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‘Lowest prices’ no longer single factor driving consumer behaviour – report

‘Convenience plays a huge role, and strip malls are becoming more relevant,’ says Nielsen SA’s Ronell Pather.

NOMPU SIZIBA: The Nielson South Africa Consumer Trend Survey 2019 has been released, and one of the things it notes is that South African consumers are not influenced by price alone. There are many variables that a more sophisticated consumer now looks at.

Well, to give us a sense of what came out of the survey and the broader themes around the retail space, I’m joined on the line by Ronell Pather. She is a senior manager in the shopper and quantitative research department at Nielsen South Africa.

Thanks very much for joining us, Ronell. We know in South Africa there is an abundance of choice for consumers when it comes to which retail outlets they decide to visit. What are some of the drivers you found in consumers deciding to go to one retailer over another?

RONELL PATHER: Thank you, Nompu, for having me on the show with you. For the past two to three years we saw low prices to be the key driving choice behind choosing which retailer to shop at. However, in 2019 we saw value for money and store experience as key drivers for choosing a store. So, shoppers are not just concerned about the price of the thing, but the value that they get in return for what they pay at the end of the day. Retailers trying to differentiate on price alone is just not an effective differentiator anymore. You have to focus on stock experience, the convenience the consumer takes to shop at in terms of locations and so on. And also offering value to the shopper.

NOMPU SIZIBA: What about the issue of food pricing? The economists have been telling us that food inflation hasn’t been so bad this year, but of course we don’t all eat the same things and we don’t all have the same disposable income, with some families spending a huge proportion of their income on food. So, what were your findings around attitudes towards food pricing?

RONELL PATHER: In 2019 we see that the perceptions around food prices increasing have been more stable than in recent years, and especially for the lower LSM consumers. And we evaluate this information with our own consumer panel data, where the majority of their purchases are around their staple food, maize meal. Previously we saw price increases for the staples, and they have been stabilised recently. And with this the perceptions around food prices are also stabilising.

So, as I mentioned, the maize price has been a huge portion of that wallet, of the share of that wallet for shoppers, but that’s stabilising now, and obviously affects perceptions around prices.

NOMPU SIZIBA: Are South African consumers beginning to look more at online retail facilities, given the busyness of many people’s lives, or do we mostly like to touch and feel in store?

RONELL PATHER: Online shopping impression is still very low in South Africa. I’m pretty sure it’s 1.5% around the globe as well, mostly in developed countries. But it doesn’t mean that being present online is not impressive, because what our shoppers are doing is they are going online and researching, and then completing their purchase in store. This could be due to trust issues around payments, and obviously just wanting to see and feel the product that they are purchasing.

NOMPU SIZIBA: So, on the supply side, the retail manufacturer and retail outlet side, obviously they operate in a very competitive terrain. So, what do you see as their challenges, and what they are having to do in order to keep their heads above water?

RONELL PATHER: As I mentioned before, low prices are just not going to cut it. They need to be constantly innovating from the manufacturers’ perspective in terms of the products that they offer to the shopper, and additionally retailers. We see larger retailers now are constantly renovating their stores, trying to make the shopping experience more intrusive, to keep that shopper coming back – and not just coming back but spending more in store as well.

NOMPU SIZIBA: How important are things like loyalty cards?

RONELL PATHER: Loyalty cards are important. I think they are very important for the retailers and manufacturers, because they get the data from the shoppers. That almost completes the reason why you shop at that retailer, having that sense of belonging to that retailer. I have a Smart Shopper card, and you see Checkers now with the Xtra Savings [card]. But it’s important to offer value and not just swiping a card each time you buy a basket of goods.

NOMPU SIZIBA: That’s true. The reason I ask that is because all of them now have loyalty cards of one sort or another. I have a few loyalty cards in my purse, so I’m not really very loyal. I’m going to try and get the best that I can when I go for my retail experience.

RONELL PATHER: We know that shoppers have a repertoire of two to three stores to complete their purchases on any given week or month. It just depends on what you are offering them that, that gets them to buy into that loyalty card or promotion that you are running. So you have to give them a compelling reason to swipe that card or to buy that basket.

NOMPU SIZIBA: Ronell, what about shopping malls? South Africa has so many, and we’ve learnt this year that it’s a tough environment for many property companies, with vacancies rising in some places. What are your thoughts there? Could we see some sort of consolidation happening in that sector? And, if you do need to reduce the number of malls, how would you repurpose them, and what would you repurpose them for?

RONELL PATHER: I see strip malls being a bit more relevant, where it comes back to the whole convenience relevance. So, as opposed to going into a massive mall where you have to find parking, and then find the stores that you need to get to, be it the pharmacy plus a retailer, a grocery store, and then even one more store that you need to complete your basket of purchases at, strip malls are a bit easier. To even out, you maybe have your farmer retailer, your supermarket and perhaps your wholesaler that you usually buy from – and you go in and out. So, I think convenience plays a huge role there, and strip malls are becoming more relevant.

RONELL PATHER: Ronell, a pleasure talking to you. Thank you so much.

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