South African retailers have turned to digital innovation to meet growing demand
A rapidly expanding consumer market and the lack of corresponding infrastructure development has created the ideal conditions for a digitally reliant and innovative retail sector in South Africa, according to a new report from global management consultancy Bearing Point.
The population in South Africa – much like the rest of Africa – is amongst the youngest in the world. In the next few years, a large portion of this population will enter the working age, thereby increasing the proportion of the population with a steady income and overall spending capacity.
In addition, overall increases in prosperity have led the country to witness a rapid expansion of its middle class, and the consequent expansion of its consumer market. Despite the fact that the country’s retail sector is amongst the steadiest industries in South Africa, analysts have been in doubt about the sector’s capacity to match the growing demand.
According to Bearing Point, retailers in South Africa have turned to the digital paradigm to tackle this lack of infrastructure and capacity. Businesses have begun to leverage Fintech and other mobile technology to boost the country’s ecommerce and mpayment activity, primarily to compensate for the lack of infrastructure.
The consumers are an important part of this equation nonetheless, and Bearing Point reports that they are evolving in tandem with market trends. Over the course of last year, 71% of the milennials in South Africa used a mobile application to make payments. Such a trend is indicative of the increasing propensity to spend amongst consumers.
75% of South Africans reportedly spend more money on their family and basic care when compared to the figures from a few years ago. Familiarity with digital media has also brought social media into the equation in a fairly important capacity, given its potential for marketing to millennials.
Whatsapp, for instance, has become an important method for customer service as well as to ensure supplier accountability. For instance, certain ecommerce applications collect photographic representations of goods before shipping, which they can then compare with the product post-shipping.
A highlight from the findings of Bearing Point’s report is that the digital activity of South African consumers in certain sectors proved to be higher than that of China in the same sectors. For instance, 89% of South Africans order food from online platforms as opposed to 83% in China. Similarly, South Africans appear more prone to use Youtube for online demonstrations than consumers in China. 75% of South Africans make use of Youtube tutorials while this number stands at only 56% for Chinese consumers.
