SA’s brick & mortar retailers safe, for now

Peter Hoijtink, PwC associate director and retail specialist, similarly points to the fact that between 2009 and 2014 visits to physical retail stores in the US almost halved. “The impact of online shopping on the amount of square metres in malls is quite significant in other countries, such as the US, where the landscape is changing quite rapidly. Locally, there is no real impact being seen yet,” he explains.

There are several explanations, but chiefly the fact that local online retail is still in its infancy. While the sector will be worth an estimated R9.5 billion in 2018, online retail currently counts for less than 1% of SA’s total retail revenue. This is according to PwC’s retail and consumer leader, John Wilkinson, who recently presented the findings of PwC’s annual consumer survey, Total Retail: Retailers and the Age of Disruption.

Another important factor is the country’s “embedded mall culture,” says Nic Robertson, head of new business development at Efinity – an e-commerce fulfilment service provider.

“We have 33 (2 000 square metres plus) malls per one million people in South Africa, which is one of the highest densities in the world. However, the number of consumers who are beginning their purchasing journey online or via a cellphone is increasing. As an example, between OLX (classifieds) and PriceCheck (price comparison), one is seeing more than 5 million visitors a month to their sites,” he says.

However, according to PwC’s Total Retail 2015 report, 81% of SA’s online shoppers (and 70% globally) still prefer to do their regular shopping in-store. The top reasons cited by survey respondents were” to experience merchandise, confirm fit and immediate ownership.”

“Even in categories where consumers predominantly buy online, some consumers still research online and buy in-store – 58% for consumer electronics and 29% for books in South Africa (25% and 13% globally),” the report noted.

Online driving offline sales

Interestingly, some traditional retailers are finding that instead of being a cannibalising force, an attractive online platform can be a powerful complement to physical stores.

The Mr Price Group, whose core market comprises 16-24-year-olds, launched its online platform in 2012. It told PwC analysts that it “is seeing online traffic significantly driving offline sales”, and has enjoyed a “big growth in market share since launching our online store”. It also noted that the younger generation browses and the older generations transact.

The number of online “browsers” who will mature into paying customers will undoubtedly rise exponentially in coming years – a shift which will probably require traditional retailers to rethink their approach.

“With South Africa’s population being so young, the adoption of a more socially connected, digital retailing space – where not only a product is sold but the customer receives a memorable experience – is imperative for any retailer looking to maintain or gain competitive advantage over its competitors,” says Hoijtink. 

*This article was originally published in the recent edition of Moneyweb’s digital magazine Property Mogul. To view the original, as well as the rest of the publication, please choose one of the following formats:

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