Time to capitalise on increased consumer spending
Our economy is strengthening, and if retailers want to capitalise on an increase in consumer spending, their landlords will have to restrategise.
Providing tangible incentives to customers, and delivering unique advertising and promotional messages tailored to specific individuals, are among the initiatives they need to take. This was one of the strategies raised at the South African Council of Shopping Centres’ 8th Annual Research Conference, which highlighted important aspects of the South African – and international – retail and shopping centre landscape.
In a discussion involving Sesfikile Capital’s Kundayi Munzara and political commentator Justice Malala, it was agreed that the rand had strengthened over the past few months. This, they said, would increase consumer spending, which would ultimately boost the economy.
Tied in to this is the need for loyalty programmes, said Steven Burnstone, chief executive and head of analytics for Eighty20 Consulting. He said standing out and being attractive to consumers was possible if retailers and shopping centres understood their customers and partnered with the right brands.
“The way businesses communicate to customers is one of the many areas that need to be focused on. Businesses need to shift away from traditional, product- focused advertising models and focus on delivering advertising and promotional messages that are customer-focused and tailored to specific individuals.
“Partnering with the right brands offers customers a sense of added value by providing tangible incentives such as fuel discounts.”
However, while there are opportunities for the retail sector to be boosted by the strengthening of the rand and improved consumer confidence, pretending that industry disruption was not happening “won’t help anyone”, said Catherine Stevenson, senior consultant of Cross Border Retail for Cushman & Wakefield Excellerate, which sponsored the conference.
“New experiences, formats and trends, underpinned by advances in technology, are creating new ways for customers to interact with retail. The occupiers and landlords with an informed view – and willingness to adapt – will find opportunities in our changing retail environment.”
Lemok Group founder Lebogang Mokubela said while the popular narrative was that e-commerce was causing the biggest disruption with regards to the retail market – which may be true in terms of the global market – it was not the case with the township market. Here, he said, the biggest disruption was the shift in power.
“A majority of the township audience is relatively reluctant to try online transactions due to issues around security. Most importantly, this market is big on instant gratification. They want to buy something and get it now, which e-commerce does not provide as an option,” he said.
Township consumers were more educated and more aware of their buying decisions and therefore the power now lay with them, he said.
“In the beginning it was about promotions and tenant mixes, but these days, despite the promotions, consumers do not buy. Obviously this is because of other influences, such as lower disposable income. But the main point is that to appeal to the township market, shopping centres need to be aware of the less obvious needs and cater for those.
“Bringing a cash and carry into your mall isn’t the answer. The point is to build initiatives and spaces that give consumers a real reason to come to your mall.”
Stevenson said customer journey maps – visual representations of customers’ experiences with the brands or malls from original engagement – allowed retailers to understand their customers’ experiences, which was often different to the one they thought they are having.
“Using the mapping process, you can chart your customers’ needs, activities and feelings throughout their relationship with a company. In the context of property management, there are many types of customer and many customer journeys. The process of customer journey mapping enables you to prioritise the most important parts of the customer journey for each kind of customer so you can focus on improving what matters most and what will have the greatest business impact.”
Amanda Stops, chief executive of the South African Council of Shopping Centres, said its research conference started in 2011, and the main objective was to enhance and satisfy the need for more information on trends, technology and customer information.
The findings are expected to further improve the performance of South Africa’s malls, which have been the best performers over the past four decades.
Statistics released by StatsSA showed retail trade sales rose by 4.8% year-on-year in March, with the highest annual growth rates recorded by: household furniture, appliances and equipment (20.7%); textiles, clothing, footwear and leather goods (10.6%); pharmaceuticals and medical goods, cosmetics and toiletries (7.9%).
Retail trade sales rose by 4.1% in the first quarter of this year compared with the first quarter last year.