Shopping shake up head for SA stores has been saved
Shopping shake up head for SA stores
The growth of e-commerce and increasingly connected consumers are shaking up shopping habits – and South Africa is not exempt from this global wave of change, according to Deloitte retail specialists Allison Legge and Patrick Farrand.
Retail is in the throes of enormous change, driven by a culture of ‘everywhere commerce’ in which digitally connected consumers are increasingly expecting to be able to shop whenever and wherever they want; whether it be in stores or online, using their smartphones or even voice-activated digital assistants. To cater to this new breed of consumer, some of the world’s nimblest and fastest-growing retailers are opting to pass up short-term profitability in a race for customer acquisition and retail dominance. Internationally, this trend has sparked a wave of store closures as retail spending moves online.
In South Africa, online shopping remains a relatively small slice of the overall retail pie, but this is changing rapidly, says Allison Legge, Deloitte retail audit partner, who attributes this in part to surging smartphone penetration, falling data prices and the growing ubiquity of Wi-Fi connectivity.
“Anyone sceptical of the potential of online shopping locally needs only to look at China, a country with many parallels to South Africa, where e-commerce sales are already rivalling, and in some cases eclipsing, those in the US,” says Allison.
Closer to home, she cites the example of What does this mean for retailers? For a start, they must be in a position to plan, strategise and execute across all channels, regardless of whether the sale ultimately happens in-store or online. “A seamless shopping experience is no longer a nice-to-have, but an imperative. This a key reason why retailers worldwide are investing heavily in online and digital,” responds Allison.
It also explains why the retail industry is rife with examples of companies building, buying or partnering to attain much-needed e-commerce capabilities or, on the flipside, to gain a bricks-and-mortar presence.
A prime example of this is Amazon’s acquisition last August of US natural supermarket chain Whole Foods Market. And in the United Kingdom, the online retail giant broadened its collaboration with grocer Morrisons to bring one-hour grocery delivery to London-area shoppers.
“As consumers become accustomed to such innovations, these rapidly become the ‘new normal’. Retailers who are unwilling or unable to adapt to the transformation sweeping the industry face the prospect of being outmanoeuvred and, ultimately, eclipsed by more nimble competitors,” warns Allison. Patrick Farrand, Deloitte retail audit partner, concurs, adding that shoppers are increasingly expecting a customer experience tailored to their specific needs, prompting several local retailers to develop their existing loyalty card systems into far more personalised programmes which enable them, for example, to offer highly targeted discount vouchers to customers based on their specific preferences.
“And this is just the start. A one-on-one relationship with each individual customer is the ultimate goal, something that’s becoming ever more important in today’s cluttered online space. It will also help retailers connect with consumers who are increasingly turning to ad-blocking apps and advertisement-free subscriptions,” says Patrick. He cautions that before retailers rush into the online space, key decisions need to be taken at the outset which could mean the difference between success and failure down the line. “For example, should you go it alone, or would it be better to join forces with an online heavyweight along the lines of the Morissons– Woolworths, which reported a 100% increase in its year-on-year mobile transactions at the end of last year. The retailer also revealed that more than half of the traffic to its website is from customers browsing on mobile devices. “Forward-looking local retailers – along with their global counterparts – recognise the fact that, from the consumer perspective, shopping is increasingly less about ‘bricks versus clicks’ or one channel versus another. Rather, the shopping journey and pre-shopping research is a fluid process, with consumers bouncing between online and offline along the path to purchase.” Amazon partnership?” Another crucial choice retailers need to make concerns IT infrastructure. “To remain competitive, significant investment will be required. However, where should the bulk of the money be spent? “These are not trivial questions and with some major local online retailers experiencing Black Friday website outages in recent years, the challenges can seem daunting for less digitally adept players, several of whom struggled when presented with the comparatively simple challenge of incorporating a one percentage point VAT increase into their systems,” Patrick says.
Marius Alberts, managing partner of Deloitte Western Cape, believes the global wave of change offers tremendous opportunities to local retailers who are courageous and fast-acting enough to tap into key trends. “It’s clear when you look at the strategic pillars of leading locally based retailers that they are already thinking along these lines. An enhanced customer experience and investing in cutting-edge retail technology are common themes,” Marius comments. In step with the trend, Deloitte recently strengthened its South African retail team with the addition of a number of individuals who have extensive expertise in the international and domestic retail sectors. “In bolstering our local retail expertise and augmenting it with our extensive global resources, we’re in a position to offer our clients, and the market in general, current and well informed insights, as well as powerful and impactful solutions to help navigate this exciting, rapidly evolving sector,” says Marius.
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