My Article

My Article (541)

Tuesday, 25 October 2016 09:06

Brands and the mind of the Afrillennial consumer

Written by
Millennials as a group are arguably the most discussed and analysed consumer segment across the globe due to their growing buying power. Within this group are the Afrillennials (South African Black Millennials), who face a different set of challenges to the global Millennial. Writing in the October 2016-January 2017 issue of the ‘IMM Journal of Strategic Marketing’, advertising strategist Nandi Zambodla says that many Afrillennials, once working, must think about the families they have left behind in townships or rural areas and contribute to the running costs of these homes – so-called ‘black tax’. Unsurprisingly, this slows the process of starting to grow, save and progress like other Millennials. This is but one factor that differentiates Afrillennials from their Millennial peers elsewhere. So what are the characteristics of this group? Zambodla says Afrillennials are defined by a shift in thinking, a strong sense of self-belief and an ability to rise above often difficult circumstances. They are unapologetic, outspoken, daring, bold and want to be heard. What should marketers do to maximise their opportunities among this target audience? “It is not enough to simply find out where Afrillennials communicate and how. Marketers need to contribute towards their success too,” Zambodla says. “It is about celebrating the beauty, the heritage and what Afrillennials love about themselves. It is their everyday stories that grab this group’s attention.” This is why influencer marketing works so well with Afrillennials – because they get to engage with a face that is aligned with their aspirations. “These are movers-and-shakers who are running their own projects, aspiring to change the world and doing something different,” she observes. Published by the Institute of Marketing Management, the ‘IMM Journal of Strategic Marketing’ is read by professional marketers and those working in related fields, business executives and IMM Graduate School students.
South African consumers are continuing to embrace loyalty programmes, with the biggest growth in users taking place in the under-25 age group. This is according to the 2016 Loyalty Whitepaper released last week by Truth, a Cape Town-based consultancy specialising in in customer centricity and customer loyalty programmes. CEO Amanda Cromhout says the number of young people participating in loyalty schemes rose by 13% over the past year. This indicates that programme usage among this segment of the population is increasing at double the average annual growth across all age groups. Around 60% of all people aged 25 and under now use loyalty schemes. There were also notable increases among men (up 7%) and households with an average income of R20 000 a month, or less. Cromhout belives this is largely because a number of brands have “really upped their loyalty game” when it comes to innovation, particularly when using mobile and omni-channel strategies that particularly appeal to younger people. Offering tangible benefits that have strong customer appeal is obviously important. Cash is king, but other sought-after benefits include discounts, coupons and vouchers. Women are keener on cash-back rewards (70%), while 56% of male consumers said this was their first choice. The white paper acknowledges that, for retailers, cash rewards programmes have a hard cost associated with them. However, the benefit is dramatically increased redemption. Where there are conditions attached – for example, R50 discount for every R250 spent – uptake can be as low as 2,5%. Pick n Pay’s Smart Shopper is the most used loyalty programme in South Africa, followed by the Clicks ClubCard and Woolworths’ WRewards. The programme with the largest number of members is the Thank U card by the Edcon group. It has 12-million members, versus Smart Shoppers’ 8,9-million members.
How do you grab the public’s attention and, in a simple but graphic way, illustrate the serious consequences of global warming on their everyday lives? A little humour and a lot of innovation can go a long way towards creating a memorable campaign that drives home the point. Offsetters, a Canadian organisation that advises companies and individuals on how to offset carbon emissions, used this approach to good effect a few years ago when it came up with a way to show people in the ocean-side city of Vancouver what their community would look like if global warming goes unchecked and sea levels rise dramatically. Together with local ad agency Rethink Communications, Offsetters decided to suspend lifeboats from the side of an office tower as a way to show the public how high water levels in Vancouver could rise. To ensure pedestrians below got the message, the undersides of the lifeboats were emblazoned with the slogan ‘Stop Global Warming’. The campaign didn’t end there. Lifeguards and their lifeguard chairs were placed in nearby city parks with the message ‘Lifeguard on Duty – Stop Global Warming’, while park benches had lifejackets strapped underneath them and were adorned with the message: ‘Life Jackets Under Seat – Stop Global Warming’. Local media called it “a dose of global warming reality”. Allbusiness, a small business website, commented: “The execution didn’t cost much, but created high shock value that got the attention of local and national media. And the idea was completely tied into the mission of the organisation.”
Thursday, 20 October 2016 08:10

Understanding the potential of stokvels

Written by
Although it often flies under the radar of formal business, South Africa’s stokvel sector has huge membership and enormous buying power. Perhaps, says the ‘IMM Journal of Strategic Marketing’ in its latest issue, savvy marketers should be paying more attention? According to the October 2016-January 2017 edition of the magazine, market research company African Response estimates that there is R25-billion invested by 8,6-million stokvel members nationally – or 23% of the population – in an estimated 421 000 stokvels. However, the National Stokvel Association of South Africa (Nasasa) doubles these figures in its estimates, projecting more than 800 000 stokvel groups with a collective value of R49-billion. Mamapudi Nkgadima, Managing Director of African Response, is ‘passionate’ about stokvels and their potential to transform SA. She knows that brands are eager to tap into the market, but observes that “what is missing is the understanding that stokvels are community driven, not individualistic. Brands need a deeper understanding of stokvels. They need to get closer to [them].” She continues: “The essence of most stokvels is trust. If trust is what pulls stokvels together, then how can you – as an outsider – engage with them?” Her advice to marketers is to follow a carefully thought-out approach. “If business took time to get close then they would see opportunities to engage. It shouldn’t be about how much I [as a brand] can get, but what role I can play in education, empowerment and hand-holding.” She believes that knowledge-sharing is the most powerful tool for engaging with stokvels. This is supported by Andrew Maluleka of marketing services company Mindshare and a lifelong stokvel member. He says sectors like financial services “keep missing the point of a sense of community and belongingness. Their approach is too commercially orientated and cold.”
Wednesday, 19 October 2016 07:00

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

Written by
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.”
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’.
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.
© 2015 by African Marketing Confederation