Why retail may be the saviour of South Africa's economy
Retail sales in South Africa rose 1.4% year-on-year in September 2016 after being flat in August and above market expectations of a 1% increase.
According to moneyweb.co.za this unexpected news bolsters the cautiously optimistic feedback from the recent Beyond Retail conference, hosted annually by UCS Solutions. As global economic woes challenge every sector, a question posed by some in the market is if retail can save the South African economy?
Around up of the top take outs regarding this question vary; however, the overall tone is positive.
The economist’s view:
Director and Chief Economist for Econometrix Dr Azar Jammine said that the outlook was slowly becoming rosy, with retail sales growing 3% this year.
With population expansion in South Africa as well as urbanisation, there is a lot of long-term economic growth potential, he explained, adding that demographic trends should be researched and capitalised on by the retail sector.
While there has been some “doom and gloom” in the economy, there are lots of reasons to be optimistic including the fact that the local drought seems to be over, the electricity supply constraint has eased, inflation has turned out to be lower than expected, petrol prices are falling, interest rate hikes are no longer a certainty.
Big businesses are doing well in South Africa with solid balance sheets, commodity prices have recovered from the January lows and the rand is still very cheap with costs rising at a solid pace – a great opportunity for exports.
The opinion-former’s view:
Times are certainly changing, according to Maryla Masojada, Managing Director for Trade Intelligence.
She told moneyweb.co.za that by focusing on the political, economic, social, technological, legal and environmental factors that affect retail behaviour – more commonly referred to as PESTLE factors – she said that retailers need to start looking at shoppers and their needs as a community. “Food and grocery retailers really understand the reality of what is going on in the country,” she said.
Masojada pointed out that retail can play a significant role in the economy by appealing to the health and well-being of a consumer and bringing them a solution as well as education, awareness and engagement. In fact, retail has the power to change behaviours with plenty of opportunity for collaborative thinking, innovation and sustainability.
The online retailer’s view:
A little bit of curiosity and a lot of passion can take you very far.
CEO of Netflorist, Ryan Bacher, who launched his company as a start up in the 90s, outlined the differences between the South African industry and Silicon Valley, where there is still a lot of potential for the local industry to grow.
Bacher explained that while e-commerce makes up 1% of overall retail locally, it is a space that can be dominated with the right idea and the right strategy, contributing to the economy and its survival.
The retailer’s view:
Retail can certainly save the economy, says www.moneyweb.co.za
This was the conclusion by two retailers – David North, Group Executive: Strategy and Corporate Affairs, Pick `n Pay and Jacques de Kock, Head of Supply Chain, Clicks Group.
By focusing on highly advanced products that already exist in South Africa, including personalised promotions to inspire customer loyalty, the self-service checkout and the power of private label products, the two showed just how optimistic the industry is looking.
North pointed out that government also needs to embrace retail as an engine of growth, focusing on its contribution to the economy through collaboration, innovation and job creation.
“As we fast approach the Christmas retail season and enter into 2017, it is apparent that this sector is one to watch in the global drive towards sustained recovery,” says Mark Belcher, Senior Executive at UCS Solutions.
He adds, “What is clearly evident is how much potential there is in the sector, which needs to be harnessed strategically. The next year is going to be an important one as retailers rise to the challenge.”