Here are the changes you can expect from your local retailer

South Africa’s retailers have only a handful of months to prepare for the next peak trading season which includes the busy shopping time over Black Friday and the festive season.

The country’s retail market is estimated to be worth R1 trillion a year, allowing a slice of the pie for any retail merchant who is agile, fast, bold, and innovative enough to create opportunities that can boost profit margins.

Yet that doesn’t mean that it will be easy to win in the second half of the year, even in a post-Covid environment, according to Steven Heilbron, the chief executive officer of Capital Connect, part of the Connect Group.

Competition is fierce, rising prices and load shedding make for difficult operating conditions, and consumer confidence and discretionary income are under enormous strain.

“Retailers can prosper in these uncertain times and grow their market share, but only if they are innovative and proactive,” said Heilbron. “They need to keep up with rapidly changing consumer needs and tastes by adjusting their product range and channel mix as needed. They also need to be creative about how they diversify revenue streams.”

In the grocery supermarket space, The likes of Woolworths, Checkers, Pick n Pay and Spar are all making moves to be innovative and proposition their offerings to new market segments.

Spar, for example, has announced several changes planned for its stores in the coming months – including more food options and environmentally-friendly packaging. This includes a revamp of its fresh food offering and home meal replacements through a new ‘Food Stall’ offering which has begun rolling at stores across the country.

In May, retailer Pick n Pay announced plans to take on Shoprite and Woolworths across three main market segments with the launch of ‘Project Red’ – a new store format aimed at taking on middle-market against stores like Checkers and Spar.

Pick n Pay said that its mainline store brand is currently competing in three distinct consumer markets – less affluent, middle market, and more affluent.

Retailer Woolworths also expects shopping to become increasingly digital as people use less traditional platforms such as Tiktok and Instagram to do their shopping.

The group said it is positioning its social media platforms as an ‘extension of its marketplace’ through new tools such as ‘virtual try-ons’, allowing customers to try on their make-up products virtually on Instagram, with the option to purchase straight from the platform – a first in South Africa.

The retailer is also trialling a ‘phygital’ solution, integrating its social platforms with its physical outlets through an in-store InstaShop, letting shoppers browse their digital friends’ favourites on Instagram, while physically browsing inside of a Woolworths store.

Shoprite meanwhile, has an entire sub-division dedicated to new shopping technologies known as ‘ShopriteX’.The group has also refurbed its stores in recent years to cater for a mid-to-high end shopping demographic, taking away market share from Woolworths and Pick n Pay.

At the end of 2021, the group announced that it was trialling Checkers Rush – an automated, cashless “no queues, no checkout, no waiting” concept store.

Massmart has also recently said that it plans to expand its online marketplace OneCart in the coming months as part of a growing push into the internet space. The Makro and Game owner acquired an 87.5% stake in on-demand multi-retailer marketplace OneCart in late 2021, with the platform seeing Gross Merchandise Value (GMV) growth of over 200%.

And Makro this week launched a standalone app, which it hopes will boost its online shopping venture.

Capital Connect shares five ways retailers can innovate and try to get a bigger piece of the R1 trillion retail pie:

1. Be where the customer is: Flexibility is the watchword beyond the pandemic, with customers following a complex purchase journey. They may research online and buy in-store. Or they could go to a shop to see and touch a product, before ordering from the cheapest shop on the Internet. Retailers must be at all the touchpoints where consumers browse, transact, acquire and consume.

Flexible purchase and fulfilment options are key—from a range of delivery choices to buy online-pickup instore, curb-side pickup and in-store shopping.

2. Get ready for a winner takes it all: Despite the surge in online shopping during Covid-19, indications are that South Africans are heading back to the malls in a big way. Yet things are not going to go completely back to normal. When customers shop, they are now shopping at fewer retailers but spending more per trip. Retailers should position themselves as the destination of choice, or risk losing out.

3. Freshen up advertising and marketing: Advertising and marketing in South Africa has become stale and boring. Too many retailers still depend on generic deals and lookalike flyers to promote themselves. Those that create a wow factor with bolder offers and more interesting marketing will stand out. Retailers can experiment with social media activations and ads at low risk and cost.

4. Keep improving your product and service offering: Compared to the pace of change and innovation in sophisticated retail markets like the UK, South African retailers are conservative. They tend to stick to the same products and services, seldom adding anything new to their offering. The deli section in one supermarket is much like that of another. Now is the time to find ways to diversify revenue streams by adding new offerings and to trim costs by cutting unprofitable products and services.

5. Adopt a genuinely customer-centric mindset: Brand loyalty is a relic of the past. Customers are more informed than ever about pricing and offerings across different merchants and will gravitate towards the retailers that offer them the best value. Retailers should master the science and art of understanding what the customer wants. Those that focus on data-driven insights, fast delivery and high quality will be able to get an edge.

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