Tag: retail

The changing face of retail

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

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

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

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

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

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

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

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

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

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

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

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

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

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

With so many shoppers and so much to offer, what are some of the emerging trends that e-commerce specialists noticed in international markets and how can they be adopted in the South African market? Digital Planet takes a look at these international trends and how they benefit both the retailer and consumer.

Mobile
Smartphones provide the ultimate gateway for internet users across the world. They provide consumers with market transparency and the possibility of anywhere, anytime interaction. In China, it’s estimated that 88.9% of internet users chose to connect through their mobile phones. A recent study, conducted by the German Scientific Institute
of Market Research (GfK), found that 26% of German shoppers compare prices using their mobile devices when visiting a store.

When it comes to South Africa, mobile has also had a significant impact within the market. “Mobile penetration within South Africa is huge and smartphones are quickly gaining market share over feature phones,” says Neil Watson, CEO at Digital Planet. “Mobile purchasing isn’t big just yet, but consumers are increasingly making use of it. Just take a look at one of our partners, HP Shop, with their total mobile visitor growth of 65%.

Digital currency
Digital currency, particularly Bitcoin, is emerging at quite a rapid pace within the online retail space. However, due to some scandals and security risks, many businesses are still wary of digital currencies. Despite this, there are many different forms of online monetary transactions coming to the fore, such as desktop wallets, mobile wallets and web wallets. South Africans, have in fact, become far more familiar with the concept of mobile wallets in recent years.

Interestingly, Africa and South Africa are more advanced in mobile payment systems than the US. This is thanks to payment methods such as QR codes or tap to pay, with 55% of South Africans saying they would be willing to use digital currency, according to the 2015 consumer study conducted by PwC. “Credit card penetration within South Africa is relatively low,” says Watson. “Digital currency could therefore bridge the gap between those who have a credit card and access to the internet versus those who have internet, but no credit card.”

Same-day delivery
Let’s be honest, not everyone has the time to sit around and wait for their parcel to be delivered. Standard delivery will suit most consumers, with some willing to wait for a longer period of time, in order to get free delivery. That being said, there are many consumers who wish to have their parcel delivered on the same day. When it comes to delivery, a fixed date is the most popular choice, closely followed by next day delivery. PwC’s consumer study also found that 79% of South Africans are willing to pay for same-day delivery, which is why it’s important for retailers to have the logistical infrastructure in place to satisfy customers’ needs.

Click and collect
The concept of click and collect is very simple. The consumer will buy something online and collect it in their own time, often just a few hours later, rather than wait for it to be delivered three or four days later. It’s ideal for those consumers who are headed to a particular store but want to save time. One of the biggest attractions about click and collect is the certainty that your item will actually be there, waiting for you. “This particular trend is very popular within the UK marketplace and it’s something which has the potential to become just as popular in South Africa,” says Watson.

The year ahead
Online shopping in South Africa as a standalone, is still relatively small. When it comes to the world of online retail, South Africa is still seen as being in e-commerce infancy but is growing at quite a rapid pace. Watson says that the ability for rapid growth is what makes South Africa’s market so exciting.

Watson’s advice is that because South Africa is lagging behind the rest of the world in online retail, we have the advantage of having other markets far ahead of our own going through trends before we do.. “It’s like the world is our testing ground,” he adds. “So the methods that have been successful across the globe are the ones that South Africa’s retailers should try first. It means a much higher chance of success”

The South African Council of Shopping Centres has reported some welcome festive season growth coming out of the country’s malls and retailers at the end of 2015, notwithstanding tough trading conditions in local markets.

Amanda Stops, CEO of SACSC, notes that recent figures from Statistics SA show retail sales increased at 3,9% year-on-year for November 2015. This is much higher than expected.

Plus, updates from retailers themselves also reveal sales growth for the final months of the year, including Truworths, Woolworths, Massmart, The Foschini Group and Shoprite.

The council’s own review of festive trade taken from a sample of the country’s shopping centres shows a trend of growth in turnovers, despite shopper numbers generally remaining unchanged from 2014.

“Of course, there were outperformers that far outstripped this with significant growth in sales and shoppers. However, these were the exceptions and often the result of a major extension or upgrade taking place at a centre,” says Stops.

“There were also some underperformers, mostly in communities particularly hard-hit by economic strife.”

Stops says the country’s shopping centres play and important role in the festive season and most worked hard to create a festive spirit for shoppers at the end of a tough year, serving up all the ingredients needed to support retailers’ sales and spread a little cheer among South Africa’s hard-pressed consumers.

“Many shopping centres began their year-end campaigns in November, dressing up in beautiful festive décor, helping shoppers by offering longer opening hours, presenting fun seasonal entertainment, offering big competition prizes and, of course, the all-time favourite attraction of photos with Father Christmas,” says Stops.

There were also many less glamourous preparations to ensure a pleasant shopping experience, even at the busiest times. This included increased cleaning, security and parking support. Fostering a safe festive season in places where many South Africans gather, there was also increased visible policing from the SAPS at shopping centres across the country.

Trends show South Africans left shopping to the very last minute, according to Stops. “The 23rd and 24th December were the busiest shopping days at many malls. However, several shopping centres, especially those in seaside cities, showed peak shopping and parking on Friday, 19 December,” she points out.

“Interestingly, some malls are also telling us the US retail phenomenon of Black Friday made a blip on sales charts at the end of November,” says Stops. “It was the first year the local retail sector took part in the retail event in any meaningful way, and it will be interesting to see if this trend continues in 2016.”

Stops reports the value for money and having an enjoyable experience were at the top of shoppers’ wish lists for the 2015 festive season.

Family and community were two strong themes at the country’s malls this festive season.

“Many families get to enjoy precious time together during the holidays, so many shopping centres place a strong emphasis on providing attractions for children and adults of all ages to enjoy,” says Stops.

With the season being a time for giving, community projects are also at the heart of most shopping centres’ festive campaigns. “Many shopping centres partner with local charities for a gift-wrapping service to raise funds to boost good work in their communities, or collect gifts for the disadvantaged.”

The SACSC is the official umbrella body of all involved in shopping centres, including: owners, developers, managing agents, brokers, professionals, retailers, marketers, service providers, financiers and researchers. It was officially launched in 1991 to advance the retail and retail property sectors of South Africa.

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