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Shopping Shake Up Ahead For SA Retailers

Shopping Shake Up Ahead For SA Retailers

E-commerce and the increase in connected consumers are shaking up traditional shopping habits and South African retailers need to embrace this brand new wave of change.

According to Deloitte retail specialists Allison Legge and Patrick Farrand, there are several changes that retailers should be aware of in 2019.

The Retail Evolution

Driven by a culture of ‘everywhere commerce’, digitally connected consumers are expecting to shop whenever, wherever and in any manner they prefer; this could be online or in-store, via their smartphones and 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.

Online Shopping

While online shopping in South Africa still remains a relatively small part of retail, a change is seen in the rapid increase of 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.

South African Retailers

Why should SA Retailers start takingnotice of these changes?

To position oneself to plan, strategize and execute across all channels, regardless of where the sale happens, i.e. online or instore. One vital reason for retailers worldwide investing in online and digital, is the expectation of a perfect shopping experience. This also explains why companies in the retail industry are buying or partnering to attain much needed e-commerce capabilities and a strong presence.

An example of this is Amazon’s acquisition last August of US natural supermarket chain Whole Foods Market.

The New Normal

Innovations become the ‘new normal’ as customers become accustomed to the rapidly changing retail environment.

Unwilling or unable to change, retailers face the prospect of being outmanoeuvred and eclipsed by adaptable and
nimble competitors. 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.

One-On-One Relationship

The cluttered online space today creates challenges for establishing a one-on-one relationship with each individual customer, but that is something each retailer should strive to achieve. It will also help retailers connect with consumers who are increasingly turning to ad-blocking apps and advertisement-free subscriptions.

Retailers have to consider and make various key decisions before rushing into the online space. This could mean the difference between one’s success and failure down the line. An example of a key decision, should a retailer go at it alone, it would be better to join forces with heavyweights in the online space. These include Morissons– Woolworths, which reported a 100% increase in its year-on-year mobile transactions at the end of last year.

Fluid Pre-shopping Research Process

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?”

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.

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.

Offering current, general and informed insights, Deloitte are in a position to deliver impactful solutions to help navigate this exciting and rapidly evolving sector within the retail industry.

Article By Allison Legge and Patrick Farrand, Partners at Deloitte South Africa.

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