major differentiator for digital businesses.

Companies must find innovative ways to distinguish their offerings through the entire customer lifecycle, including later stages that still have untapped opportunities for engagement.

Customer experience doesn’t end after purchase

People have grown accustomed to doing their own research on products before engaging with a brand. Key findings from a Gartner customer experience survey show that 82% of smartphone users consult their phones before they make a purchase in-store. This means that the opportunities a company has to influence customers in the early stages of the customer lifecycle are being cut down.

But there are still ample opportunities to reach out to new customers post-purchase and continue to engage them as a way of preparing them for the next purchase with your company. Research has shown that existing customers are both easier to sell to and more profitable than new customers.

Rather than focusing on narrowing opportunities to influence new customers, businesses should find ways to nurture their existing customers, ultimately turning them into advocates that will come back to purchase again and again.

Changes in customer loyalty

If existing customers are so profitable, why do businesses neglect them in favor of new customers? Often, the answer comes down to the changing nature of customer loyalty and how difficult it is to turn people into repeat customers.

Companies used to be able to develop lifelong brand loyalty in their customers through big campaigns or traditional loyalty programs. The idea of lifelong brand fans meant that loyalty was defined as buying solely from that brand— like a staunch supporter of Coca-Cola that refused to drink Pepsi.

Now, it is incredibly easy for customers to switch brands, and they don’t hesitate to exert that right. Millennials will cite anything from poor customer experience to feeling that a brand no longer fits their identity as reasons for moving on from a previously favourite brand. Experiences are what earn customers’ loyalty today, and businesses will need to adjust their strategies in order to account for this reality. The more information and differentiators companies are able to offer with their experiences, the more loyal customers will be.

These four strategies will help you focus your efforts on engaging your existing customers in a way that creates loyalty for your brand.

1. Collect the right data

Companies need to collect information that is actionable, not just interesting. There’s no value in asking customers to give up personal details if that data cannot be analysed for new ways to advance your business. Companies would do better to focus on tracking behaviours that give them a better understanding of their customers.

With detailed insight, companies can choose to alert store reps, confirm product availability before customers show up, offer free delivery if they give online purchasing a try, or send a reminder that, if the customer comes in a day early, they’ll be able to take advantage of the store’s annual sale. These are the kinds of detailed insights that differentiate experiences, the way a mom and pop shop would be able to simply by familiarity with its customers.

2. Go beyond segmenting

One of the benefits of refocusing on engaging existing customers is that you have an opportunity to gain deeper insights by continuing to collect and analyse data over time. Track the way customer behavior changes throughout repeat purchases, and use that to inform the experience you’re creating for new customers. Eventually, you should also be able to use this data to more accurately identify who your top customers are, and what it is that keeps them consistently engaged with your company.

3. Turn service culture into a process

Great customer experience often comes down to a story about exceptional one-on-one employee-customer interactions.

Part of great customer experience is maintaining consistency across interactions through the use of technology. Take a local coffee shop as an example; if its customers pay through a mobile app, the store will automatically have a record of their usual orders. If that information is shared with the POS system when the customer walks into the store, then it doesn’t matter if they come at a different time of day or go to a different location — the cashier still knows their usual order. Customers have access to the same great experience, and it’s consistent for all customers, instead of being dependent on the regular cashier remembering a customer’s face and preferences.

4. Integrate loyalty initiatives into your digital strategy

The goal of focusing on existing customers is still to drive profit through excellent service, and that might look different than a traditional loyalty programme. Companies need to assess the success of loyalty initiatives within the context of their entire digital strategy, rather than assuming loyalty programs will be profitable on their own.

The future of customer experience

As new digital channels open up, companies will need to be prepared to manage data in a way that eliminates noise and focuses on valuable insights that can enhance the customer experience. Digital leaders are focusing heavily on transforming their companies so that their technology solutions are part of a unified platform. Business systems need to be able to tap into the many disparate touchpoints customers are interacting with and process that data quickly and efficiently. The future of customer experience depends on taking this detailed customer knowledge to scale, and using that to consistently deliver personalised experiences at the individual level. Data not only matters, it is thought to be among the most precious assets most organisations have.

By Martin Hesse for IOL

Among the many topics covered in the recent three-day annual summit of the South African branch of Singularity University (or SingularityU), which hosted a terrific international line-up of speakers, was the new world of retail, which merges traditional and online shopping in exciting, innovative ways.

In her presentation “The Retail Revolution”, Kayleigh Fazan, founder and owner of the International Retail Academy, said this revolution was happening under our noses.

“In 2020, $4 trillion was spent online, a staggering third more than 2019. Of course, 2020 was a far-from-normal year, but nonetheless … Oxford Street department stores have closed. Global brands have vanished. Businesses are disappearing overnight. It’s shocking to see.”

She said three key trends were happening in retail:

1. Retail is un-retail. Shops are springing up that don’t actually sell products. “An example is Samsung 837, the Samsung concept store and repair service in New York. Nothing inside that space can be physically bought except the coffee. Imagine thousands of square feet with no sales budgets and no inventory. The space is filled purely with experiences. Another example is the demonstration store in which, again, nothing is actually sold. Instead, everything is shipped,” Fazan said.

2. Omni-channel is yesterday’s news. “It is no longer enough to simply have an omni-channel marketing strategy (using both physical and online channels through which to sell a product). Global consumers now demand a unified experience, allowing them to move freely and smoothly across channels with live visibility of inventory and pricing.”

3. The store as a stage. “If you’ve heard of retail theatre, you’ll know that stores have activation days, seasonal offers, promotions and campaign launches, but these don’t last. They are moments in time. The stage goes back to normal and consumers dial out.

“Millennials scroll through an estimated mile of content every day. This suggests that the mobile phone offers things that the store environment is currently lacking and consumer expectations are changing rapidly. Retailers need to build a star cast of employees, consider their products as the props on the stage, while their customers are the audience.”

Shoppers unite

In another talk, “The Future of Shopping”, Elizma Nolte, regional marketing manager at Facebook Africa, also identified key trends among consumers and retailers, mirroring Fazan.

“The future of shopping is an exciting space where online and offline will be merged. It’s going to bring new digital experiences to our lives, be immersive and allow for experiential shopping,” Nolte said. She said social media has really become the way for people to discover products. “Online consumers are embracing digital tools and they want brands to meet them in that space.”

Another trend is “shopper-tainment”. Said Nolte: “People don’t just go shopping because they need to get something; they go shopping because it’s fun, it’s an experience, a way to hang out with friends. This has led to the rise of live shopping. There’s been an incredible 200% increase in live shopping over the past year, and research done in emerging markets, including Africa, showed an increase of 68% in live shopping over the last year.

“This trend is very fashion-focused at the moment, but what about sports equipment and auto accessories? It’s all about adding experiences, across many different products, again and again. People want brand interaction, for brands to respond to their comments or queries and to assist when something they want is not available.”

The third trend Nolte identified was augmented reality. “Augmented reality is really helping bridge the gap between offline and online, as it works through the entire shopping funnel. For example, if there’s a sofa you’re thinking of buying, augmented reality lets you see what it would look like in your own living room. There is much excitement about augmented reality with 75% of businesses globally stating that they are looking at using augmented reality in one way or another, a figure that is up from 40% in 2020,” Nolte said.

She said a big problem is that there is growing demand for products and growing demand for experiences, but we don’t have additional time. “This is where we rely on recommendations, and usually a machine is making the recommendations. Netflix has been doing it for a very long time – 80% of content that you watch on Netflix is because Netflix recommended it to you. Spotify is very similar: over the last five years, they’ve driven 2.3 billion hours of music discovery.”

Nolte said artificial intelligence would be used more and more across retail and social platforms to refine the recommendation process. “The machine will learn what you’re interested in and present this to you in fun and interactive ways.”

 

How supply chain woes may affect holiday retail

By Alicia Doniger for CNBC

Supply chain bottlenecks and rising prices aren’t keeping consumers from buying. The latest retail sales numbers show U.S. consumers are spending at a much faster pace than expected, excluding autos, up over 15% in September. Back-to-school and back-to-work trends drove a higher level of transactions despite the headwinds of inventory shortages and inflation, but what about early holiday shopping?

With widespread supply chain warnings, retailers including Amazon and Target started to offer holiday promotions even earlier than normal to get ahead of the lack of inventory and to ease consumer anxiety. That may yet lead to an accelerated timeline for holiday gift buying.

NPD Group said in its annual holiday shopping outlook that 51% of respondents to a survey said they plan to start holiday shopping before Thanksgiving, but that is only up slightly from last year. The early shopping trend is not new in retail. Major retailers had Thanksgiving Day store openings as far back as 2014 and Amazon’s Prime Day moved to October last year amid the pandemic.

This holiday season “continues the early shopping trend, with the added layer of inventory concerns motivating many shoppers to grab what they want when they see it, instead of waiting for better deals later in the season,” said Marshal Cohen, chief retail industry advisor for NPD, in its annual outlook.

A selfish shopper is leading sales
But if economic anxiety related to the supply chain and inflation is motivating consumers right now, it may be less about the holidays than their own needs and daily lives. Data collected by Kearney Consumer Institute last year found that holiday shoppers largely held back, with 81% of respondents to a survey it conducted about Amazon Prime Day saying they waited on major holiday shopping, and the purchases they did make were for themselves.

“We’ve seen consumer awareness around supply issues and things they need to buy now,” said Katie Thomas, lead of the Kearney Consumer Institute, on the current consumer environment. And supply chain issues are “playing more to the emotion of the consumer” who doesn’t want to miss out on something big, but that may not extend out beyond the immediate family for many shoppers. “A toy your kid really wants, or the specific new appliance you want,” Thomas said. “Some of those are playing into the sense of scarcity.”

The messaging about scarcity ahead of the holidays started during the summer, and remains an issue at the highest levels of the government, where the Biden administration is focused on fixing supply chain problems at ports amid fears of a political backlash.

“There’s no political intervention that’s going to get this done, and there may not be a human intervention that gets this done because this issue is now going to last well into next year,” Steve Pasierb, the president and chief executive of the Toy Association, told Politico this week.

Retailers took to calling “September the new December” this year as they started promoting holiday sales early. Amazon rolled out its “Black Friday-worthy” deals the first week of October, the earliest holiday start in the online retailer’s history, and Target promised the “lowest prices on gifts” starting October 10.

Concerns from experts over supply shortages seem to increase daily, although Black Friday (the unofficial start to holiday spending) is over a month away. Shelves are emptying fast, and experts worry they will be completely empty by the time the typical holiday shopping season begins, which runs November through December, according to the National Retail Federation.

Still, Thomas says the early promotions won’t change the fact that consumers are used to doing actual holiday shopping starting around Black Friday, “or at least November.” Even with widespread holiday-placed promotions leading to more consumer incentive to buy now, “a lot of the shopping [consumers] are doing with these deals is buying things for themselves,” Thomas said. “That is why people love Prime Day, because it’s in the summer and they don’t actually feel like they have to be buying for people.”

A consumer hyper-aware of empty shelves
Consumers are dealing with a unique form of pandemic PTSD. “When we were in the throes of a pandemic, consumers expressed availability issues as one of their biggest frustrations,” Thomas said. “We’re all way more hyper-aware of out-of-stock and availability, and noticing shelves that are empty.”

Last year’s shortage of supplies on basics like toilet paper and cleaning products that were stockpiled at the start of the pandemic have made consumers more anxious with low inventory, said Vincent Quan, associate professor at FIT and global supply chain expert, and there are obvious benefits to partaking in a retailer’s early holiday promotions. “The consumer thinks ‘Oh wow, well there is a deal going on and I don’t even know if I can get this again, so I might as well just take the chance now and buy it,’” he said.

“Buy now and return later, because it won’t be there tomorrow,” Quan added. “If you don’t like it, you can always return it, so why take the chance?”

It might be wise for consumers treating themselves to these early holiday deals to think a little bit more about purchasing holiday gifts for others, as some experts have warned. Thomas said even though there is a high level of “fanfare” about the extra early promotions, consumers should start their holiday shopping now given the meaningful supply issues retailers could run into later in the year. But ultimately, that doesn’t mean holiday shopping will end any earlier.

Retailers are trying to accommodate consumer needs, get them what they need sooner rather than later, and offer up a good deal, but “I’m just not sure people have Christmas and holiday shopping on the brain yet,” Thomas said.

For the big retailers, there are benefits in the holiday promotions even if consumers aren’t in the holiday frame of mind yet. Amazon and Target can use these deals as consumer experiments, testing different types of sales and timing, according to Thomas, as retailers try to spread out consumer spending. “And that will make them all that much more successful as the season goes on,” she said.

When consumers do start their holiday shopping, they won’t face a situation in which there is nothing to buy, but Quan said they should be prepared for shortages of items that top consumers’ lists. And shipping delays will inevitably result in some tension. “As long as [their orders] arrive before Christmas consumers say they are fine with the delays,” according to Thomas’s research. But she added that people are defensive, and tensions are high. “We all just want to get back out there, we want to feel like things are normal again, but our fuses are shorter.”

So while consumers are not as concerned over holiday inventory now, Thomas warns, “they’re going to be mad come December.”

 

By Londiwe Buthelezi for News24

Hyprop Investments says it had a negative reversion rate of 22.7% in the six months to 31 December 2020, reducing its monthly rental income by approximately R5 million.

The company’s retail vacancies increased to 3% while office vacancies stood at 16.2% at the end of December 2020.

Hyprop’s retail vacancies are lower than some of its peers, but its offices are much more empty.

The owner of Canal Walk and Rosebank Mall, Hyprop Investments, says it is receiving R5 million less in monthly rental income for leases that expired recently. This as vacancies rise, putting pressure on landlords to accept lesser rental rates than they did before Covid-19.

The property group – which also owns few office buildings, including those that are part of Hyde Park and Canal Walk shopping malls – said during the announcement of its financial results on Monday that it recorded an average negative reversion rate of 22.7% in the six months to 31 December 2020.

A reversion rate measures the extent to which landlords were able to increase rental rates for expiring leases that were renewed. A negative reversion rate shows lower rental rates than before.

In the six months to December, Hyprop renewed and signed new leases for 11.2% of its gross leasable retail space, or just shy of 75 000 square metres, and this is where the negative reversions were recorded.

“This equates to a reduction in monthly rental income of circa R5 million (equivalent to 2.4% of the average monthly rental). There has also been a noticeable increase in the number of tenants who are reluctant to commit to longer-term leases until economic conditions improve,” wrote Hyprop in the results announcement.

The company also noted that new leases were shorter by 4.1 years on average while those tenants who were renewing also shortened their lease terms by an average of 3.2 years. These tenants will also be paying lower rent in the future than what Hyprop is used to as the annual escalations decreased to 6.5% from 7.2% in the period ended in December 2019.

Hyprop, however, fared better than some of its peers when it comes to having empty malls. The company said vacancies in its SA retail portfolio increased to 3% in December 2020 from 2.4% in June. In comparison, Liberty2Degrees reported a vacancy rate of 4.7% in its retail portfolio at the end of December 2020 while Emira Property Fund’s retail vacancy rate stood 3.4%.

However, the same cannot be said for Hyprop’s office vacancies, which stood at 16.2% at the end of December – notably higher than the national average of 13.3% for the fourth quarter of 2020 that was reported by the South Africa Property Owners’ Association.

Hyprop’s office vacancies were also higher than those of all the other peers that recently reported their numbers, including Redefine (14.7%), Emira (14.9%), and Liberty Two Degrees (12.4%).

Sandton City sees a spike in luxury purchases

By Londiwe Buthelezi for Fin24

The owner of Sandton City says footfall at the country’s premier shopping centre recovered to 87% of pre-lockdown levels on weekends in October.

Its other big malls, such as Eastgate in the East Rand and Liberty Midlands Mall in Pietermaritzburg are recording more customer visits on weekends than they did before the lockdown.

And what have people been frequenting the malls for? Looking at retailers’ turnover in Liberty Two Degrees’ malls, they have been shopping for luxury and tech goods, as well as more obvious grocery and supermarket items.

In fact, luxury brands contributed 8.1% towards total turnover at L2D malls even though they only account for less than 1% of mall space. The rapid recovery in demand for luxury brands is defying expectations in a country where over 43% of people are now unemployed if you include discouraged jobseekers after 2.2 million more people lost their jobs in the third quarter.

But a 10 point improvement in consumer confidence in the three months to end-September – after it reached a 33-year low in June as shown by the FNB/BER Consumer Confidence Index – was perhaps a telling sign that those who still have the ability to spend will gradually go back to their shopping habits.

L2D said the recovery for luxury brands was driven by domestic demand.

But while people are out shopping for luxury items again, they aren’t yet flocking to hotels. L2D said the Sandton Sun hotel is currently the only hotel in its portfolio that is operational. But its occupancy rate still stood at 30.9% in September, 10 percentage points above the 20.9% recorded in August.

The Sandton Intercontinental Towers, Garden Court and the Convention Centre have been closed since March 2020. But it’s not only hotels that are giving L2D a headache. The company said vacancies across its property portfolio increased again from 6.1% in August 2020 to 7.6% in October. Office vacancies increased to 15.1% by the end of October 2020, with Melrose Arch being the most affected.

“The effects of Covid-19 continue to drive the downsizing of office space,” wrote L2D in a trading update released on Friday.

The retail vacancy rate also continued to increase with Eastgate Mall being the largest contributor. But the company said its team had secured leases for further 900 square metres of space, which will reduce the Eastgate’s vacancy from 7.0% to 6.3% in the fourth quarter.

Image credit: Michael Turner

The evolution of retail in a post-pandemic world

The rhetoric of ‘retail is dead’ is incorrect. In fact, retail is advancing at a rapid rate to meet the consumer demands for in-store innovation and service solutions for their shopping requirements in this post-Covid era.

This was the view of industry thought leaders who participated in the Fortress Retail Evolution webinar that took place recently. This online event was hosted by Mike Stopforth and included a panel discussion between Vuso Majija, Alex Morar, Tshiamo Mathibela and Richard Mukheibir, as well as commentary from other retail experts.

A key insight shared by Graeme Codrington is that the pandemic has accelerated a lot of the trends that were already underway. “E-commerce is one of the biggest trends at this time, but it’s not merely about putting your products online and then hoping somebody buys them. It is not competition to traditional retail; it extends and expands traditional retail. You need to develop relationships with your consumers and then personalise your connection with them through the right in-store experiences that gives them reasons to keep coming back– it’s not just sales.”

When discussing the innovations that are in play at this time, Vuso Majija explained how the tenant mixes are evolving and changing in response to changes in customer behaviour. “Pre-Covid-19, we saw space consolidation by tenants, including the closure of non-performing stores. For example, banks closed branches and Edgars closed certain stores. On the other hand, certain retail categories including grocers, pharmacies, and athleisure tenants were opening new stores. This is directly because shoppers were focusing on essential items, health and beauty products and changes in clothing preferences.”

“Our biggest challenge as landlords at this time isn’t omni-channel retail, it’s economic growth. There is appetite from small and large retailers to open stores, but the current economic situation is the main hindrance,” commented Majija.

SMEs are key drivers of economic growth in the country, which is the area where landlords are hoping to attract new tenants to shopping centres. “Both large and small partners are looking for space – it’s not all doom and gloom. Our priority this year is to try and accommodate as many of those opportunities as possible,” added Majija.

Richard Mukheibir supported these views, saying, “As a franchise business, we couldn’t sell franchises during hard lockdown in our usual face-to-face manner. Our sales model changed to weekly webinars and within a month, I had spoken to more than 100 people about franchising. Subsequently, we have sold 11 franchises as at the end of January. There are now more stores, but the size of the stores has reduced, with lower overheads and in turn, more profit. This proved how discomfort has resulted in interesting, innovative solutions that led to growth.”

Bathu Shoes have directly contributed to economic growth by opening twelve stores during 2020, despite the pandemic and its difficulties. Tshiamo Mathibela shared her views on how this emerging business overcame their challenges: “We don’t have a blueprint for the way we do things. Instead, we focus on innovation and customer experience. For the new stores, we paid a lot of attention to in-store design elements which have technological features that engage our customers as they approach the store – for example, the levitating sneaker machine makes the shoes look like they are floating. We consider the music we play, the images we use and fragrances we have in stores in detail. Most importantly, our engagement with customers through trained sales executives in a safe manner that makes customers feel secure in store. Furthermore, we built South Africa’s first sneaker customisation lab as an extension of customer engagement.”

The conversation around offline or online, this binary notion of one or the other, seems to be fading into obscurity. Retailers are looking to landlords to aid and advice in giving their customers a more seamless omni-channel experience. Alex Morar, CEO of NEPI Rockcastle, commented on how this has played out in the Central and Eastern European region: “We will never go back to the way things were, but that is always the case. Circumstances and operations continuously evolve and there is not a “one size fits all, all the time” strategy that we can apply. Landlords and retailers are part of one ecosystem. We need to work together to provide the best retail experience for our customers and partners. Landlords need to make sure shopping centres are attractive, well located and that the entire tenant mix is advertised. By integrating the various retailers’ concepts into digital advertising, we can ensure we are where the customers are searching. We need to have a joint strategy to approach this omni-channel experience.”

Retailers have realised that customer experience is only as strong as its weakest link. When the retail ecosystem works together to provide operational excellence, it benefits the customers. Most importantly, paying attention to what customers need and the level of human interaction that people are looking for was they come out of lockdown.

Majija made the point that customer experience does not start with the sales executive in store. “It starts with the car guard in the parking area and includes everyone in the shopping centre environment. The entire ecosystem must provide a great experience. Upskilling all staff to interact with customers will increase the interactions and will add to the overall shopping experience.”

It is a known fact that consumer behaviour is dictating most of the changes that have been implemented in recent months. The number one priority for customers is convenience. Majija related how Fortress partnered with a company that focused on Click and Collect. This company opened booths at many of the Fortress centres and there are plans to open more booths this year. In addition, Takealot opened a depot at Pineslopes. “We have seen a massive increase in delivery services like Uber Eats at a number of our centres, especially those with lots of restaurants and fast-food outlets”.

Mukheibir discussed the trend of people thinking about the trend of reuse, recycle and repurpose and wanting to live a more nomadic and agile existence. “This trend is playing really well into our hands. People are selling unwanted items in a professional retail environment and others are buying those items at half the price with a six-month guarantee. The idea of “value shopping” is increasingly mainstream, fast-forwarded as a consequence of Covid, a re-evaluation of priorities and financial spend, and the sad reality of change in employment status.”

Morar is looking forward to the continued progress of retail innovation in multi-channel retail strategy. “We are optimising our operations using revolutionary technology. The end goal is to offer a better service to our final customers. It does not sound like a big deal, but the detail behind it is substantial. The faster and the better that we do this, both us and the retailers, the more we will be able to provide the adequate experience and bring products to the end customers via multiple channels, not just physical or just online.”

Mathibela added that her team is excited about proving that traditional retail is still alive and kicking. “Because South Africa still struggles with high data costs and people not wanting to share their personal details online, they are frequenting shopping centres. We are going to continue to expand our footprint and conduct research into other engaging features to put into these stores. Our biggest goal for 2021 is become even more accessible by tapping into the smaller communities that other retailers don’t think about.”

Majija reiterated that the shopping centre industry in South Africa accounts for about 72% of all retail. “That’s approximately R780 billion per year. It is an important industry and employer. We must keep growing and expanding the retail industry. It is a massive contributor to service delivery and to the provision of services and products in South Africa. All we need now, is the economic recovery and growth to improve so that we can see the retailers opening more stores and consumers get what they want and need too.”

 

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.”

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My Office News Ⓒ 2017 - Designed by A Collective


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