What will the next 20 years look like in the SA retail sector? A whole lot more convenient according to industry stakeholders.
Did you know that those FreshStop outlets at local Caltex petrol stations are amongst the fastest-growing retail chains in South Africa?
The concept is increasing its market penetration, according to the brand’s director Joe Boyle, because of one key influencer that’s shaping the future of retail.
Consumers want more convenience
Boyle travelled to Chicago and London in 2017 as a key role-player in the National Association of Convenience Stores (NACS) international judging panel. He helped select winners for the annual NACS Insight International Convenience Retailer of the Year Awards.
According to Boyle, the idea of ‘convenience’ is changing the retail landscape dramatically around the world, with new international concepts such as Amazon Go and drones disrupting the sector.
Related: 6 Trends and the future of South African retail
“These big trends won’t change the industry overnight, but the convenience store of today will not be the same convenience store in 20 years – it has to evolve.”– Joe Boyle, brand director for Fresh Stop
Co-founder and managing director of research and analysis organisation Trade Intelligence, Maryla Masojada says, “We find ourselves in a time where extreme economic pressure and the accelerating rate of technological developments are meaningfully influencing how consumers behave, shifting the demands made on those who supply them.”
Why convenience is on the rise
Economic pressure and advancement in technology contribute to an evolving retail sector. During recent trips to retail conventions in London and Chicago, Boyle said he and his sector constituents discussed the following as key contributors to the growing popularity of convenience outlets:
1. Healthier, convenience foods and drinks gain popularity
Consumers want access to healthier food options, but they want it to be accessible at their fingertips. “They continue to lean towards products that are natural and better-for-you,” Boyle says.
But, healthy eating can mean several things to several different people. Outlets can tailor their convenience offerings based on the type of customer that visits, for example:
- To retirees ‘healthy’ could mean fresh fruit and vegetables
- For Millennials, healthy could mean a low-carb chocolate milk drink.
“When it comes to healthier options, understanding your customers’ needs and getting the correct product mix are crucial,” Boyle explains.
2. More Millennials spending money
“Food is the new rock ‘n roll. It is part of an aspirational lifestyle, but along with it comes the awareness of health, brands, convenience, and range,” Boyle says.
He attributes the power of social media and the influence of peer groups, who are speaking about healthy, ethical and traditional foods, as key influencers of consumer behaviour.
Related: How to provide alternative means of payment for your customers
“As Millennials become more educated and enter the middle class, their disposable income increases and they are the customers of the future. Their demands touch on all aspects of future convenience store retail trends,” he adds.
How leading traditional retailers are evolving in response
Shoprite, Pick ‘n Pay, Checkers and Woolworths outlets are going increasingly move away from selling the ‘bare-necessity’ groceries.
Trade Intelligence reports that in the ongoing race to attract and retain the cherry-picking shopper, retailers will continue to expand their lifestyle services whether in healthcare, nutrition, beauty advisory services, parenting support or in hospitality and banking.
Here are a few other ways retailers are going to evolve:
1. Greater focus on value and experience for customers
It’s expected that price will remain the single biggest factor when choosing a shopping destination, but retailers are responding with innovative in-store experiential tactics to give more value to their shoppers “From loyalty points to cashbacks, and multi-buy-bundles to buy-one-get-one-free promotions, the combinations to consider are immense,” Masojada says.
2. The use of flagship stores to attract modern shoppers
It’s anticipated that leading retailers will launch more flagship stores like Checkers in Ballito (KZN) and Pick ‘n Pay Constantia (Western Cape). To offer further differentiation in the years to come, you can expect Augmented Reality, Virtual Reality, Artificial Intelligence and blockchain technology to transform how these big retailers engage with customers.
Your next logical step towards convenience?
Why not consider delivering to customers that can’t come to the shop? Walmart-owned Makro in South Africa is already looking to offer greater convenience by making queuing to pay a thing of the past in its stores.
The company recently bought a majority stake in a last-mile delivery company named Wumdrop.
Key points on the strategy
- Makro aims to reduce the delivery times within 20 kilometres of its partner shops from three days to three hours. Customers can go browse the store (or online) and ask for their goods to be delivered at home the same day.
- According to Wumdrop founder Simon Hartley, the new acquisition will allow Makro to offer its customers a ‘flexible and anxiety free shopping experience’.
Makro has already rolled out Wumdrop’s on-demand services to 16 stores in Durban, Cape Town, Pretoria and Johannesburg, reporting an average delivery turnaround time of two and half hours.
If you’d like to offer your customers more convenience, why not consider Snapscan, BluMobi or Tap to Pay for your till point? Talk to one of our representatives to learn more or click here for more essential retail sector insights.