Investing in e-commerce could be tremendous for SA retailers

23 October 2019 3 min. read
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Despite having trouble with adapting to the online sphere, retailers in South Africa could generate tremendous financial value by boosting their e-commerce capabilities, according to experts at global management consultancy Accenture. Emulating tried and tested international models is key, according to the firm.

South Africa’s retail and consumer sectors have been among those that have remained steadfast amid recent economic stagnation. The top retailers in the country were reporting growth in excess of 5% at a time when the rest of the economy was struggling, although the time has come for the sector to make some changes.

Much like the rest of the economy, the retail sector is starting to face competition from more digitally-advanced avenues. E-commerce giants such as Amazon have flooded the market, putting pressure on the traditional retailers in the country. Despite their best efforts, these traditional retailers have struggled to adapt.

On the other hand, Accenture reports that the sector appears to be going in the opposite direction of where this trend is pushing them. The additional costs of maintaining an e-commerce platform has caused many retailers to revert to traditional sales means, while consumer behaviour appears to be reinforcing this trend.

Investing in e-commerce could be tremendous for SA retailers

Consumers in South Africa are also reverting to the traditional approach of visiting a store to shop. According to Accenture, shifting to the online sphere has tremendous benefits for retailers, consumers and the South African economy as a whole. This draws on the success of ecommerce behemoth Amazon, among others.

The firm also predicts that South Africans have recognised this potential, but will take some time to work towards digitalisation, primarily due to the costs and risks involved. “Accenture projects that South African consumers will sharply increase their online shopping in the near future,” said John Watling, Managing Director of Accenture Retail in Africa.

“If local retailers can follow suit by offering experiences such as those of Amazon, eBay, Zappos and others, customers will be more trusting of online shopping and less reluctant to use it. When Woolworths launched in- app shopping through its integrated lifestyle app, the company achieved a 34% growth in online sales (almost double the projected market growth of 19%),” he added.

Said Johan McCabe, Accenture Products Africa Management Consulting Lead, “As our digital world rapidly expands like never before, South African retailers are presented with a mammoth opportunity to learn from the successes and failures of local and global eCommerce pioneers. In the era of hyper-relevance, can they tap into consumer demands, grab the opportunity presented to them and pivot to the future?”