South African consumers may be moving online but this doesn’t mean that modern retailers should simply abandon their brick and mortar stores. While South Africa’s online spend growth rate is projected as 15% through 2021, this figure only accounts for 1% of the country’s retail sector as a whole. But this doesn’t mean that retailers who have spent time and money developing their online presence were jumping the gun. In fact, these numbers indicate that there is immense potential for growth and opportunity. And local retailers certainly shouldn’t treat digital and e-commerce as an after-thought.
So, what’s holding local retailers back?
Aside from the fact that it appears to be what local customers want – 63% of South Africans prefer to make purchases at a mall, according to Visa and 76% of South Africans visit a mall at least once a week, says Urban Studies – there are other hurdles preventing retailers from going digital.
According to advisory firm, Accenture, SA’s traditional retailers are still focusing on their core brick-and-mortar stores because they find “online operations expensive to maintain and unprofitable”. In addition to this, these retailers struggle to measure the return on investment when it comes to their online strategies. But Accenture advises that these brands view e-commerce as being part of a multi-pronged, omni-channel business strategy.
“Accenture projects that South African consumers will sharply increase their online shopping in the near future,” John Watling, managing director for Accenture Retail in Africa, told Business Tech. “If local retailers can follow suit by offering experiences such as those of Amazon, eBay, Zappos and others, customers will be more trusting of online shopping and less reluctant to use it,” said Watling.
This trend towards increasing digitally savvy South Africans is projected to continue in the coming years, Accenture explains. Retailers that want to stay relevant need to consider their customer preferences, anticipate their needs and provide an excellent experience every time. This means doing so both online and when customers visit their brick and mortar stores.
What’s at stake if they fail to do so?
Simply put, they stand to lose customers. Further research from Accenture found that South African companies lost a staggering R663 billion in potential revenue in 2017 because their customers switched to a competitor brand. And the same study found that two thirds of the customers who jumped ship did so because the retailer lacked relevance to address their needs in an increasingly digital world.
“As our digital world rapidly expands like never before, South African retailers are presented with a mammoth opportunity to learn from the successes and failures of local and global e-commerce pioneers,” says Jonathan McCabe, Accenture products Africa management consulting Lead. In the era of hyper-relevance, can they tap into consumer demands, grab the opportunity presented to them and pivot to the future?”
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