Adapting to a new World
Leveraging emerging technologies to get ahead in a changing retail ecosystem.
The current retail landscape in South Africa differs from global trends in a few important ways. Most notably, where retailers worldwide are moving towards omni-channel offerings, things are evolving differently back home. Marketing Intelligence research indicates that South African consumers still depend very much on brick and mortar outlets. Despite this, African countries across the continent remain ahead as early adopters of mobile technologies. Everything from tap-to-pay technologies to quick mobile money transfers have become every-day in this part of the world. This intersection of “old-meets-new” presents interesting opportunities and challenges.
The current pressure on South Africa’s economy is felt most keenly by retailers. Prices can only be adjusted so far, and many consumers are focusing more on essentials. Those in the luxury products or services industries are feeling the brunt of this recession. However, an interesting trend that emerges in times like this is the “Lipstick effect.”
“The Lipstick Effect is the theory that when facing an economic crisis, consumers will be more willing to buy less costly luxury goods. For example, instead of buying expensive fur coats, women will instead purchase expensive lipstick or luxury cologne” – The intelligent Economist
What this means is that, although consumers are more careful about the non-essentials that they buy, they do still spend on smaller, less expensive luxuries. This may serve as an opportunity of retailers to find unique, affordable ways to surface their products and services.
How can we use emerging technologies to mitigate this changing landscape?
The very first step is to look at the shape of the current purchasing process. In many respects, speed and efficiency in the shopping journey have surpassed lower prices as value propositions. In individual outlets, this may simply mean an upgrade of the current point-of-sales system to accommodate tap-to-pay. It may also mean bringing in spatial planners to improve and speed-up the in-shopping journey. Loyalty programs and customer relationship management systems are also emerging as an excellent way to add value to consumers.
Research has indicated that sustainability and ethical corporate processes have become a a very real drawing card for consumers.
This means that although your business may not lend itself to an omni- channel retail experience, the online landscape has greater PR and branding potential than ever before; viz. Showcasing social responsibility activities in local settings, highlighting your company values and shining a light on the businesses you source from.
For retailers who have the potential or opportunity to establish online ordering, purchasing or delivery channels, the time is now. This does not necessarily mean a full online solution. If we look at the way companies like NetFlorist have adapted to changing demand (increasing food options when alcohol sales were temporarily banned,) there are a variety of ways to get started. Focusing on specific products or offerings as a starting point and branching from there also gives retailers the opportunity to test and refine the online journey and the logistical processes behind it. With the monumental up-take of e-commerce during the COVID-19 pandemic, there is a large amount of data drawn from countless case-studies to draw from.
Payment options are an additional entry point that can be explored in greater detail. With a bourgeoning variety of digital and mobile-based platforms becoming available, it is important for retailers to keep a close eye on where the market is going. QR code platforms present a good opportunity for lower purchases and there are movements in the Fintech industry towards WhatsApp-based money transfers. If the adoption is as fast in South Africa as it has been on the rest of the continent, retailers should take notice.
The real watch-word for retailers in South Africa at this point in history, is start anywhere, but get started.
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