Wednesday, 19 October 2016 07:00

Bigger isn’t better in SA’s new retail reality

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In a changing retail environment, shoppers believe stock availability, stock quality and convenience are more important than price and special promotions In a changing retail environment, shoppers believe stock availability, stock quality and convenience are more important than price and special promotions
South Africa is undergoing a retail evolution where mass-market ‘one size fits all’ strategies are no longer as desirable and bigger retail stores are not perceived as being better by consumers. These insights stem from a recent Nielsen Global Retail Growth Strategy Report, which highlights the need for innovative tactics in the retail landscape. Says Nielsen’s Craig Henry: “As lifestyle and consumption habits change, we’re seeing a structural shift with small formats showing big growth. This [is because] the small store has reinvented itself, [but] the hypermarket has remained more or less the same over the last three decades. As a result, small stores are able to meet the current consumer need for a higher level of specialisation and service delivery since an artisanal feel, personal service and individualism are synonymous with this store format.” South African consumers reveal that, when selecting a store, their choices are highly influenced by convenience of location (71%), ease and speed of access (61%), high-quality fresh produce (71%) and product availability (68%). Less important are price-related attributes such as lowest prices overall (56%) and good sales and promotions (56%). The study also emphasises that bigger stores are not necessarily better. Whereas hypermarket-style outlets once benefitted from scale, more shelf space to stock more products, and the ability to provide convenient one-stop shopping, these aspects are no longer as important as they were 10-15 years ago. “The modern retail store model has evolved,” says the study. “Supply chain process improvements have made it possible to achieve similar, or even higher, levels of profitability with smaller stores – paving the way for smaller retail outlets to expand and take share from larger competitors in many markets. The result is that today’s retail environment is more fragmented than ever, with fierce competition for shoppers leading to an increasing dependency on promotions among large retailers.”
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