Tag: retailers

By Nomzamo Radebe, CEO of Excellerate JHI

There can be no doubt that digital processes and technology will underpin future retail, but what does this really mean for local brands and companies? Arguably, the first step towards future-proofing retail is to understand what the customer of the future looks like.

Today, with endless information at their fingertips, consumers are well informed, demanding, and in a rush. And while many ‘gurus’ have foretold the death of the brick and mortar store, consumers continue to go to malls for both shopping and entertainment. Essentially, retailers and property development partners have to balance out contradictory messages and trends: are they preparing for a digitally driven environment with e-commerce at the centre? Or must retailers find a way to merge hyper-connected, digital habits with physical shopping experiences?

Seamlessly connected, 24/7

As of 2017, there were 3.4 billion global Internet users, which equates to 46% of the population, according to Euromonitor. By 2022, that figure will reach 58%. Along with more people becoming connected, more ‘things’ will become connected – with devices of all kinds constantly generating and sharing data. Yes, this is the Internet of Things (IoT), which will become fundamental to individual lives and purchasing habits. In homes, connected fridges will automatically send notifications when certain things are running low – and may even send a grocery list directly to the owner’s device.

For retailers, the rise of the Internet of Things and overall hyper connectivity means that consumers will be very specific in what they are looking for – and will demand that the retail experience deliver on their needs both seamlessly and instantaneously. Retailers will have to harness technology, including IoT, to create a ‘friction-free’ environment. For instance, the use of chatbots can make sure that when consumers are online they receive immediate and data-driven feedback or help.

Embracing cash-free living

With the enormous popularity of cash-free or cashless services such as Uber and Lyft, even credit and debit cards are beginning to look obsolete. Already, some analysts are forecasting the shift towards an entirely cashless society – and consumers are increasingly demonstrating their keenness to ditch cash. In South Africa, many are already leaving their wallets at home as smartphones become the new [digital] wallet. According to a study by PayPal, 85% of respondents used their mobile phones to make a purchase in 2017, and 46% said being able to shop on their mobile phones has made them buy more. Tellingly, the majority of South Africans would rather leave home without their wallets than leave home without their beloved device.

Conscious living, conscious shopping

With dramatic climate change now firmly on the global agenda, consumers are becoming increasingly aware of their environmental impact – which includes their shopping habits. According to research firm J. Walter Thompson Intelligence, ‘consumers expect brands to be sustainable and are willing to pay more to support those that are.’ In a 2018 study titled New Sustainability, the firm stated that 89% of those surveyed ‘care personally’ about protecting the planet; 92% said they are trying to live more sustainably, while 83% would always pick the brand that has a better record of sustainability.

With digital transformation now becoming a global business imperative, local retailers will have to ensure that their digital strategies closely reflect the evolving needs – and values – of their customers.

By Suman Bhattacharyya for DigiDay

Staples no longer wants to be thought of as a place to buy office supplies.

In a brand revamp, Staples this week repositioned itself as “the Worklife Fulfillment Company,” or a place where it says workers can feel happy and productive, reminiscent of WeWork. Staples wouldn’t say if this means it’s going to launch co-working spaces of its own (it ended a co-working trial with startup Workbar earlier this year), but it’s rolling out new private-label technology and office products and yet-to-be-announced business services. It’s also launching a business-focused content-marketing platform called The Loop.

“The focus on Worklife means providing services, products and solutions and an improved digital experience that allows our customers to work wherever, whenever and however they want,” a Staples spokeswoman told Digiday.

Among office supplies companies, a services focus isn’t unique to Staples. Office Depot’s Los Gatos, California location, for example, includes 5,000 square feet of co-working space. Called the Workonomy Hub, it has flexible hot desks, a Starbucks kiosk and a dedicated area for shipping. Any business or worker can sign on for subscriptions or à la carte services.

The pivot to services, including shared-office space, along with agency-style marketing, advertising and other business services, is a way retailers can monetize unused space, generate additional revenue from co-working customers, and build an ongoing relationship beyond one-off interactions or purchases. The co-working market, however, is highly competitive. Beyond industry heavyweights like WeWork and Regis, there are an estimated 200 co-working companies across the U.S. that have at least one location that’s 5,000 square feet, according to real estate company Cushman & Wakefield. Retailers, particularly office-supplies companies, are betting on services and co-working as a means to lock in regular revenue from clients already in their ecosystems.

“We have a very large physical footprint across the country as you can imagine with almost 1,400 locations; we’re always looking for new ways to reimagine how we can get more value out of that square footage,” said Kevin Moffitt, Office Depot’s chief retail officer. “It’s also is a way for us to continue to develop our communities. With our business customers, we have very strong relationships.”

Relationships, in turn, make way for additional service offerings and product purchasing opportunities. It’s a follow-on effect that resulted in increased sales, Office Depot CEO Gerry Smith told investors last November. After opening the initial co-working space and office services center in Los Gatos in August 2018, Office Depot added new locations in Irving, Texas, and Lake Zurich, Illinois. Meanwhile, Staples rolled out a new line of private-label brands associated with its new mission, including office supplies products line Tru Red, Nxt Technologies, a tech product line, CoastWide Professional, a facility supplies brand, and breakroom essentials label Perk.

While the growth of co-working and service arms are natural areas for expansion for office-supplies companies, one disadvantage they may have when compared to pure-play co-working companies is a physical space that looks and feels more boxy and less niche.

“I’m not sure that office supply stores are that attractive as destinations,” said Forrester retail analyst Sucharita Kodali. “Part of the appeal of WeWork is that they are in interesting locations and have attractive layouts that make the space appealing to members.”

Meanwhile, companies that specialize in setting up co-working spaces are seeing increased inquiries from big-box retailers. Industrious, which runs its own co-working spaces and designs them, said it’s seen an increase in the number of big-box retailers that want help redesigning their spaces, and Kettle, a subscription-based service that allows restaurants to be used as co-working spaces, also said it’s also seeing an uptick in interest from retailers.

“It lowers the barriers to entry to allow people to come and stay, they’re surrounded by your branding and it offers opportunities for new customers,” said Kettle co-founder Daniel Rosenzweig.

Compared to co-working companies, office-supplies companies say they’re uniquely positioned to cater to businesses and mobile workers because they offer on-site services on demand which other companies could be challenged to provide at scale.

“You go to other competitors, and they may have a single printer available for 300 folks who are working there, while we have end-to-end marketing services available within a 20-foot walk from your dedicated office, and you can get your laptop fixed right there,” said Moffitt.

Source: Supermarket & Retailer

Data shows that 2 out of 3 South African consumers participated in Black Friday shopping at some point, according to Isana Cordier, sector head for consumer goods and services, corporate and investment banking at ABSA.

ABSA card data indicates that, on average, every last Friday of the month consumers spend about 55% of purchases on groceries.

On Black Friday, however, this changes and durable goods make up about 20% of purchases.

“It, therefore, seems that consumers are holding back spending on those durable items to buy them on Black Friday. South Africans especially like to spend on electronics on Black Friday,” Cordier said at a recent consumer insights event hosted by ABSA in Cape Town.

Black Friday has become the biggest spending day of the year in the SA retail sector, with more than R3bn spent last year.

Another interesting trend for her is that, whereas Black Friday shopping in SA was initially mostly centred around Gauteng and the Western Cape, the “frenzy” has started to spread to other provinces as well.

For instance, the Eastern Cape now makes up about 7.2% of Black Friday spending in SA, KwaZulu-Natal 14.2% and the Free State 4.1%. Gauteng still accounts for 37% of spending in SA on Black Friday.

Fin24 reported last year that retail sales over the Black Friday and Cyber Monday period most likely “saved” the South African economy in November, according to the BankservAfrica Economic Transaction Index (BETI).

On Black Friday and Cyber Monday, a total of 5.2 million card transactions were recorded.

More significantly, according to the BETI report, there was 55% growth in online sales for Black Friday and 36.4% for Cyber Monday.

By Kim Abrahams for News24

They’ve just come through an exhausting festive season, complete with overcrowded stores, reckless spending and extended working hours.

But now retailers are in for another shopping frenzy – this time it’s to reverse all those sales that just weeks ago saw their profit skyrocket.

Research by the Centre for Economics and Business Research has found that one in every four gifts bought between last year’s Black Friday and Boxing Day will be returned in the new year, Mail Online writes.

The UK-based company says the returns are expected to amount to £4.8bn (about R85.2bn) out of total sales of £19bn (R337.3bn).

Iain Prince, supply chain director at KPMG, tells The Times the cost of having a product returned could be twice that of delivering it in the first place – but that’s done little to stop consumers.

Those who can’t return unwanted gifts simply flog the items on eBay, Gumtree or Facebook for extra cash.

Do female consumers pay ‘pink tax’?

Source: Supermarket & Retailer

Women pay more for cosmetics and clothing than men, says Use Your Voice (UYV), a non-profit organisation that distributes sanitary pads across South Africa.

In a Facebook post, since shared more than 6 600 times, UYV compared the prices of daily-use items such as razors, day cream and clothes to show how much more women pay for each item.

It is estimated that women pay as much as 13% more for personal care products.

“If you do feel the need to comment that this is fake, and that you do not agree, we highly recommend that you do the research yourself,” the organisation said about the price comparison.

Business Insider South Africa found differences in prices for similar products aimed at men and women:

  • Women are expected to pay R25 more for similar razor blades
  • Women pay R20 for the same t-shirt, on promotion
  • Similar vitamins by the same label costs R16 more for women
  • Women’s deodorant costs R2 more than for men at two different stores
  • The same brand of spray deodorant costs R10 more

Across our sample of products, women were expected to pay 18% more for what appears to be the same products for men.

South Africa’s largest retailers

As retailers in South Africa look to support the economy through turbulent times, five of the country’s top retailers feature in global professional services firm Deloitte’s ranking of the 250 biggest retail groups in the world. Pre-scandal Steinhoff is the highest on the list, while Shoprite and Spar also feature.

Few sectors offer reliability at the moment in the South African economy. Although the country is the second richest in Africa behind only Nigeria, and is endowed with economically promising demographic trends, the last few years have represented a slump in economic growth, resulting from a severe dip in global oil prices in 2015.

Most sectors of the economy have been struggling since, including the ever-lucrative mining industry, which has suffered from a plummeting of prices and a spike in costs. However, amid this struggle, one sector that appears to be on the mend is the retail sector, which had its own mini-crisis in 2016, but has since recovered strongly with growth of almost 5% annually.

Now, a report from Big Four accounting and advisory firm Deloitte has revealed the primary drivers of growth in the sector. The report, which ranked the 250 biggest retailers in the world, featured five of South Africa’s major retail groups.

Top five retailers in South Africa

The highest-ranking South African retailer on the list was Steinhoff International at 68th on the global list. The firm was founded by Bruno Steinhoff in 1964 in the town of Stellenbosch in South Africa. Today, Steinhoff International operates in 31 countries, and recorded retail revenues of nearly $13.6 billion in 2016. In 2017, the firm went on an expansion drive, acquiring five firms, including Mattress Firm in the US and Poundland in the UK.

However, since Deloitte conducted its research, the firm has been shrouded in scandal, as sustained irregularities were found in the firm’s accounts for the last few years, forcing the resignation of its CEO and causing an 80% collapse in its shares. Steinhoff’s ranking may, therefore, be affected in retrospect.

The largest retailers in South Africa

The second-highest South African retailer on the list was Shoprite at 94th, with operations stretching across 15 countries, and retail revenues of just over $10 billion in 2016. The firm was founded four decades ago in 1979, and has since grown to employ 144,000 people across its international operations. Alongside the Johannesburg stock exchange, Shoprite also has secondary listings on the Namibian as well as the Zambian stock exchanges.

The SPAR Group of South Africa was next on the list, at 156th, operating across 11 countries and closing fiscal 2016 with just over $6 billion in revenues. The group began operations in 1963, when eight wholesalers were handed exclusive rights to the SPAR brand, which they utilised to supply 500 small retailers. The group now works out of six distribution centres and supplies to more than 1000 SPAR stores across South Africa.

In fourth for the South African list, and 156th in the global ranking is Pick n Pay Stores, with seven countries of operation and revenues of nearly $5.5 billion in 2016. Founded in Cape Town in 1967, the firm now employs approximately 50,000 people worldwide, and stretches across the African continent with operations in Botswana, Mozambique, Zambia, Namibia, and others.

Woolworths of South Africa rounded out the South African presence on the list, with operations in 14 countries and revenues just short of $5 billion. The Cape-Town-based retailer, which was founded as early as 1931, has achieved an impressive compounded annual growth rate of 18.9% since 2011.

Global leaders
Meanwhile, the list of leading retailers across the world had some predictable names on it, with Wal-Mart Stores leading by an enormous margin, followed by another US-based retailer, Costco, in second.

Source: Supermarket & Retailer

Beware the dark side of Black Friday

Deeply indebted consumers should think long and hard before plunging themselves even deeper into debt by splurging on luxury goods on Black Friday.

With Black Friday and the silly season upon us, finance experts are warning consumers to steer clear of any spending sprees that could exacerbate their debt situation.

It should go without saying, but the message is clear: don’t spend money you don’t have on things you don’t need.

According to Neil Roets, CEO of debt counselling group Debt Rescue, deals offered by major retailers on Black Friday often seem so good that consumers throw caution to the wind and blow their entire Christmas budget on single expensive items such as high-end TVs and other domestic appliances.

“(Black Friday) promises deals that would tempt even the most financially distressed amongst us,” Roets said. “The short answer is – don’t.”

Roets said that his company, for the past several years, has seen the impact that Black Friday and Christmas shopping sprees have had on consumers when they approach the group to try and get them out from under the financial mess that reckless spending has caused.

“Retailers who are themselves in deep trouble because of the contracting economy have come up with a host of clever ideas to tempt consumers to open their wallets and purses, which is how the idea of Black Friday was born,” he said.

“Black Friday was initially slow to take off when the idea was imported to South Africa. Once it took hold, however, it took off like a rocket ship, and many traders are now notching up a significant portion of their yearly sales on this day and over the Christmas holidays.”

Roets said many consumers also fell into the trap of feeling a degree of resentment, believing that they had been tightening their belts for so long that they needed a break and that Black Friday would be the ideal opportunity to splurge on something nice.

However, he warned that the current state of the economy did not lend itself well to this pattern of thinking.

“We are far from seeing the light at the end of the tunnel. It is our belief – and many leading economists share that belief – that we are far from staging a recovery.”

“In short, things are going to get a lot tougher before they get better. Now is not the time to act recklessly. On the contrary – it is more important now than ever to implement fiscal discipline and save whatever money is left over at the end of the month.”

The CEO said that consumers should plan around a budget, and bear in mind that December tends to feel like a long month, as the stretch between paydays is often much longer. Those who are paid a 13th cheque also get lulled into a false sense of security, he said.

“While we all feel that we desperately need a holiday and the end of a brutal year, keep those holidays within budget and don’t think that if you don’t have the money for school fees in December that the money will somehow, magically become available in January when the schools reopen,” he said.

According to Debt Rescue’s data, half of all South Africans are three months or more behind in their repayments, having collectively notched up R1.71-trillion in debt.

Source: Business Tech

Many of South Africa’s largest physical retailers have committed to Black Friday, which will hit South Africa on 24 November 2017.

Due to its huge success for US retailers, Black Friday has been adopted in South Africa over the past several years, with more companies taking part each year.

While initially a big sale focused mainly on online retail in South Africa, the craze seeped into brick and mortar stores in 2016 including the biggest retailers like Makro, Pick n Pay, and Checkers.

The shopping phenomenon will take place on November 24, 2017, followed by Cyber Monday on November 27, 2017, where a host of leading online retailers drop their prices.

South African retailers are already advertising major discounts in preparation for the big day on the shopping calendar, with many expected to follow suit in the coming weeks.

Shopping malls across the country are also preparing for the day, with the likes of Menlyn Mall in Pretoria, and Irene Village putting out notices and billboards advertising the Black Friday craze that will be descending on the day.

Other malls that are readying for Black Friday 2017 include Canal Walk (Cape Town); Mall@Reds (Centurion); The Glen (Joburg South); Clearwater Mall (West Rand); La Lucia Mall (Durban).

These are 10 of the country’s largest retailers who have committed to Black Friday 2017 – from groceries, to toys, homeware and building supplies, the promise of great deals awaits those who venture out of their homes and into the shops.

While the deals themselves are under wraps, these retailers have confirmed their participation.

  • Checkers
  • Mr Price
  • MR Price online
  • Clicks
  • CNA
  • Edgars
  • Makro
  • Pick ‘n Pay
  • Dischem
  • Builder’s
  • Boardmans
  • Toys R Us
  • HiFi Corp

Source: Business Tech

The Internet and mobile devices have reshaped the retail environment. With the rise in e-commerce, brick-and-mortar stores have struggled to compete with the depth of the virtual world’s retail offering. This includes the ability to offer a larger variety of categories and products, one-click buy and pay convenience, and the ability to compare prices from multiple retailers, often through the use of price comparison engines.

For many consumer goods categories, e-commerce has all but killed off physical retail sales. However, rather than view this digital revolution as a death knell to their traditional business, retailers should be looking to leverage unique trends that are emerging in physical retail space thanks to technology. As a prime example, in many instances price comparison engines are enriching the physical shopping experience.

A 2016 study from Euclid Analytics looked at the shopping preferences and behaviours of 1,500 US smartphone users. According to the study, 83% of consumers used smartphones while shopping in brick-and-mortar stores to help make purchase decisions.

The truth is, despite the hype and the boom in e-commerce, in-store shopping remains the consumer’s preferred form of retail interaction. This was shown recently by local social media ad tech company Popimedia following commissioned research that identified the trend in SA.

Released as the “Digital Influence in SA” study, local research findings were combined with other publicly available research, revealing that 91% of consumers visit a store to make a purchase at least once a week while only 49% of consumers shop online with the same frequency.

Additional research findings suggest that six in 10 Internet users start shopping on one device and continue or finish on a different one – 79% of these consumers use their smartphones for research, but only around 10% make purchases via the device.

What, then, are these consumers doing on their devices? According to the Euclid Analytics study, most consumers use their phones, both in the lead up to a purchase and in store, to compare prices or to look at current promotions. Other uses for mobile devices in the retail environment include taking pictures of products for later reference, checking shopping and to-do lists and reading online product reviews.

Statistics released by Google supports this, showing that 82% of smartphone users turn to their phone to influence an in-store purchase decision. However, it’s Popimedia’s recent research that proves most compelling in this regard. For instance, the findings show that 85% of consumers compare prices online and 78% read online product reviews before going to a store to make a purchase.

Most importantly, a staggering 93% of respondents use mobile to research and make purchases mostly in store, while 47% of customers check the price of products online while in store before purchasing.

The easiest and most convenient way to compare prices at present is to use price comparison engines. These web-based resources have the capabilities to filter content from a variety of sources to deliver granular search results based on specific criteria, including price, brands, features and product reviews. While the benefit to e-commerce platforms is clear, and most already leverage the technology to drive click-throughs and sales, the benefit to the brick-and-mortar retail environment has been less clear – n until now, that is.

The fact is that prevailing shopping trends suggest consumers aren’t so clear-cut in terms of their preference for e-commerce over physical retail. Many consumers still enjoy the physical retail experience and environment when shopping for specific product categories, but may prefer the convenience of e-commerce for others.

What Popimedia found from its Digital Influence research was that consumers are increasingly blending their “online” and “offline” shopping experiences. It’s a trend we’re also seeing on Phonefinder.co.za. Many of our over 7,000 unique visitors each day use the price comparison engine to identify cellphone contract offers across the spectrum of providers, filtering results according to their phone preferences and contract offers to find the best price with the most data.

In this new “no-line” paradigm, price comparison engines will play an increasingly important role in the modern retail mix as they help to influence and drive in-store purchase behaviour.

Source: Supermarket & Retailer

Who has SA’s best loyalty programme?

Clicks Clubcard has taken over the top spot as the most used loyalty programme at 67%. The Clicks brand took over the top position from Pick n Pay and their Smart Shopper card system, with Pick n Pay, ranked in second place with 66%.

The third spot belonged to Dischem with a sizeable jump down to 44% who climbed two places compared to last years list.

These are results from the 2017 Truth Loyalty Whitepaper, which is a complete annual look at the loyalty habits of 28 273 adults with a gross monthly income of R10 000 or more.

Loyalty programmes are up 8% compared to 2016 which makes the number of loyalty programme users stand at 79%.

With four out of five South Africans now using loyalty programmes, people view memberships as something that is worth their while.

The CEO of Truth, Amanda Cromhout, said that it has been another tough year for South Africans and political and economic instability always ends up hurting the consumer’s pockets.

Clicks reported that the loyalty programme membership has grown to 6.- million members which make up 77,4 % of sales.

The Edgars Thank U card retains their spot in fourth place but Woolworths fell two places to fifth place this year.

FNB has remained the most used loyalty programme for banking while being ranked in sixth place and Spur at the seventh place is the only restaurant on the list.

Loyalty programme users have increased since 2016. Male loyalty programmes users stand at 74%, a 5% increase since last year and 84% of women are loyalty programmes users, an 11% increase compared to 2016.

Consumers should be selective about the programmes that they join. Cromhout said that her advice to consumers is to focus on the brands you use most often and whose loyalty programmes rates are fairly high. The ideal rate should be between 2-5%.

Some of South Africa’s other loyalty programmes are:

1. Exclusive Books Fanatics
2. Discovery Vitality
3. SAA Voyager
4. Standard Bank UCount
5. MTN 1-4-1

Source: Supermarket & Retailer

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