Major trends driving the evolution of South African retail

The industry has seen retailers enter new product territories by digitizing their business models and service offerings. These adaptations, believed by many to be temporary measures, became the framework for a new industry.

Now, three years after the pandemic hit, the retail landscape looks very different than it did before. Arguably the biggest driver behind this change was the mainstream and rapid adoption of digital technology.

E-commerce platforms and mobile applications rose to serve consumer needs where brick-and-mortar retailers could not. Contactless, and faceless, exchanges between retailers and their customers became the norm. For over a decade, the steadily increasing pace of digitization has gone into overdrive. And retail was ready to ride the wave.

The rise of payment technology

In the years since the outbreak, South Africans have turned to online and mobile platforms as these have become the most secure solutions to market quickly. Retailers have risen to the challenge by leveraging their technologies for efficient customer service, fast order fulfillment, quick turnaround times and reliable delivery.

Over time, what began as a desire gradually became an expectation as customers became accustomed to this greater level of convenience and wider choice.

Now, South African consumers, like their global counterparts, expect seamless convenience from start to finish. Expect to check in, shop and check out in record time. Fortunately, driven by innovation and hunger to meet the expanding market demand, payment technology startups and developers have helped answer this call.

Technologies such as digital wallets are becoming increasingly popular with South African consumers. Additionally, with the incredible penetration of smartphones, customers are increasingly looking to shop on their mobile phones.

Consumers want flexible payment options and credit plans – something we’ve seen in MobiCredit’s acquisition of RCS, a leading digital credit provider. South Africans are also moving from credit, debit and store cards to virtual cards, and large retailers are investing in the technology.

Retail will return to pre-pandemic performance

Despite several socioeconomic headwinds in South Africa’s retail space, encouraging prospects abound. Overall, the sector is showing strong signs of recovery as store expansion returns to pre-pandemic levels due to a return to brick-and-mortar stores.

As the end of 2022 approaches, retailers are gearing up for the holiday season. Now the sector is consolidating, but not in any way that directly reflects how the sector was operating before the pandemic. Retail has evolved into a realm of omnichannel experiences, with stores reaching their audience across multiple touch points.

For some, this required more cross-industry collaboration. For others, it has gone all out by launching e-commerce and m-commerce platforms as well as mobile applications to support their physical stores.

We are also looking at strategic partnerships with the likes of H&M South Africa and online shopping platform Superbalist. Fashionistas of the H&M brand, previously only able to shop in-store, can now shop for fashion and home accessories online and pay in multiple ways. The future will undoubtedly see more of these alliances as retailers join forces and pool their resources to grow their businesses.

Consumers have embraced their ‘need for speed’

If anything, the pandemic years have taught South African consumers that local retailers have the technological prowess to get things done and done quickly. In the pre-pandemic world, consumers were familiar with a standard supply cycle of three to five days. But apps like Checkers Sixty60 and Mr D have introduced consumers to a new level of speed and convenience.

If consumers want wine and snacks for their dinner party in the evening, they can order those items an hour or two in advance and have them delivered to their home. And so, we’ve seen South Africa’s m-commerce potential reach its next-day mindset just in time.

Following suit with other retailers, they realized that customers could skip queues and avoid the effort of store transfers and enjoy fast, online replenishment and delivery.

Add to this the rapid innovation of personalization technology, as well as artificial intelligence and blockchain technology in the near future – and we have the first shoots of something exciting and achievable for retail.

Put information in the driver’s seat

The opportunity to connect with consumers and create impactful experiences is the holy grail of retail. Information – respectfully tapped and politely presented – is the way to do it. In it are the insights retailers need to tap into customer psychology, understand what drives purchasing behavior and keeps customers coming back. Unlock this level of knowledge and the possibilities are endless.