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The South African retail industry has undergone profound change over the past few years, with digital platforms and e-commerce reshaping consumer expectations. However, we are only in the early stages of digital transformation, and SME retailers need to remain agile to keep pace with emerging customer demands and new competitors.
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Steven Heilbron, CEO of Capital Connect, a fintech company that provides fast and flexible business financing to South African retailers, outlined five trends that are changing the retail landscape:
E-commerce giants enter the market
E-commerce continues to reshape South Africa’s retail sector, with a study by World Wide Worx showing online retail sales growing 29% to R71 billion in 2023. The sector is expected to pass the R100 billion mark by 2026. The study noted that growth in grocery delivery services was particularly strong.
The entry of international e-commerce giants such as Amazon, Temu and Shein into the local market is expected to drive rapid growth in the coming years. Small and medium-sized retailers may need to focus on improving in-store experience, leveraging community connections and investing in their own digital commerce offerings to remain competitive.
Last-mile delivery services meet consumers’ expectations for fast fulfillment of fast food and grocery orders. We are now seeing logistics providers and e-commerce companies working together to deliver almost any product on demand. Takealot offers on-demand 60-minute delivery services in select suburbs of Cape Town.
Meanwhile, Shoprite Group’s Checkers Sixty60 now offers same-day delivery of small appliances, homewares, consumer electronics and other goods. The service is currently being trialled in Cape Town. Small and medium-sized retailers need to partner with local delivery services and offer faster delivery options to compete.
Improve automation
Cloud-based platforms and connected devices such as RFID tags and smart shelves allow retailers to automate areas such as inventory management and customer service.
Retailers and merchants are also adopting automated cash handling solutions to streamline processes, reduce errors, mitigate risks, and enhance security.
These solutions typically include cash vaults, ATM reclaimers and integrated point-of-sale (POS) systems that automate tasks such as counting, sorting and depositing cash. Automated cash handling systems can save up to 40% in time and money. Improved automation can reduce costs and increase business efficiency.
Fintech products empower SMEs
Fintech leaders are working closely with retailers to address pain points in areas such as business financing and payment acceptance. For example, they are providing solutions that enable retailers to manage cash and cashless payments in one ecosystem to support customer choice and making it easier for retailers to access lightning-fast opportunity capital through apps so they don’t miss out on retail growth opportunities.
Embrace the omnichannel reality
Today, customers expect a seamless experience across online and offline channels, including consistent pricing, product availability and customer service. Retailers with an omnichannel presence can drive sales by reaching customers across touchpoints such as physical stores, e-commerce platforms, social media and mobile apps.
In addition to physical stores, customers must be offered options such as click-and-collect and home delivery. To succeed in an omnichannel world, retailers need an efficient logistics engine. This may mean partnering with courier service providers or platforms such as MrDFood or Uber Eats, or investing in their own vans or websites.
Thriving in Chaos
“Continued technological change presents retailers with a host of threats and opportunities,” said Heilbron. “They have a number of viable responses, from doubling down on the in-store experience through shoppertainment and promotions to investing in digital platforms and delivery capabilities.”
“Whichever path they choose, they need access to fast, frictionless opportunity capital to implement their growth strategies. With Capital Connect, retailers can apply for an unsecured, short-term loan of up to R5 million through our app, with funds wired to their bank account within 24 hours, so they can capitalise on retail opportunities to outpace their competitors and grow their profits.”
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