Retailers feel the heat as e-commerce siphons off sales
By Isana Cordier - Apr 11th, 09:47
The start of 2019 has been bleak for most SA retailers, raising questions about the future of the sector.
It is uncertain whether there will be an improvement later in the year or whether this is the beginning of a permanent shift in consumer behaviour that the sector could be ignoring at its peril.
If the current economic conditions can be viewed as a dark cloud blocking out the consumer, what then lies beneath? Has this cloud been masking a huge shift in consumer behaviour in the retail space? Andrew Jennings, retail expert and author of Almost Is Not Good Enough, recently said that change in retail has never been this fast, and it will never be this slow again.
The question then is how to understand this new world in which the consumer moves, a world in which the boundaries are no longer constrained by physical location, payment mechanisms or brand loyalty — in which choice, speed, convenience, health, environmental impact, individualism and personalisation seem to have crept up on us overnight and shaken organisational structures to their roots.
If organisations remain structured in silos, viewing data, e-commerce and marketing as add-ons to sales, they have a problem. The current consumer seems oblivious to channels and moves seamlessly from one to the next in the process of gathering information, making decisions and ultimately executing a purchase. The question is, how can retailers grab the attention of their target customers and remain relevant in future?
Linah Maigurira, Google industry manager for retail and e-commerce, says Google is going to great lengths to understand consumer behaviour. Through multiple Google platforms, they are able to interpret consumer intent, how they behave and move through various platforms from an original search to the sale.
Google Shopping, for example, is primarily built to empower consumers throughout their shopping journey and is a powerful tool for retailers as well. Retailers are able to understand how consumers respond to their product inventory, which in turn will empower them to match their offering to consumers’ needs.
Absa has also recognised its capability to use card-acquiring data to perform data analytics and understand consumer spending behaviour. An analysis of this data for Black Friday in November 2018 resulted in interesting insights on consumer spending patterns.
For instance, “card present” continues to be the preferred method of payment, although online spend has significantly increased in recent years. Noticeably, Absa customers’ spend from one specific online retailer has more than doubled. Google SA has also reported a strong spike in searches relating to Black Friday deals compared to the previous year.
Opening stores at midnight
The data reveals that the top category contribution to overall spend on Black Friday, from issuing and acceptance sources, remains groceries with more than 50% of total spend. It can also be seen that the Black Friday frenzy has now spread across SA as spend has increased in outlying provinces, after being focused mainly in Gauteng and Western Cape in previous years.
Some of the “wackier” Black Friday trends involved opening stores at midnight. One retailer that opted to pursue this strategy recorded its highest turnover at 1 am, while others that attempted this strategy eroded their overall turnover on Black Friday compared with the prior year. This indicates that this is not a one-size-fits-all game.
What is becoming clearer from all the data points is that no retailer can assume natural attraction by brand loyalty and product offerings alone. Reaching out to the consumer through familiar marketing channels such as audio and visual has become less impactful.
To remain relevant and attractive in the fast-paced shopping universe, knowing your consumers is even more important to retention and growth strategies than before. Consumers are indeed still spending, just not in the manner they used to, and some of this spending has nothing to do with the current economic conditions.
Leveraging data analytical insights can lift the dark cloud masking consumer behaviour and allow retailers to adapt their strategies accordingly and remain relevant to the ever-changing consumer.Business Live
Retail sales beat expectations in February
19/04/2019 - 12:39
SA shoppers spent more than expected in February, with retail sales growing 1.1% year on year, led by expenditure in the textiles, footwear and clothing sector.
Asian revenue surpasses European for first time at L’Oreal
18/04/2019 - 09:07
L’Oreal got more revenue from Asia than from Western Europe for the first time last quarter as the region’s surging demand for luxury products continued to resist the drag of a slower Chinese economy.
Easter is also a feast for criminals, retailers and consumers warned
18/04/2019 - 09:01
There is a tendency among criminals to use the Easter long weekend - and its spike in shopping - to their advantage, says Richard Phillips, joint CEO of retail cash management company Cash Connect.
Checkers hot cross buns go viral
17/04/2019 - 13:42
Checkers hot cross buns are trending on social media and South Africans are in stitches following the release of a viral video in which a false-positive breathalyser reading was recorded for a police officer.
Clicks says private-label products boosted interim earnings
17/04/2019 - 09:59
Clicks Group says it grew headline earnings by 12.9% to R763.3m in the six months to February thanks in part to better sales of its private-label products and higher profits from its distribution business.