Despite experiencing an African summer Christmas, shoppers in South Africa still seem to prefer decorations in the country’s shopping malls to hark back to a cold and snowy European-style winter wonderland. An article published last week by the international news website, ‘Quartz Africa’, ponders the seasonal disparity between Northern and Southern Hemisphere Christmases and the vexing question for SA mall managers as to what constitutes appropriate festive season decorations – given that most customers would never have experienced snow, never mind sleigh bells and reindeer. “Even as the country’s consumer base has become more diverse and sophisticated, Western visions of Christmas still appear to be a huge draw to the country’s multitude of malls,” observes the publication. “For mall managers, this wholehearted embrace of ‘atmospherics’, or the Western-perfected practice of using decor, sound and smells to put people in the mood to shop, has taken on an even greater importance during an economic downturn that is seeing consumers adopt more measured, rather than merry, shopping habits.” Jan Griesel, co-owner of a specialist decorating business The Magic Christmas Co, says there has been a growing effort in the last 15 years to recognise local traditions. These range from using Ndebele tribal prints to replace ribbon, a giant baobab tree instead of a fir tree, and handmade wire reindeer, sheep, and cows. “What we’re trying to do is incorporate more local people to produce more local things, so we can put it together in one statement,” he tells ‘Quartz Africa’. But while some malls have tried to find a balance between African and Western traditions, it seems the white Christmas approach is here to say, the publication reports. Even though malls might be catering for more diverse communities, religions and races, “… there is an expectation for beautiful, traditional stuff,” Vanessa Fourie, Brand Manager at the new Mall of Africa, says.
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Wednesday, 07 December 2016 08:49

Foschini Group innovates in e-commerce space

Retail giant The Foschini Group (TFG) is trialling a ground-breaking new delivery service for its products being sold online. Called ‘Deliver 2 Me’, it uses a geolocation tracking system – similar to that used by smartphone tracking systems or the Uber taxi app – to enable customers to pinpoint exactly where they want their purchases to be delivered. The ‘Deliver 2 Me’ system sends an SMS to a customer when their online order is ready for delivery and the client then selects a ‘Deliver Now’ option that enables the order to be delivered to the customer’s location, typically within three hours. The location need not be the client’s home or work address, but can be wherever they happen to be located at the time. TFG is offering the service in conjunction with WumDrop, an app-based courier service that operates in much the same way as Uber. The service is currently being trialled in Cape Town, but will go live in other cities in South Africa in the early part of 2017. Traditional retailers like TFG are facing increased competition from online retailers in SA and are now moving rapidly to counter the growing threat. After a slow start, fashion retailing is one of the sectors that is moving increasingly online
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In yet another strategy to make the payment process easier for South African retail customers, McDonald’s and social communications app WeChat have joined forces to trial mobile payments at selected restaurant outlets in Johannesburg and Cape Town. Payment is being facilitated by a mobile option called Quick Pay which is claimed to be safe, quick and easy. The system allows customers to generate a WeChat QR code that can then be scanned at point of sale to register a payment. Quick Pay is part of the Mobile Wallet technology unveiled by WeChat in 2015. Like a physical wallet, customers can store their bank cards and make instant cash payments within WeChat. They can also make cash payments to certain merchants. “We are continuously searching for innovative ways to enhance our customer’s experience,” says McDonald’s Chief Marketing Officer, Daniel Padiachy. “We believe the partnership enables [us] to provide a modern solution to our customers.” Notes WeChat Africa CEO, Brett Loubser: “Although Quick Pay is innovative, it also offers customers a much faster and easier payment option to traditional payment.” According to research by the National Restaurant Association in the US, quick-service restaurants are more likely to implement high-technology payment solutions than formal sit-down outlets because the latter are driven by speed. This is why online ordering, smartphone apps and mobile payment are more of a focus for them in day-to-day business operations. The association says that technology can clearly help to boost productivity and efficiency in restaurant operations. But it also has to simplify, not complicate, the customer experience.
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Tuesday, 29 November 2016 07:38

Pick n Pay speeds up service at its tills

Retailer Pick n Pay has confirmed that it is launching a tap-and-go system at its stores in an effort to speed up the processing of customers and reduce queues at till points. The chain is apparently the first major South African retailer to introduce the system, although it is already popular in many other parts of the world. According to ‘Business Day’ newspaper, last year there were three-billion such transactions in Europe alone. Tap-and-go enables a customer to touch their credit card against a card reader and the transaction is then competed around 30% faster than a typical credit card transaction. Customers do not need to swipe the card, enter a pin or provide a signature. The system can be used for payments under R200. Pick n Pay Deputy CEO, Richard van Rensburg, says the system is easy to use. “You just tap or hover your credit card above the terminal, confirm the amount and the transaction is processed immediately,” he explains. “After a number of years of significant investment, our systems have reached a level of maturity where we are able to introduce an increasing array of innovations that make shopping at Pick n Pay cheaper and more convenient.” The retailer is in the midst of a turnaround strategy and has previously said that innovation and modernisation is critical to its success.
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Wednesday, 23 November 2016 10:12

South Africa gears up for Black Friday sales

Yes, it’s an American tradition, but Black Friday sales have recently spread across the world, with South Africa being no exception. Last year local retailers participated in large numbers and 2016 seems to be heading for an even greater level of participation as some businesses run week-long sales that began on Monday. Black Friday happens this Friday (25th) and both online and bricks-and-mortar outlets are competing strongly to get shopper attention. Electronics chain Hi-Fi Corporation, for example, says it will be offering ‘up to 80% off’ on selected goods. Similarly, online retailer Takealot is offering discounts of 60-80%. Speaking to the website ‘Times Live’, Takealot’s Chief Marketing Officer, Julie-Ann Walsh, said that last year's sale showed growth of more than 200% over 2014. She assured customers that the website would be able to deal with the surge in customer demand on Friday. Among those who are offering discount deals throughout the week are Makro, Game and Bidorbuy. The latter says it is running a Black Friday sale from Monday (21st) to Sunday (27th) and is following this up with a Cyber Monday sale that will run for the following week. Some retailers are arguably being more inventive than others. The Foschini Group (TFG), for example, has a promotion in which customers can upload a selfie of their most ‘amped up face’ to a mobi-site, where their expression will be scored. If a customer scores higher than 60%, they receive vouchers valued at up to R300 which can be redeemed during the Black Friday sale. Black Friday retailing have become more frenzied than ever in recent years and spread to countries such as Canada, Britain and Nigeria. Competition for shoppers’ money has become tougher too, with some industry observers calling it the “most important event of the year for [American] marketers”.
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Tuesday, 01 November 2016 08:06

Tough retail environment hits Stuttafords hard

In yet another indication of the changing and highly competitive times in the South African retail sector, the long-established Stuttafords chain has entered business rescue after many years of declining sales and low profitability. Business rescue enables a company to keep trading while a professional business rescue practitioner takes control, together with the board of directors, to provide a fresh perspective and new direction. If this revised strategy fails, the next step is usually liquidation. Stuttafords was founded in 1858 and sells branded clothing, shoes, accessories and cosmetics, mainly in a large-format department store environment. It has 18 outlets in SA, Namibia and Botswana. Speaking to ‘The Money Show’ radio programme last night (Monday), Stuttafords CEO Robert Amoils said negative consumer sentiment was driving people away from retail stores and shoppers were tending to buy down rather than go for the higher-priced international brands that Stuttafords offers. He added that the chain’s department stores had tended to be relatively resilient. “But the foot traffic in malls is declining and spend per head has dropped – especially in those malls that are undergoing refurbishment.” In the fashion space, Stuttafords once focused on selling house brands with high margins, but then changed its strategy to selling primarily international brands such as Banana Republic, Tommy Hilfiger and Pringle of Scotland. Price-wise, these have all suffered as a result of import duties and the devaluation of the rand. Recently the Edcon Group – which includes Edgars, Jet, CNA and Boardmans – narrowly avoided business rescue and was taken over by creditors. Not all South African retailers are enduring tough times, however. Clicks Group, for example, delivered a strong trading performance in the year to August, increasing retail turnover by almost 13%, mainly due to good performance in the health and beauty segments.
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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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Like the independent corner store that offered personalised service, informal credit and home delivery, the local pharmacy is on the way out in South Africa and being replaced by hard-nosed retail businesses. Indeed, the entire sector is undergoing a sea change, reports the ‘IMM Journal of Strategic Marketing’ in its October 2016-January 2017 issue. Deregulation in 2003 has progressively seen the growth of corporate-owned pharmacies and the once-traditional ‘corner chemist’ is now struggling to survive. Clicks was the first to see the new opportunity and by the end of February this year had 384 in-store pharmacies. It represented an increase of 23 pharmacies over 12 months, and 60 new outlets over 36 months. “We have a leading 19% share of the retail pharmacy market by sales,” says Vikesh Ramsunder, Chief Operating Officer of the Clicks stores division. It is a market share edging up steadily, having grown from 18,5% in 2015 and 16,5% in 2013. Overall, says Ramsunder, corporate pharmacies tied to the major retail and supermarket chains now account for about 46% of total sector sales. Other corporate players include Shoprite with145 in-store Medi-Rite pharmacies, Dis-Chem with 100 big-format drug store-type outlets, and Pick n Pay with 26 in-store and three stand-alone pharmacies. Spar Group has also joined in the fray. But, in keeping with the Spar model, pharmacies remain stand-alone businesses in the hands of their owners. The attraction of the pharmacy ‘superstore’ model is not that dispensing prescriptions makes money, it’s that pharmacies attract customers who will then shop for more general merchandise elsewhere in the store. Clicks, for example, generates about 25% of sales in the pharmacy and 75% in the so-called ‘front shop’.
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In the fiercely competitive world of South African retail, an effective supply chain is imperative. More effective global sourcing, better speed to market, increased onshore manufacturing and improved warehousing efficiency are strategies being used by the big retail groups, reports the ‘IMM Journal of Strategic Marketing’ in its October 2016-January 2017 issue. The Foschini Group (TFG), for example, has worked hard to enhance the efficiency of its procurement processes in China, where much of its clothing is manufactured. One of the first moves was to reduce the number of Chinese ports through which products are shipped – from 20 down to five. Up to 20 containers a day are shipped to TFG from these five harbours. Much work has also been done to optimise container loads, which now often comprise mixed consignments. The result is that TFG has halved shipping costs. But a slick procurement capability in China is not enough. At the fashion end of the apparel market, what counts most is speed to market and flexibility. Spanish retail chain Zara is a leader in this respect and tries to manufacture garments close to its major markets, often at its own factories. TFG is emulating this and, in 2012, acquired Prestige Clothing and its garment factories in Cape Town and Caledon. Both have since been revamped into state-of-the-art production facilities that can take garments from concept to production in 2-4 weeks. Other fashion retailers including Woolworths, Truworths and Mr Price have also upped their local procurement markedly. “Higher up the value chain, where-speed-to-market counts, upwards of 80% of clothing is today locally produced,” says Johann Baard of Apparel Manufacturers of SA, which represents garment sector employers. Published by the Institute of Marketing Management, the ‘IMM Journal of Strategic Marketing’ is read by professional marketers and those working in related fields, as well as business executives and IMM students. The print edition sold in selected CNA and Exclusive Books outlets, or is available via subscription. Copies are also distributed through a targeted mailing list and through selected airline lounges and IMM Graduate School student support centres.
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Are attractive salespeople more likely to boost sales in the retail environment? While the common belief is that people react more favourably to physically appealing individuals, new research indicates this may not be the case when it comes to shopping. Instead, an attractive salesperson can discourage people from buying a product, and consumers may react more negatively to a good-looking service provider than to an average-looking one. This is because attractive salespeople can cause consumers to have concerns about their ability to make a good impression. Professors Lisa Wan and Robert Wyer of the Chinese University of Hong Kong undertook several experiments that monitored highly attractive/less attractive shop assistants of both sexes and how shoppers then interacted with them. In the study involving female shop assistants, male shoppers interacted more with the average-looking assistant and bought higher-value goods from her. In the experiment involving male shop assistants, female shoppers had to seek information about a thermal weight belt that can be used to either promote weight loss in overweight people, or to promote general relaxation and good health. “As expected, the results show that participants in the embarrassing consumption condition were less likely to make a purchase when the salesperson was presented in an attractive way than when he was not – and had a greater concern with the impression they created when he was attractive than when he was ungroomed,” the researchers say. “The study demonstrates that when a consumption situation is likely to be embarrassing, attractive opposite-sex providers can lead consumers to have self-presentation concerns. And when it occurs, it has a detrimental effect on purchase decisions.” There were also problems when shoppers and shop assistants were of the same sex. “Self-presentation concerns appear to be driven by social comparison processes, leading consumers to dislike the provider and to avoid interacting,” the study says.
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