Tag: supermarket

Source: MyBroadband

In 2016, Amazon unveiled the “future of shopping” with its Go store.

The store does not require shoppers to go through a checkout point – you walk in, pick what you want from the shelves, and walk out.

Everything is tracked by computer vision, sensor fusion, and deep learning, and customers are automatically billed via their Amazon account.

The first store was launched in Seattle, USA, and offered ready-made meals and grocery items.

“We created the world’s most advanced shopping technology so you never have to wait in line. No lines, no checkout,” said Amazon.

In late 2018, Amazon has expanded its Go stores to other areas in the USA and they are now being called the “inevitable evolution of supermarket retail”.

Engadget stated that Amazon Go is “a natural extension of existing retail trends”, and added that Amazon plans to open 3,000 Go stores by 2021.

Not in South Africa
While shoppers used to visit a butcher for meat and then travel to a hardware store for tools, today’s customer can buy these items from a single outlet like Makro – or visit a shopping mall where different types of shops are grouped together.

This was a natural progression which made it easier to shop. The argument for cashierless stores is the same, since walking in, taking what you want, and walking out makes the life of the shopper easier.

In South Africa, however, it is unlikely that this technology will roll out to retail chains such as Pick n Pay or Checkers in the foreseeable future.

The reason for this is that the initial job losses that would be suffered by cashiers and store staff would not be tolerated by workers’ unions.

This was proven in 2016, when Pick n Pay trialed a self-service checkout at a store in Cape Town.

The system was set to be tested for six months, and the company would see how it benefited consumers before taking the next step.

Cosatu was quick to pressure the company into not expanding the self-service trial; however, as the union stated at the time that it would lead to job losses.

Fast forward to 2018, and Pick n Pay told MyBroadband there have been no developments to the system, with no plans to take it forward either.

Cosatu told MyBroadband it is still “bitterly opposed” to the self-service checkout system, as it will decimate much needed jobs in the country.

“Our unemployment statistics are shocking and we are not going to allow the reckless introduction of mechanisation and automation,” said Cosatu.

It stated that it will fight the introduction of these systems in South Africa, and it is opposed to “technological ‘solutions’ that are imposed with no regard for local economies and cultures”.

With workers’ unions wielding the power to strike and protest, and local companies known for backing down against unions on a regular basis, it is unlikely that Amazon’s “future of shopping” will land in South Africa any time soon.

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

Supermarkets are a key route to market for many suppliers of food and household consumable products. The growth of supermarket chains in southern Africa presents important opportunities for suppliers, as it potentially opens up much larger regional markets for them. Supermarkets can therefore be a strong catalyst to stimulate suppliers in food processing and light manufacturing industries in southern Africa.

But even the most efficient suppliers with competitively priced, high-quality products are unlikely to succeed if they can’t get their products to consumers. Here, large supermarkets play a key role. Onerous requirements and exertion of buyer power by large supermarket chains can result in small- and medium-sized suppliers and entrepreneurs failing to enter and participate in the economy.

We examined the obstacles to accessing shelf space in supermarkets in Botswana, South Africa, Zambia and Zimbabwe. The research revealed a range of costs that suppliers incur even before a single unit of their product is sold off supermarket shelves in each country.

Supplier development initiatives have been put in place by supermarkets and governments. But these have had limited success because they are restricted in scale and scope, are largely ad hoc, and don’t have a regional development perspective in mind.

There is a need for more co-ordinated, sustainable and regionally focused interventions to increase the participation of suppliers in supermarket supply chains. These should aim to reduce barriers to entry by, for example, curbing supermarket buyer power and building capabilities of suppliers.

Supermarket buyer power
The formal South African supermarket industry is concentrated, with only a handful of large chains holding more than 70% of the national market share. South African supermarket chains also have a strong and growing presence in each of the other countries assessed, although recent years have seen the emergence of other African and global chains too.

Large supermarket chains therefore have considerable buyer power, and are often able to control pricing and trading terms with suppliers. This can include a range of fees such as listing or support fees paid by suppliers to get their products listed in supermarket books.

These fees can be prohibitive for small suppliers. Estimates of listing fees in South Africa range from US$350 to $3,500 per year for a single product line of a basic food item on the shelf. They can go as high as $17,000 to $20,000 for prime till positions for products like sweets and lollipops for a limited time period.

In Zimbabwe, listing fees can be up to $2,500 per product line, with $50 to $100 for the introduction of additional new product lines by the same supplier.

Suppliers are also often required to offer supermarkets settlement discounts for paying them within the number of days stipulated in the trading terms. This varies depending on the supplier.

Long payment periods put considerable pressure on suppliers’ cash flow and working capital which is problematic particularly for small suppliers. Local suppliers in Zambia raised this as a key reason for non-participation in supermarket value chains although it was a concern in all the countries studied.

Over and above the advertising costs faced by suppliers themselves in creating brand awareness for their products, supermarkets require them to make a host of additional payments. These can include:

  • Discounts off the purchase price for indirect advertising;
  • Contributing towards promotions. Our research showed that it can cost anything from $2,500 to $7,000 to promote a single product line as a contribution to the costs of the supermarket advertising through TV, newspapers and flyers; and
  • Paying to participate in different promotions held by supermarkets such as Easter and Christmas promotions.
    A range of other fees also apply, varying by supplier and according to industry. These include general discounts, fixed or variable rebates based on sales volumes, transport discounts and swell or wastage allowances.

Cumulatively, the various fees can add up to at least 10-15% off the price of the product sold to supermarkets, placing considerable strain on supplier margins.

Other obstacles to accessing shelf space
General access to good shelf space often comes at further costs. It is critical for successful sales that products are displayed where shoppers can easily see them. Eye-level shelf space is often taken up by dominant suppliers.

Similarly, access to refrigeration space is important for suppliers of cold products such as soft drinks, ice creams and frozen food. There have been competition cases globally and in South Africa that have recognised the harm to competition of dominant suppliers imposing exclusivity requirements on fridge space.

Over and above legal requirements such as compliance with national standards, food safety, labelling and packaging requirements, suppliers also have to adhere to private standards imposed by supermarkets. These can include barcoding and specific packaging requirements as well as sustainability criteria and religious requirements (such as halal and kosher certifications).

These can also include higher accreditation standards which often involve on-going audits at the supplier’s cost.

Helping emerging suppliers
Codes of conduct between suppliers and supermarkets can be a useful way to control the exertion of buyer power.

In the UK, for example, the Groceries Supply Code of Practice was set up specifically to oversee the relationship between supermarkets and their suppliers following an inquiry by the former Office of Fair Trading.

Similarly, in Ireland and Spain, there are plans to institute voluntary or mandatory codes of conduct in the grocery sector to govern commercial relations between suppliers and supermarkets in the food chain.

We recommend that such codes also be set up in southern Africa. Given the multinational nature of supermarkets in the region, these codes can be harmonised across the region.

Supermarkets can also play an active role in building the capabilities of suppliers. Almost all supermarkets in South Africa have some form of voluntary supplier development program in place.

In some instances, large supermarkets have been mandated to set up supplier development programs. For example, as part of the merger between Walmart and Massmart, the merged entity was required to set up a supplier development fund. Around $16.7 million was allocated to be spent over five years to develop suppliers.

Some aspects of the program involving farmers were unsuccessful. But there have been positive outcomes for some black entrepreneurs in food processing. One beneficiary, Lethabo Milling, a new entrant producing maize meal, received around $110,000 towards refurbishing his plant.

And the company was able to secure a loan from a commercial bank on the back of a guaranteed route to market through supplying Massmart stores in South Africa. Lethabo Milling also received additional support through training, waived listing fees and fast-track payments.

Successfully developing supplier capabilities in the region requires a much larger, long-term and commercially oriented approach by supermarkets in partnership with governments. This can be done through the creation of supplier development funds similar to the Massmart/Walmart programme. Funding can also come from fines levied by the competition authorities in abuse of dominance or cartel matters in each country.

By Reena Das Nair  for www.theconversation.com

Amazon.com said on Monday it has opened a brick-and-mortar grocery store in Seattle without lines or checkout counters, kicking off new competition with supermarket chains.

Amazon Go, the online shopping company’s new 1,800-square-foot (167-square-meter) store, uses sensors to detect what items shoppers have picked off the shelves and sends a bill to their Amazon accounts if they do not replace them.

The store marks Amazon’s latest push into groceries, one of the biggest retail categories it has yet to master. The company currently delivers produce and groceries to homes through its AmazonFresh service.

“It’s a great recognition that their e-commerce model doesn’t work for every product,” says analyst Jan Dawson of Jackdaw Research, noting that physical stores would complement AmazonFresh.

“If there were hundreds of these stores around the country, it would be a huge threat” to supermarket chains, he says.

The S&P 1500 food retail index, which includes Kroger Co, Whole Foods Market Inc and other companies, was down 0.5 percent at the close. Shares of Amazon closed up about 2.6 percent.

Amazon Go is available now for employees of the company and is expected to be open to the public early next year, Amazon says.

If tests are successful, Amazon plans to open more than 2,000 grocery stores, the Wall Street Journal reported on Monday, citing sources. The company is considering other store formats, including one that would let drivers pick up goods at the curbside, the report says.

Amazon declined to comment on the report.

“The checkout lines are always the most inefficient parts of the store experience,” says Neil Saunders, managing director of retail research firm Conlumino. “Not only would you save a lot on labor costs, you actually would make the process much quicker for consumers and much more satisfying.”

Still, the grab-and-go experience would take getting used to, he says.

Some people may “feel like they stole” an item, Saunders says.

Apart from groceries such as bread and milk, the store also offers ready-to-eat meals made fresh by on-site chefs and local kitchens and bakeries, Amazon says.

That would make Amazon Go a potential competitor to fast-casual dining chains like Chipotle Mexican Grill Inc as well.

Amazon Go is not the first physical store for the e-commerce company to open.

It has a book store in Seattle, as well as pop-ups at malls where it displays Amazon devices such as the Kindle.

Source: www.businesslive.co.za

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