Traditionally, South Africa has lagged behind in the ecommerce trend, with brick and mortar outlets, many of them in malls, tending to perform significantly better than ecommerce options for the same retailers.
World-wide, retail floorspace has been steadily declining for the last 20 years, with for example the UK losing 20% of its retail space between just 2008 and 2015, as more shoppers started to migrate online. Even before the pandemic, the US projected that retail vacancies would increase by 20% in the next 5 years as malls struggled to maintain tenant occupancy rates due to the same factors, a process which has surely accelerated now.
At the same time in South Africa, new malls were being built, and old ones expanded, a trend that only started to reverse last year, when after the expansion of Fourways Mall to the largest mall in SA in August last year, Keillen Ndlovu, then head of listed property funds at Stanlib, said in an interview that globally, the days of building gigantic malls were gone.
The Ecommerce Journey
Speaking in an interview recently, Terence Govender, a director at Mazars South Africa (a global auditing and advisory services firm with a local presence), said “Covid has expedited the digital journey for many businesses, and it has caught a lot of businesses at the beginning of a journey they should have started 5 years ago.”
While, as Nedbank economist Busisiwe Radebe points out, there will still be a generation (perhaps even 2) of South Africans who prefer physical stores, as the buying power of the Gen Y and Z customers increases, brick and mortar retails stores will likewise continue to fade, making way for the consumers who are used to and comfortable with online purchasing.
She adds that it’s also not enough just to have an online presence, “it’s imperative for it to work, and imperative that it is resilient.”
Planning And Resilience
While the global pandemic spurred many businesses into ecommerce, it also showed up many businesses who already had a going ecommerce component, especially with its impact on the logistics side of things. Increased orders, restrictions, staff availability and more showed themselves in month-long (or longer) delivery times, reduced support capability, and turn-around times that had already tense customers foaming at the mouth.
Logistics is a key consideration for ecommerce even at the best of times, and these have not been the best of times. In response, some companies (particularly in the US) converted some stores into no-client locations, and used them to improve order processing, while others, including here in SA, leaned on an existing brick and mortar infrastructure with expanded “click and collect” options that they hoped would reduce the burden on an already stretched delivery system.
That’s all very well if you have an extensive existing brick and mortar infrastructure, but in the absence of that, ensuring a efficient delivery chain remains one of the most challenging parts of entering the ecommerce sphere.
If you have an existing arrangement with a courier company, many of them offer packages designed to meet a retailers ecommerce needs, but if not, you’ll need ensure that you enter into such an agreement as early as possible in your process. Letting people buy off your site is no good if they can’t receive the products they were purchasing.
The Future of Ecommerce
We’ve already written about how, during the height of the lockdown restrictions, ecommerce in SA boomed. And we’ve also seen how, as restrictions have eased, there has been a decrease in the peaks recorded during April and May 2020.
However, decrease or no, the lockdown forced many South Africans who usually gave no thought to popping out to the shops to reconsider the benefits of online shopping, especially for regular purchases of perishables, (probably one of the least widespread markets online previously), and that’s not a change that will go away.
If you’re not already offering an ecommerce solution to your clients, it’s past time to do so if you’re looking to future-proof your business.