Advertise with fastmoving.co.za
 
 

E-commerce is growing rapidly with online spending expected to breach R18bn in 2018, but empty store space across the 2,000 shopping centres is already on the rise.
E-commerce is growing rapidly with online spending expected to breach R18bn in 2018, but empty store space across the 2,000 shopping centres is already on the rise.

SA consumers swarm online but still lag way behind international trends

RETAILER NEWS

By Joan Muller - Nov 26th 2018, 08:13

It’s too early to say to what extent Black Friday sales have boosted retailers’ bottom line but there is no doubt that South African consumers are increasingly turning to tech-enabled solutions for their regular dose of retail therapy. 

Online spending in SA has more than tripled over the past five years — from R5.7bn in 2013 to an estimated R18.1bn in 2018, according to data released by the SA Council of Shopping Centres and market research group Urban Studies.

The growth in e-commerce poses a threat to mall owners, who are already facing a slower uptake of retail space as cash-strapped consumers cut back on spending in bricks and mortar stores.

E-commerce in SA has grown 22% year-on-year since 2016 while the average spend per online consumer has nearly doubled from R1,882 to almost R3,400 per month since 2013. However, Urban Studies MD Dirk Prinsloo said that the adoption of e-commerce in SA still lags way behind that of overseas markets.

Online spending in SA contributes only about 1.8% of retail sales of just more than R1-trillion. That compared to 19% in Britain, 17% in Germany, 14% in France, 10% in the US and 7.2% in Australia

“So there are great opportunities to grow the SA market," said Prinsloo. He expects spending via digital platforms in SA to more than double over the next five years, potentially reaching R42.1bn by 2023. That will amount to 3.3% of total retail sales of an estimated R1.3-trillion.

Prinsloo said that growth in e-commerce in SA will be strongly influenced by millennials and middle to upper-income consumers. “Convenience will be a major driver with the advent of new and better e-commerce platforms. Innovative delivery methods will further improve the convenience factor of online shopping," he said.

But Prinsloo said future growth will mainly depend on how many would-be shoppers can be converted to digital platforms. Urban Studies research shows that only 49% of South Africans buy online, up from 42% in 2013.

A key reason for SA’s relatively low adoption rate is the fact that non-users still prefer shopping in bricks-and-mortar stores. Key concerns among non-users are the quality of products bought online, potentially ordering the wrong sizes and delivery issues.

The most popular online retailers in SA are Naspers-owned Takealot that recently merged online fashion retailers Spree and Superbalist. Prinsloo said Woolworths Clothing and Woolworths Food have also shown strong growth in online sales.

The growth of online shopping has forced retailers to adopt a more cautious view in terms of physical store expansion, which is likely to lead to more vacant space in malls.

The SA Property Owners Association’s latest retail trends report shows that empty store space across the country’s about 2,000 shopping centres is already on the rise.

The vacancy rate in super regional shopping centres — exceeding 100,000m² — has nearly tripled from 2% in 2013 to 5.8% in the second quarter, the highest level in the index’s 15-year history. Industry players expect a further increase in vacancies over the next 12 months given the Edcon Group’s plans to reduce its retail footprint as leases come up for renewal.
Business Live 

Related News

US retail sales rise as households spend more
18/07/2019 - 14:16
US retail sales increased more than expected in June, pointing to strong consumer spending, which could help to blunt some of the hit on the economy from weak business investment.

Takealot and Superbalist to launch new annual event - The Ultimate Checkout
18/07/2019 - 14:01
In line with international trends and following on the success of Black Friday, the Takealot Group is once again leading the charge with a first-of-its-kind shopping event in South Africa.

Refinery celebrates diversity with new fashion campaign
18/07/2019 - 11:39
Local fashion retailer Refinery is set to make waves across the local industry with its new spring campaign which embraces diversity, encouraging others to be unashamedly, authentically themselves.

Amazon offers $10 to Prime Day shoppers for access to their data
18/07/2019 - 09:53
Amazon.com has a promotion for US shoppers on Prime Day, the 48-hour marketing blitz that started recently: earn $10 of credit if you let Amazon track the websites you visit.

Retail sales jump in May ahead of expected rate cuts
18/07/2019 - 09:24
South Africa’s retail sales rose more than expected in May as sales of household goods, furniture and appliances expanded quickly, a hint that pressure on consumers was easing ahead of an expected lending rate cut that may further support spending.