The trend has started, SA retail brands need to get ahead of it.
It sounds very dramatic, doesn’t it? Well, it should, because it is!
In a recent article published on Business Insider, “thousands of mall-based stores are shutting down in what’s fast becoming one of the biggest waves of retail closures in decades. More than 3,500 stores are expected to close in the next couple of months.” We’re not talking small niche stores, we are talking the likes of JCPenney, Macy’s, Sears, and K-Mart among the companies shutting down stores, as well as chains like Crocs, BCBG, Abercrombie & Fitch, and Guess.
You might read that and think “But that’s US brands, SA is safe”, but let’s be honest, as sure as day follows night, SA follows the US. So take note – it’s coming.
It’s been a tough couple of years economically for South Africa. Consumers have had to tighten their belts and cut down their spending to keep their heads above water. Which means fewer sales for big department stores while their expenses (i.e. rent, infrastructure, merchandise etc) continue to increase year on year. On top of that, consumers are devoting more of their “fun” money to restaurants, travel, and technology, and spending less on apparel and accessories.
So who is going to survive? Brands that have invested in eCommerce that’s who!
According to the article, many retailers are exiting the brick-and-mortar space completely and turning to an online model instead. According to a Bloomberg report, “Bebe is closing all its stores (about 170) to focus on increasing its online sales”. The Limited also recently shut down all 250 of its stores, but it still sells merchandise online.”
Other department giants such as Sears and JCPenney, are diminishing their store counts in an effort to unload unprofitable locations and try to stagnate losses.
The trend has started, what SA brands need to do is get ahead of it.
Food for thought:
- eCommerce already makes up 1% of SA’s GDP – that sounds small, right? But take into account that South African shoppers spent an estimated R28.8 billion online in 2015, and this is expected to rise to nearly R46 billion in 2017, according to PayPal’s global survey conducted by Ipsos on consumer shopping habits.
- PayPal alone has about 600 000 active account users in sub-Saharan Africa, with the bulk of users being South African.
- The rapid penetration of affordable smartphones in SA will be a driving force of eCommerce in SA, breaking down the barriers of lack of Internet access and the cost of broadband.
South African retail giants such as Pick n Pay, Woolworths, and an Edcon Holdings have taken up eCommerce seriously, according to Authur Goldstuck, Managing director of World Wide Worx. Others like Mr Price, Truworths International and The Foschini Group are bolstering their online shopping channels.
What do these brands know that you don’t?
The dawn of eCommerce is upon us; don’t be left behind wondering where it all went wrong!
Need a little help to bolster your own eCommerce strategy? Contact Offerforge.com today.