|South African retail gets a kick start
If Walmart’s entry in SA has done anything, it’s
given South African retailers a kick start to expand their
footprint in Africa. They can no longer be complacent with
the operations already in place and are now compelled to
look more closely at the future of their business.
But, expansion into Africa is not an easy road for South
African retailers because they have to compete with a long-established
and active informal trading sector that African consumers
have become accustomed to. Informal traders rarely pay import
duty, they’re not expected to create employment and
they don’t contribute to building communities or infrastructure.
Formal retailers understand the long term benefits of investing
in and developing the communities that they serve, but there
is a premium attached and it is vital that the consumers
they service are aware of the benefits.
Pep stores have been proactive in developing the communities
in which they operate, which has led to the success of this
discount apparel retailer in Africa. Apart from developing
infrastructure and growing operations, retailers also need
to structure the store footprint efficiently. Clustering
stores in specific areas helps the retailer manage its operations
and supply chains more efficiently.
Walmart’s entry, combined with retail’s rush
into Africa has resulted in a busy and fascinating year.
But, its endeavours to win over newly-found groups of consumers,
while competing with Walmart and an established informal
trading sector, will provide an equally fascinating backdrop
for retail in 2012.
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