INTRODUCTION BUILDING RETURN ON INVESTMENT · The Times/Sowetan Retail Awards are undertaken in partnership with TNS South Africa A TOTAL OF 2 750adults aged 18 years and older were

Sunday Times Combined Metros 1 - 2014/10/17 01:19:04 PM - Plate:

Retail

Survey

2014

INTRODUCTION

THE RESEARCH

BUILDING RETURNON INVESTMENTTimes Media’s RetailAwards Survey helpsclients to maximisetheir advertising rands

Alf James

THE ANNUAL The Times/SowetanRetail Awards Survey continues in-to its seventh year and maintains ahighly credible platform in theSouth African marketing arena,providing a representative snap-shot across 20 retail categories.

“We invest into the Retail Shop-per Survey’s market research inorder to give back to the sector,which represents an important seg-ment of our advertisers,” s aysTrevor Ormerod, general manager:group sales for Times Media. “Ourresearch is taken very seriously byretailers, as it’s among the mostpre-eminent retail surveys in thecountry.

“The results and awards of thesurvey are handed out in one-on-one presentations, which allow theretailers to gain a strategic un-derstanding from user, non-userand relative-advantage perspec-tives. The one-on-one presenta-tions also allow us to develop ourrelationships with Times Media’sretail-sector clients and share in-sights, which helps us to offer themdiagnostic advertising opportuni-ties that are specifically aligned totheir goals and strategies,” s aysOrmerod.

This year’s The Times/SowetanRetail Awards continues within thesame framework and methodologyof last year – based on the conceptof relative advantage.

Ormerod explains that the win-ning index score is calculated byusing a retailer’s relative advan-tage on the delivery scale com-pared to ratings within a category,and is finally derived from the ac-tual usage of a retailer in a specifiedtime period; the rating it receivesfrom its users relative to others inthe category; and the rating it re-ceives from those non-users awareof it, also relative to competitors inthe category.

The strength of competitors mustbe taken into account in any as-sessment of a retailer’s relativea dva n t ag e .

Similarly, by looking at the non-user ratings, some idea of a re-tailer’s relative “att r a c t i o n ” amongnon-users is gained, which is a goodindication of its relative ability toattract new users.

Ormerod says this year’s awardstake place in a challenging retailenvironment in which many con-sumers are finding it difficult tomake ends meet as living costsincrease, wage growth is arrested,job creation stalls, and debt con-tinues to mount.

“The increases in costs have

knocked the consumer, who hasless disposable income, which hasresulted in tight trading conditionsfor the retailer.”

However, he states that, accord-ing to the recent Deloitte 2014 Glob-al Powers of Retailing report, de-spite increased economic pres-sures and rising inflation costs, theSouth African retail industry per-formance figures remain largely incheck with international retail per-formance trends.

Ormerod says the Deloitte re-port, which unpacks the mechanicsof the South African retail industry,reveals that five of South Africa’stop retailers featured on the list ofthe world’s 250 largest retailers,contributing an estimated total of$4.3 trillion into global retail rev-enues measured from June 2012 toJune 2013.

The listed South African Retail-

According to the report, growthof local retail sales revenue will beseverely hindered by the followingeconomic constraints: low con-sumer confidence; higher interestrates and fuel prices; unfavourableeconomic indicators, such as GDP,CPI, PPI; and weakening randva l u e .

“This puts inflationary pressureon consumer goods, furtherstretching the reach of the con-su m e r ’s purchasing power. Localretailers have the difficult task ofadapting marketing strategies tothe fast-changing economic condi-tions,” says Deloitte.

However, Ormerod says the Re-tail Awards Survey assists TimesMedia to work as tactically andstrategically as possible, togetherwith clients, to maximise every ad-vertising rand they spend with thenewspapers, taking into consider-ation that they are working withtight advertising budgets in a chal-lenging retail environment.

He says Times Media is focusedon building return on investment(ROI) for its retail clients that isbased on sound research, strategyand learning from the Retail Shop-per Survey, which also confirmst h at :ý Newspapers are used extensive-

ly by consumers when lookingfor special deals, especially forgroceries, furniture, appliances,clothing, cellphones and jew-ellery, among other retailproducts;

ý Many newspaper inserts per-suade consumers to try outstores they don't usuallyfrequent;

ý Eight in 10 readers find news-paper advertising either veryrelevant or relevant;

ý Eight in 10 readers look at adsand inserts, while one in threetake them with them on theirshopping trips; and

ý Newspaper inserts provide val-ue to shoppers, are the mostconvenient for shoppers to use,and contain advertising thatshoppers look forward to most.

THE METHODOLOGYThe Times/Sowetan Retail Awards are undertakenin partnership with TNS South Africa

A TOTAL OF 2 750 adults aged 18years and older were interviewed –2 000 in the metropolitan areas and750 in non-metropolitan areas ofSouth Africa.

The final results have beenweighted to represent the popu-lation according to StatsSA 2013mid-year population estimates.

The survey uses three questionsto determine a retailer’s relativeadvantage against competitors:1. Retailer used within a defined

time period (this period differedfor each category).

2. Retailers with which people

were familiar enough to rate ona 10-point scale.

3. The actual rating of all thoseretailers on a 10-point scale.These provide an understanding

of the retailer’s penetration in themarket, while also examining itsrelative strength among its usersand its relative attraction amongnon-users. An index score for eachretailer is derived from these ques-tions and takes into account theactual usage of a retailer in a spec-ified time period, the rating it re-ceives from its users relative toothers in the category, and the

rating it receives from those non-users aware of it, also relative tocompetitors in the category. Thenon-user rating carries only halfthe weight of the user rating in thefinal algorithm. A winner occurs inone of three situations:1. If it is big AND rated above

average by both its users and itsnon-users.

2. If it is truly big but perhaps onlyrated as average by its usersand non-users.

3. It is smaller but very well lovedby its users and is strongly as-pired to by its non-users.

– Shirley Jeoffreys, innovationpartner, TNS South Africa

“The results allowthe retailers to

gain a strategicunderstanding fromuser, non-user andrelative-advantage

perspectives”

ers are Shoprite, which ranked in94th position; Steinhoff Interna-tional Holdings (otherwise knownas the JD group) in 125th position;Pick n Pay in 137th position; SparGroup in 172nd position; and Wool-worths entering at 234th.

Furthermore, the Deloitte reportsays inspection into annual salesfigures indicated promising growthyields when compared to developedmarkets. The seven African andMiddle Eastern companies (ofwhich South Africa accounts forthe above five) listed revenuegrowth of 13.5% and net profit mar-gins of 4.4%, when compared to the4.9% revenue growth and 3.1% netprofit margins of developed mar-ke t s .

Pic

: Ray

mon

d P

rest

on, S

unda

y T

imes

4 / Shoprite’slow-price promise

5 / A good yearfor Clicks

6 / All the winners



3TRENDS

ALL UNDERONE ROOF

Consumer conveniencedrives diversification formajor grocery retailersAlf James

THE EXPANSION into diverseproduct segments by big groceryretailers is paying off, with thosethat have diversified taking tophonours in multiple categories inthe Retail Shopper Survey.

This would indicate a demandamong consumers for greater con-venience in retail, evidence sup-ported by Mark Robinson, groupliquor manager at the Spar Group,who says the diversification ofSpar and Tops at Spar has cer-tainly played a role in the group’ssuccess, as it has brought con-sumers a more complete offering.

“This is reflected in the rulegoverning a Spar owner having aTops at Spar store: the Tops atSpar store should preferably belocated next to the Spar, in thesame centre or, worst-case sce-nario, within ‘line of sight’ of theSpar store, which enables our con-sumers to shop at both stores withmaximum convenience.

“There is definitely a demandfrom our consumers for greater‘ease of shop’ with improved con-venience, so, besides offering theranges that a Kwikspar, Spar orSuperspar does, with a Tops atSpar situated close by, consumershave a full liquor offering as well,”says Robinson.

According to Neil Schreuder,marketing director at ShopriteCheckers, being able to do morethan just grocery shopping at asupermarket is not only very con-venient for shoppers, but alsosaves them money, and ultimately

drives customer loyalty for thesu p e r m a r ke t .

“With fuel prices skyrocketing,it becomes very expensive for con-sumers to do multiple trips foreverything they need – by offeringdifferent product and service seg-ments under the same roof thatconsumers do their grocery shop-ping, we are able to save themmoney and time.”

Furthermore, Schreuder saysexpanding Shoprite Checkers’business into diverse consumersegments required relatively lowinvestment, since the retailer al-ready had the infrastructure andback-end to be able to seamlesslyincorporate the various segmentsinto their supermarket stores.

He says Shoprite has done wellin sectors that have not been itscore business, such as small ap-pliances, specialist entertainmentand Medi-Rite in-store pharma-cies.

“We ’ve managed to attract newcustomers who would not ordi-narily have come to us for theirspecific needs. In the process,we ’ve managed to convert some ofthose customers into becomingloyal grocery shoppers. We’re al-so offering our existing grocery

shopper access to these productcategories and services at a lowercost, which again benefits our cus-tomer loyalty,” says Schreuder.

The expansion by South Africansupermarkets into diverse con-sumer segments is a reflection ofan international trend, which hasalready been evident in the UK forsome time.

According to Key Note Publica-tions’ Supermarket Services 2013report, over the past couple ofdecades, UK supermarkets havebeen expanding and diversifyingtheir activities, with many now of-fering a wide range of services,such as financial products, utilities,restaurants and catering facilities,telecommunications and Internetservices, health products and phar-macies, and a number of miscel-laneous services, such as digitalentertainment portals, drycleaning

and automotive services.The report says there has re-

cently been a push by many of themajor multiple retailers to expandwithin the financial services sec-tor. For example, both Tesco andMarks & Spencer (M&S) em-barked on significant expansionplans for their respective bankingbusinesses, with Tesco launchingmortgage products for the firsttime during August 2012, and M&Sannouncing plans to introduce achain of 50 in-store banking

branches in some of its largershops across the UK over the nexttwo years.

More recently, Sainsbury's an-nounced that it had taken fullcontrol of its financial business,Sainsbury’s Bank, after revealingthat it had acquired the remaining50% share of the business fromoriginal partner Lloyds BankingGroup.

Other service sectors, such ashealth and pharmacy, have alsoobserved significant growth in re-cent years, with several of theleading supermarket retailersnow operating a range of in-storefacilities. Sainsbury’s, for exam-ple, which now runs a chain of 270in-store pharmacies, has recentlydeveloped a new general prac-titioner (GP) surgery programme,with the retailer now hostingaround 35 in-store NationalHealth Service (NHS) GP ornurse-led practices, as well as 12dental surgeries, while The Co-operative Group manages thethird-largest chain of pharmaciesin the UK, comprising around 781outlets.

More recent market trends haveseen supermarkets expand intoareas such as digital entertain-ment, with both Sainsbury’s andTesco launching new on-demandvideo streaming services online.

The Supermarket Services 2013report predicts that the future islikely to see a renewed emphasison the development of larger su-permarket outlets as “retail des-t i n at i o n s ”, which offer a range ofin-store services such as bankingbranches, restaurants and gro-cery shopping, and have been de-signed to encourage shoppers tospend more time in-store.

“We’ve managedto attract new

customers whowould not ordinarilyhave come to us for

their specific needs”

Neil Schreuder, marketingdirector at Shoprite Checkers


Retail

Survey

2014

4

GRAND PRIX

AN AFRICANSUCCESS STORY

QUICK FACTS

ANALYSIS

SATISFACTION GUARANTEEDCustomer experience makes for winning retailLinda Doke

IT WAS AMERICAN business mag-nate Warren Buffett, the most suc-cessful investor of the 20th century,who observed that it takes 20 yearsto build a reputation and just fiveminutes to ruin it. He wisely addedthat if one thinks about that, one willdo things differently.

This may be true of personal rep-utation, and in commerce, but it’s nodifferent for companies in the retailsector. Positive customer experienceis integral to success in the retailsector. A negative retail experience,no matter how small or simple thehappening may be, has the power toruin a person’s opinion of an outletforever and, worse still, have thatperson spreading the negativity farand wide.

And let’s face it, bad news goesviral faster than good news.

In retail, a brand’s reputation iseverything. Retailers place enor-mous value on being aware of whattranspires when the shopper inter-acts with their brand, and on ways inwhich they can continuously meetc u st o m e r s ’ expectations and en-hance the shopping journey.

BMI Research mystery shoppingand quality assurance manager San-dra Steenkamp says retailers need tocontinuously adapt and evolve inorder to meet the ever-changing ex-pectations of customers and to drivebrand loyalty.

“Customer experience is com-pellingly influenced by the stan-dards with which expectations are

met, and centres around product,quality, pricing, range and availabil-ity, service levels including staff at-titude, professionalism and productknowledge, and the store environ-ment – the look, feel and atmosphereof the store,” says Steenkamp.

Also key to the shopping expe-rience are factors such as conve-nience, ease of shopping, and ac-cessibility to information that assistswith buying decisions.

Steenkamp adds that mobility hasbeen a central player in successfulretail.

friendly and helpful is a huge steptowards achieving customer good-will.

“Shop floor design is vital – sp a c eis a merchandising Achilles for re-tailers. The luxury of spacious aislesmay be expensive in terms of area,but, if laid out properly, they’reworth every valuable metre.”

Mackay believes South African re-tailers can learn a lot from big-namecompanies internationally that areimplementing experiential brand-ing, an innovative process by whichbrands create and drive sensory in-teractions with consumers to emo-tionally influence shoppers’ prefer -ences and actively shape their per-ceptions of the brand. Such inter-actions involve communication ofthe overall message, brand space,and intricacies of product and ser-vice elements.

He maintains that customers arehugely influenced by their experi-ence in-store.

“The more powerful the experi-ence for the consumer, the strongerthe brand impression. This in turnaffects customer satisfaction andbrand loyalty,” says Mackay.

US retailer Abercrombie & Fitch,for example, uses all of the senses tocreate a retail experience specifi-cally designed to appeal to a selecttarget market – signature cologne isreleased into the air, lighting isdimmed and heavy-beat musicplayed to simulate a nightclub feel.

Craig Perry, head of sales at DMX

Africa, believes times have changedfor retailers because consumers nowexpect a lot more than a ho-mogenised shopping experience.

“Factors such as best pricing orbest selection are no longer enoughto differentiate the offering for con-sumers. It’s now essential to buildstronger connections with cus-tomers – if you are not able to createa reason for them to come into yourstore, they’ll simply purchase theproduct elsewhere or online.”

Perry says experiential designgives consumers an interaction theycannot get online; it is the inte-gration of every aspect of the cus-tomer experience, with each elementworking together to convey yourdistinct brand personality and en-hance your brand strategy.

“It’s about engaging the customer,enhancing their experience over andabove the product you’re selling, theknowledge of your staff, the look ofyour store. It’s about the visual im-pact, the sound, the scent, the am-bience of the environment. Each ofthese factors on their own may notbeing compelling enough or excep-tional, but combined they form aunique experience that is far moreimpactful, and resonates with themarket you’re targeting,” s aysPerry.

Michaela Murning, head of retailand shopper at TNS South Africa,considers that the philosophy ofhigh-touch and low-touch retailingalso plays a substantial role in suc-cessful retailing.

“High-touch retail is about cus-

tomer service. Shoppers love atten-tion and being made to feel special –cosmetic stores and cosmetic sec-tions within department stores aregreat examples, as is the growth ofcustomer loyalty programmes,” s aysMurning.

Another type of high-touch retailis the branded coffee shop within alarger store, such as WoolworthsCafé, and the standalone sushi andfood outlets within Food Lovers’Market. These help to make shop-ping less functional and more of amultifaceted experience.

“Good customer service, however,escalates labour costs – you cannotcut labour costs and still promisegreat service,” points out Murning.

The low-touch retail model focus-es on providing product value for thecustomer. Good examples includeGame, and quick-service foodrestaurants such as McDonald’s,KFC, Nando’s and Steers.

Murning observes that low-touchretail is very successful in SouthAfrica, as price value plays a strongrole in consumer decision.

“Game and Makro are the two newentries to the Grand Prix categorythis year, both of them extensiveusers of the low-touch retail model.”

All industry players know thatcreating a positive shopping expe-rience for customers is crucial forretail success. Not only do thesetranslate into repeat business andgreater brand loyalty, but also leadto higher customer expectations.That way, the retail wheel keepsturning …

IT’S A LOW-PRICE PROMISE

Shoprite Holdings enjoys a 34%market share in South Africa’sformal food retail sector

“Factors such asbest pricing or best

selection are nolonger enough todifferentiate the

offering forconsumers”

“Retailers have to think innova-tively to keep abreast of competitors.Key drivers of satisfaction fluctuatewith time, and retailers need to becognisant of these by listening to thec u st o m e r . ”

Customer experience is one of thebiggest drivers of brand choice. SaysYellowwood marketing manager Al-istair Mackay: “The essentials haveto be covered. Firstly, the humanaspect is crucial – training staff to be

Gaye Crossley

SHOPRITE HOLDINGS, it seems, can do nowrong in the eyes of the public, yet againtaking top spot in the Grand Prix category inThe Times/Sowetan Retail Awards 2014. Theretailer also came in second in the HouseholdAppliance category and third in the SpecialistEntertainment category. FurthermoreMediRite, Shoprite’s in-store pharmacy brand,moved into second place, ahead of Dis-Chem, inthe Specialist Pharmaceutical Outlets cate-gory, which was won by Clicks.

Understanding the key to Shoprite’s successis simple, believes Neil Schreuder, marketingdirector of Shoprite Checkers. He says: “Con -sumers like the simplicity of the brand andwhat it promises customers, and the fact thatwe manage to consistently deliver on our core,low-price promise.”

Affordable pricing is a major drawcard forSouth Africans consumers, who are feeling thepinch in a sluggish local economy. Schreudersays: “Offering customers the lowest prices ismore than just a marketing strap-line; it trulyis our mantra as a business. As a brand we’vemanaged to assist customers by providing thelowest possible prices on basic food items,satisfying a basic consumer need.”

In the past year alone, says Schreuder,Shoprite has subsidised the price of 329 tons ofsugar; 8.7 million loaves of bread; 2.2 millionlitres of cooking oil; 2.6 million litres of milk;700 tons of maize and 1.675 tons of rice.

Shoprite is also able to tailor its consumerexperience within the various grocery storebrands in the group’s portfolio. The Shopritebrand, for example, targets shoppers in theLSM 4-7 band, Checkers is aimed at moreaffluent LSM 8 -10 shoppers, and USave is thegroup’s no-frills discount store for LSM 1-5.Shoprite Holdings’ other brands include:Checkers Hyper, OK Furniture, OK Franchise,OK, House and Home, Checkers, CheckersHyper Liquor Shop, Shoprite Liquor Shop,Hungry Lion, MediRite and TransPharm, the

group’s pharmaceutical wholesalers.Currently Shoprite Holdings enjoys a 34%

market share in South Africa’s formal foodretail sector, says Schreuder, and the group asa whole serves 22 million people, or 58% of thecountry’s adults. Even so, 2014 has seen theretailer work hard to secure an even greaterretail share. Schreuder notes: “Market share isobviously a key metric for any business in anyindustry, since it’s a reflection of your successrelative to competitors.” But it is about morethan just succeeding against the competition;market share is pivotal to the retailer’s strat-egy to continue to be “the low-price champion”.By boosting the group’s bargaining power, itallows it to pass even greater savings onto thec o n su m e r .

Increasingly Shoprite is also focused onenticing customers with a one-stop-shop ex-perience. In-store ranges such as householdappliances and entertainment lines, togetherwith the MediRite pharmacies and Liquor-Shop outlets, have been designed to ensurethat customers do not have to shop-hop inorder to cross items off their shopping lists.The group has even incorporated Computick-et booths and a Money Market concept –which allows customers to make moneytransfers and pay for transport tickets andutility bills in-store – into its outlets.Schreuder believes these conveniences,which save customers time and money, willultimately drive increased customer loyalty.And this loyalty is certainly reflected in theresults of the Retail Awards in 2014.

“We see these awards as vote of confidencefrom our shoppers, which suggests that wemust be doing something right, and it serves asmotivation to keep on delivering on ourpromise to our customers,” concludesSchreuder.

ý 1 948 stores in 17 African countries,241 outside South Africa

ý 1 046 supermarkets, 169 outsideSouth Africa

ý Expected 2014 turnover: R102.2 billioný 2014 expected earnings before interest,

taxation, depreciation and amortisation:R8.7 billion

ý Ranked as the 94th-largest retailerglobally in Deloitte’s Global Powers ofRetailing 2014 survey.

SHOPRITE has succeeded in Africa,where many of its competitors have failed.To date the company has 241 stores be-yond South Africa’s borders.

Marketing director of Shoprite Check-ers, Neil Schreuder, attributes the group’ssuccess on the continent to first-moveradvantage. “We opened our first storeoutside South Africa in Zambia in 1995,which was well before any of our com-petitors ventured there. This allowed usto cut our teeth at a time when mostAfrican countries were still a lot lessdeveloped infrastructure-wise.”

Timing may have benefited Shoprite,but so has a model suited to the Africanconsumer, with the group’s brand

promise of keeping food pricing as low aspossible resonating with customers.Schreuder also believes the group’s cor-porate culture is suited to the Africanenvironment. “Shoprite has a team ofpeople with an appetite for risk that doesnot shy away from challenges,” he says.

Shoprite stores can now be found inAngola, Botswana, the Democratic Re-public of Congo, Ghana, Lesotho, Mada-gascar, Malawi, Mauritius, Mozambique,Namibia, Nigeria, Swaziland, Tanzania,Uganda, Zambia and Zimbabwe. Expan-sion in these countries has helped to boostthe group’s 2014 turnover by 9.7%, evenwith a slowdown in the South Africanm a r ke t .


5PROFILE

A PRETTY GOOD YEARClicks has performed well in all sectors in which it is active

Linda Doke

THE CLICKS BRAND in SouthAfrica is huge. Whether they’veshopped in the store or not, prac-tically every South African over theage of 18 knows of it, and is likely tohave at least been into one of itsmore than 440 stores around thecountry.

Referring to itself as the brandthat “speaks to those who appre-ciate value for money, and solidpharmaceutical and health ad-vice… and care about the way theylook, feel and live”, Clicks appealsto a wide range of South Africansfrom all income levels.

More than just a health and beau-ty retailer, Clicks is prominent inthe pharmaceutical sector, and hasa significant presence in the house-hold appliance category of retail.

TNS Global innovation partnerShirley Jeoffreys says the retailerperformed well in every sector inwhich it is active. Not only did thebrand win the Specialist Health andBeauty category yet again, but itsignificantly increased its marginon Dis-Chem nationally and from ametro perspective.

Similarly, the results show Clicksdominates the pharmaceutical cat-egory, extending its lead over com-petitors Medi-Rite and Dis-Chemeven more convincingly than inprevious years.

The news is also good for theretailer in the household appliancesector, which sees the brand shift-ing up from fifth position last yearinto third place behind Shopriteand Game.

Clicks also climbed in the RetailGrand Prix ranks, moving up fromfourth to third, not far behind Pickn Pay, but still at least nine indexpoints behind outright leaderS h op r i t e .

Jeoffreys points out that Clicksperformed well on both its user andnon-user ratings, showing that notonly is the brand popular amongClicks shoppers, but that the brandalso rates highly in the perceptionof consumers who do not shop atthe retailer.

“Cu st o m e r s ’ experience ratingsof the Clicks brand have increasedsignificantly this year. A score over9 is phenomenal; it’s seldom seen.”

Jeoffreys maintains that one ofthe reasons for the retailer’s out-standing performance is its abilityto continue to appeal to consumersthrough tough economic times.

“The economic dip in SouthAfrica this past year has put shop-pers under pressure. Clicks hasplayed into this very well, creatingan opportunity in its householdappliance department for lower-value assets for the home, such asaffordable crockery, kitchenwareand electrical products,” s aysJeoffreys. Clicks Group LimitedCEO David Kneale attributes thec o mp a ny ’s success to its offering ofconsistent value through good ev-eryday prices, great monthly pro-motions, and the most generousrewards programme of any majorretailer in South Africa.

“Customers don’t want to have tosacrifice quality to have value. Con-sistent value is crucial for success-ful retail – it’s all about earningc u st o m e r s ’ trust. Trust is partic-ularly important for a health andbeauty retailer – people need to be

able to rely on the quality ofmedicines, skincare and baby prod-ucts.”

Kneale explains how Clicks man-ages to retain customers throughdifficult economic times, withoutthem feeling too cash-strapped tos h op .

“Over the past year we’vestepped up the level of productpromotion by introducing the con-cept of pay-day savings, in whichwe offer particularly big discountson everyday products for one weekover month-end. We’re also the pi-oneer in South Africa of the three-

for-the-price-of-two concept, en-abling shoppers to buy in bulk, yets ave . ”

Kneale believes continued in-vestment in the customer expe-rience is another aspect thatshould never be compromised. Inthe past year Clicks has spentsome R150 million on new storesand refurbishing current stores sothey continue to look bright, mod-ern, uncluttered and well present-ed.

Staff training plays a large role inthe retailer’s ability to pay atten-tion to its customers.

“Knowledgeable and helpful staffwho are visible and friendly to thecustomer is essential. Getting thebasics right is fundamental – theclassic saying is true: retail is aboutdetail,” says Kneale.

Innovation plays a key role in thebrand’s continued success. Playinga prominent role across severalretail categories calls for carefulfocus, to ensure 100% attention andenergy is given to each sector.

“Our core business is health,beauty and wellness. Yet within ourhousehold appliances division weensure that our buying team seeksout innovation, not only in product,but in presenting those products tocustomers in ways that are ap-pealing and affordable.”

Kneale and his managementteam clearly have their finger onthe pulse of South African retail.What success in this game boilsdown to, says Kneale, is simple: youeither delight your customers oryou go out of business.

“Getting the basics right is fundamental – theclassic saying is true: retail is about detail”

Pic

: Kat

her

ine

Mui

ck, S

unda

y T

imes


GROCERY STORES

CHILDREN’S AND

BABY CLOTHING STORES

HOME ACCESSORIES

AND DÉCOR STORES

LIQUOR STORESHOUSEHOLD APPLIANCE STORES JEWELLERY STORES

MEN’S CLOTHING STORES ONLINE STORES SHOE STORES

GRAND PRIX

RETAILERSWITH THEADVANTAGE

6

As voted by savvy South Africanshoppers, these are the ...


SPECIALIST HEALTH, BEAUTY

AND FRAGRANCE OUTLETS

SPECIALIST PHARMACEUTICAL

OUTLETS

SPECIALIST HARDWARE

OR BUILDING STORES

SPECIALIST SPORTS

AND OUTDOOR STORES TELECOMMUNICATION STORES

TYRE AND AUTO FITMENT CENTRES WOMEN’S CLOTHING STORESWHOLESALERS

SPECIALIST ENTERTAINMENT STORES

SPECIALIST FURNITURE STORES

SPECIALIST ELECTRONICS,

COMPUTER AND GADGET STORES Retail

Survey

2014

7


Retail

Survey

2014

8

INTERVIEW

LIVING BYITS VALUES

IN AN INCREASINGLY c o mp e t -itive world, people forget there is awar going on in every sector ofbusiness, and none more so than inretail. All retailers are constantlylooking beyond their core businessmodels to gain competitive advan-tage. They are doing this by con-tinually investing in the future, andnever stopping in their efforts tobetter understand the complex andcontinually changing shopper be-havioural patterns.

One of the key challenges forretailers, as summed up earlier thisyear by Interbrand Group CEO JezFrampton, is: “Adapting retail for-mats to accommodate the shift inconsumer preferences for e-com-merce is proving to be the key tosuccess for many retailers world-wide. Retail brands must be moreagile, flexible and responsive thanever before.”

This is what Woolworths groupCEO Ian Moir had to say:

JEREMY SAMPSON: WHATARE YOU SEEING AS THEMAIN TRENDS AMONG YOURCONSUMERS IN SOUTHA F R I CA ?Ian Moir: Woolworths customershave always been very loyal, and sofar we have been relatively insu-lated from some difficult economictimes because our LSM tends to bemore resilient, even when the goinggets tough.

Our customers expect a lot fromWoolworths, both in terms of prod-uct and the story behind it. At thesame time as our customers wantto see increased choice, quality andfashionability, for instance, they al-so want to know where their foodcomes from, what we are doing tocreate a more sustainable SouthAfrica and which chemicals we useto dye our jeans.

I’d like to think we live up to theirexpectations by being world-classin what we offer our customers andt h at ’s why they stay loyal.

This has been a good year for thecompany, with us winning SouthAfrica’s top reputation and cus-tomer service awards, so while weare always improving, we must bedoing something right.

I RECALL A CEO OF ANOTHERTOP RETAILER TELLING ME,SOME YEARS AGO, A SALELOST TODAY IS A SALE LOSTFOREVER. IS THAT STILLT RU E ?Absolutely. Every sale counts andwe try hard to keep every customercoming back for more.

Our customer loyalty pro-gramme remains the jewel in ourcrown. Right now we can trackmore than 70% of our sales and wecan target our communications tocustomers to make sure we aregiving them what they want, whenthey want it. It also means that themore you shop with Woolworths,the more you are rewarded, and weare seeing the results of this withour customers shopping more, andmore frequently.

Customers make decisions everyday about where to shop, and everyvisit to one of our stores, everyemail, every sms and every mar-keting campaign is crucial in com-municating and reinforcing theWoolworths difference.

THE INTERSECTION OFPHYSICAL RETAIL VS DIGITAL:IS IT REALLY THAT CRUCIALL O CA L LY ?This is a crucial area for Wool-worths and we are committed tobecoming South Africa’s foremostomnichannel retailer. We’ve invest-ed in this platform for the long termand are starting to see that strategybear fruit – for instance, we wererecently voted in the top three on-line retailers in South Africa.

I think we are well positioned tosecure market share as more of ourcustomers experience the conve-nience of online shopping andSouth African bandwidth increas-es. We are also lucky to have valu-able skill-sharing with our Aus-tralian businesses such as theCountry Road group, which re-

mains ahead of the Australian mar-ket in online sales.

YOU HAVE BUILTTREMENDOUS LOYALTY, EVENAFFECTION, FOR THE“WO O L I E S ” BRAND. WHAT ISTHE KEY?Woolworths is an amazing brand,and we are lucky to occupy such aspecial place in the hearts andminds of South Africans. I thinkpeople see that we live by ourvalues, such as quality and style,integrity, sustainability, and an un-wavering passion to serve our cus-tomers and delight them in ev-erything we do.

Customers feel this and expe-rience it every day, and that’s thedifference.

HOW DO YOU VIEW THEPOTENTIAL CHALLENGE/OPPORTUNITY IN AFRICA FORWO O LWO RT H S ?We see our expansion into sub-Saharan Africa as a huge growthopportunity for Woolworths. We’veexpanded significantly over thepast few years and we currentlyhave 63 stores in 13 African coun-tries, as well as buying back manyof our franchise stores in Botswana,Namibia, Ghana and other Africancountries. Some of the best growthper store is in our African stores,and East Africa is a significantgrowth opportunity for us, withstrong performances in Kenya andTa n z a n i a .

At the moment we’re expanding incountries where we have an existingpresence on the ground. This worksfor us, as we have already expe-rienced and ironed out the teethingproblems in these countries. Wewant to give all of our customers thesame fantastic Woolies experience,so we have done a lot of work on thatin African countries to make sure wedon’t disappoint.

A MEGA INVESTMENT INAUSTRALIA WITH THEACQUISITION OF DAVIDJONES – WHAT ARE THE MAINDIFFERENCES BETWEEN THEAUSTRALIAN AND SOUTHAFRICAN MARKETPLACES?David Jones and Woolworths are anatural fit: we appeal to the samehigh-end customers in both mar-kets and have shared values.

Australia is a more advanced andcompetitive retail environment insome ways, but fortunately we havea long and successful history in thatmarket with our Country Road,Trenery, Witchery and Mimcobrands. This was a huge advantagefor us, as when we acquired DavidJones, we had the local knowledgeand expertise to call on.

South Africa is such an excitingmarket, as we are seeing an ever-growing middle class with increas-ing disposable income. This hasbeen particularly beneficial to ourgroup when you look at the stellarsales of our Australian brands inthe South African market, whichhave allowed our customers tocross-shop to a much greater ex-tent than they otherwise mighthave done.

Each country has unique oppor-tunities, risks and tastes – andwh at ’s great for our group is thatwe are now perfectly positioned togrow market share in both, andprotect against incoming NorthernHemisphere retailers by leveragingour combined buying power, designcapabilities and management ex-pertise.

WHAT KEEPS YOU AWAKEAT NIGHT?Complacency. I think most retail-ers tend to be “wo r r i e r s ”, and I amno exception. I am passionate aboutmaking this business the absolutebest it can be, and you can neverrest on your laurels.

Right now I’m focusing on in-tegrating the David Jones businessand realising the benefits of scalewe get from being one of the biggestretailers in the Southern Hemi-sphere, while making sure wemaintain business as usual. Theopportunities are huge.

YOU HAVE MADE A COUPLEOF HIGH-PROFILEAPPOINTMENTS FROMMARKS & SPENCER, AND UKRETAIL GURU SIR STUARTROSE HAS JOINED YOURBOARD. IS THIS SIGNALLINGCLOSER TIES WITH M&S?We ’ve always had close ties withMarks & Spencer. We share thesame customer profile and we op-erate in different territories, whichhelps us to share insights on prod-ucts and trends without being com-petitive. It works well for both busi-nesses. Stuart is a very experi-enced and seasoned retailer, withmany years at the helm of Marks &Spencer. He really understands ourbusiness and he makes a verymeaningful contribution to theWoolworths Holdings Board –we ’re lucky to have him!

WOOLWORTHS SEEMS TO MEALMOST TARGETED BY CON-S U M E R / R E L I G I O US / C U LT U RA LGROUPS FROM TIME TO TIME.HOW DO YOU FEEL ABOUTT H AT ?We have a huge responsibility as acompany and a corporate citizen tolive up to the Woolworths values Ispoke about earlier. Our customersrightly hold us to those and careabout how we do business. I thinkattracting attention is the naturalconsequence of being a successfuland high-profile company in anymarket, and we encourage openand honest debate with all of ourst a ke h o l d e r s .

With the advent of social media

and increasing amounts of con-sumer activism, I think all retailersare facing increased scrutiny, andsometimes outlandish allegations.Campaigners are savvy about pub-licising their work, and they knowwe will always do our best to an-swer their questions and concerns,so sometimes they will give us aharder time than our competitors,but we don’t mind that.

We know we are the leader inmany areas that matter to our cus-tomers, such as organic farming,economic development and cuttingthe amount of GMO in our foodproducts, so we are happy to havethose conversations and try alwaysto engage in a constructive manner.We are very public about the im-portance of our Good BusinessJourney to creating a more sus-tainable South Africa, and we areextremely proud of the work of theWoolworths Trust and the charitiesit supports.

We can’t please everybody, butwe always listen to our customersand they, in turn, rely on us to dothe right thing.

WOOLWORTHS HAS A STRONGRECORD FOR SUPPORTINGART AND DESIGN – HOW DOESTHAT BENEFIT THE GROUP?We get a lot of talent into thebusiness through our support forart and design. We sponsor DesignIndaba, for instance, where we’vemet talented designers who end upworking with us for many years.It’s where we met the Italian de-signer Massimo Vignelli, whoworked on our brand refresh,which has been very successful. Ithas helped to position us as a mod-ern and contemporary retail brand,and is our way of contributing to avibrant design economy.

We have also employed some ofthe fashion designers who haveworked with us through our col-laboration with design students atthe Cape Peninsula University ofTechnology and Kingston Univer-sity in the UK.

Design and innovation is abso-lutely central to the Woolworthsbrand and we will do everything wecan to continue to support it.

FROM A PERSONAL PERSPEC-TIVE, WHAT KEEPS YOUGROUNDED?My family has been a solid foun-dation for me, and always remindsme what’s important. Having fourdaughters between 18 and 23means I have no difficulty in un-derstanding my place in life, or aproblem identifying where I haveslipped up!

I SEE YOU HAVE ACCEPTEDTHE ICE-BUCKET CHALLENGE;WHAT DOES THAT SAY ABOUTYO U ?It was fun and our employees cer-tainly seemed to enjoy watching ourCOO, Sam Ngumeni, throw coldwater over my head! We donatedR100 000 to the Cancer Associationof South Africa and hopefully raisedawareness at the same time.

ONE PERSON YOU PARTICU-LARLY ADMIRE?It will take something quite ex-ceptional to match the admiration Ihave for Nelson Mandela. One ofthe hardest things I’ve had to do atWoolworths is announce Madiba’sdeath. Our employees sponta-neously broke out in song – it was asurreal moment.

DO YOU HAVE A FAVOURITEBRAND YOU COULD NOT DOWITHOUT – APART FROMWO O LWO RT H S ?I do like and admire Apple. I lovethe product innovation, the sim-plicity of design and the rathermaverick approach of former CEOSteve Jobs. It has really set thebenchmark, in many respects, andmade our lives more convenient,which is never a bad thing!

Jeremy Sampson is the groupexecutive chairman of InterbrandSampson De Villiers.

Woolworths has a market capitalisation of R74 billion, employs about28 000 people, has 407 stores in South Africa alone, 63 stores in 11other African countries, and has a proud heritage, being 83 years old onOctober 30.Jeremy Sampson speaks to CEO Ian Moir

Pic: Hetty Zantman, Financial Mail

Ian Moir...Our customers

expect a lot fromWoolworths, both interms of product and

the story behind it


9TRENDS

ENTICESHOPPERSWITH FREEDELIVERYWhen it comes to driving on-line shopping uptake bySouth Africans, research byWorld Wide Worx points tofree delivery as a tool whichcompanies can, and should,exploit. The technology re-search firm noted that 75% oflocal shoppers had highlight-ed free or minimal deliverycharges as an area in need ofi mp r ove m e n t .

A new study by the Aus-tralian Retailers Associationand ChannelAdvisor, an e-commerce solutions provi-der, points to a similar sit-uation Down Under, with 65%of the 400 Australian retailersquestioned having offeredfree shipping over the past 12months.

Harnessing free deliverywas noted by the researchersas a key marketing tool foronline retailers, as were no-hassle returns and two-day orfaster shipping.

These findings accord withthe 2014 UPS Pulse of theOnline Shopper Study in theUnited States, which foundthat 81% of online shoppersrated free shipping as im-portant. Complimentary in-store pickups were also seenas an effective promotionaltool.

LEAP OF FAITHSA consumers are warming to the idea of onlinebuying, but the challenge lies in converting thisinclination into actual behaviour

Cara Bouwer

AN EXCITING NEW category wasadded to The Times/Sowetan R e-tail Survey in 2014, one whichrecognised Pick n Pay, Wool-worths.co.za and Kalahari.com asthe top achievers in the SouthAfrican online retail space, in thatorder.

These three online stores standout from the crowd in that they’veconvinced consumers to take theplunge and shop online. It mayseem an obvious migration in anincreasingly digital world, but,says Arthur Goldstuck, MD oftechnology market research firmWorld Wide Worx, converting apropensity for online buying intoactual behaviour is challenging. Toget this right, says Goldstuck, on-line retailers have to offer an in-disputable value proposition. Inl ay m a n ’s terms, this is the point atwhich “it makes so much sense tobuy online that it would be silly notto”.

For now, online retailers are con-strained by the fact that of roughly13.8 million South African internetusers in 2013, only 4.6 million werehighly active and experienced webusers (up from 3.9 million in 2012),according to World Wide Worx.However, this situation is rapidlychanging and the numbers are ex-

pected “to grow by well over amillion a year” to 5.3 million in 2014and 6.8 million in 2015.

This digitally savvy market isheavily skewed to the top third ofSouth Africa’s consumer society,where 38.2% of LSM 7-10 adultssurf the net, according to the SouthAfrican Audience Research Foun-d at i o n ’s AMPS 2011 figures. It isalso a market which showstremendous online buying poten-tial. Certainly, the 2014 Master-Card Online Shopping BehaviourStudy, conducted with World WideWorx, shows that 58% of surveyrespondents have used the inter-net for online shopping, an in-crease from 44% in 2009 and 53% in2010.

However, Goldstuck warns, thepercentage of people shopping on-line is actually falling. The Mas-terCard study shows that, in 2013,69% of respondents made at leastone purchase online in the threemonths prior to the research,down from 72.2% in 2012 and 79.3%in 2011.

“Both Pick n Pay and Kalaharihave flattened significantly, whichshows they aren’t converting peo-ple; they are just relying on theirexisting customer base for sales,”notes Goldstuck. “But both havebeen working hard to re-kickstartthat engine.”

He notes that Woolworths “hasmassive marketing drives and isvery aggressive in social media.Th at ’s allowed it to maintain thegrowth path. But even it isn’t con-vincing new consumers to shoponline.”

Certainly, this ties in with thefindings of The Times/Sowetan R e-tail Survey 2014, which notes thatjust 3% of people surveyed useonline retail stores. In the longterm, however, it is a categorywhich is expected to show explo-sive growth. Therefore, under-standing the drivers of that growthis vital.

While affordable smartphonetechnology could be a game-changer, Goldstuck warns againstgetting too excited. “People have toget comfortable with online and ittakes at least five years (a largeproportion of users will takelonger) for this to happen,” hesays. So people coming online nowwith new mobile devices are notlikely to drive the market in theforeseeable future.

This is borne out by the findingsof the MasterCard study, whichnoted that: “At 56%, more con-sumers in Kenya and Nigeria haveshopped online via their mobilephones, or intend to, than else-where on the continent. [But] at33%, South African consumershave the second-lowest inclinationto shop online using a mobilephone, followed by 25% of Moroc-cans.”

While being mindful of mobile’s

long-term growth potential andstrategising accordingly, onlineretailers should rather focus onbedding down important issuessuch as security and service. “Co n-sumers want to shop online, butthey are still nervous about doingso,” Philip Panaino of MasterCardSouth Africa said at the release ofthe 2014 study. Secure paymentswere cited as critical by 90% ofrespondents, with 42% saying con-cerns around transaction securityheld them back from online shop-ping.

And there’s another factor atplay locally too: consumers stillenjoy visiting the mall. In a 2014interview with Moneyweb, SarahRice, head of marketing at Inter-active Advertising Bureau SouthAfrica, noted that while local con-sumers relied on both online andphysical shopping platforms, moreeducation into online was neededto grow that arm. She noted thatSouth Africans were already usingtechnology to inform buying de-cisions. A resource such as PriceCheck is a case in point, she said,noting how consumers would usethe website to compare prices be-fore going in-store to make pur-chases.

While many consumers haven’tyet made the leap from online re-search to online buying, it’s a pos-itive trend for a sector whichWorld Wide Worx projects willgenerate revenues of R6 billion in2014, up from R4.4 billion in 2013and R3.4 billion in 2012.

TWT/1883/01/AVUSA

C

op

yrig

ht

© 2

014

�� The Big Brand Roll Out Promotion ends 08 November 2014 ��Prices are for cash or credit card unless

��

· XPRESS CREDITTM

ONLY AVAILABLE IN

SOUTH AFRICA

· XPRESS CREDITTM

AVAILABLE ON ALL

TIGER WHEEL & TYRE PRODUCTS

· TERMS AND CONDITIONS APPLY

· BADGER FINANCE IS A REGISTERED CREDIT

PROVIDER.

GET IT ON CREDIT. ENQUIRE IN-STORE OR APPLY ONLINE

NCRCP 5664

TO LOCATE A STORE NEAR YOU,

SCAN THIS QR CODE

OR VISIT www.twt.to

THANK YOU

SA FOR VOTING US

YEAR RUNNINGIN THE TIMES AND SOWETANRETAIL AWARDS 2014

FOR6TH

��Battery prices include VAT ��

IN THE TYRE FITMENT

CENTRE CATEGORY

��


Retail

Survey

2014

10

PROFILE

TRENDS

A MARKETSUBDUEDYet consumers appear to be having theoccasional splurge on categories such as fashion

Andrew Gillingham

SEVERAL YEARS of real incomeincreases have underpinned retailgrowth over the past few years, butthis is having less impact in 2014 andretailers are seeing only modestgrowth in consumer spending.

Theresa Heath, retail analyst atStanlib, says, in general, the retailmarket is more subdued than it wasback in 2011/2012.

Since the recession there has beena massive growth in real income,mostly driven by government hiring,above-inflation wage increases (over10% in real terms in some cases), anda huge increase in the numbers ofsocial grants as well as generousincreases in the amounts awarded.

Added to this has been the boom inunsecured credit and credit exten-sion by many retailers.

“All of these factors are now com-ing to an end. Government is underpressure to cap its wage bill, grantswill continue to be paid, but we arenot likely to see the same growth inthe number of recipients, and thereal increase in grant amounts islikely to be much lower.

“The unsecured credit market hastightened considerably and AfricanBank’s woes do not help. Therefore,the flow of money from credit has notbeen the enabler that it has been inthe past,” Heath says.

Another factor is that there is a lotmore competition in the retail mar-

ket, including foreign entrants of-fering attractive prices, and existingplayers have been seeking to im-prove their performance. Everyonehas been fighting for a share ofc o n su m e r s ’ wa l l e t s .

Pick n Pay, under its new lead-ership, is flexing its muscles andbecoming a more competitive force,and the same is true for Massmart’sfood retail operations.

“At the same time, while the pic-ture is less positive for retailers,there isn’t a consumer recession andretail sales are still growing in realterms. The market is cooling off, butthere isn’t a dip. However, in thisenvironment, investors need to askwhether share prices are justified attheir current valuations,” H e at hnotes.

Turning to the future, she says jobcreation needs to pick up signif-icantly to drive consumer spending,and there are no signs of this gainingtraction at present.

“Employment is treading water atthe moment. Government’s budget isunder pressure and ways of raisingmore tax are being considered. Thisadds to the pressure on consumers.”

Moreover, fuel prices tend to havea significant impact on consumers’available cash and, with the presentweak rand/dollar exchange rate,there is no relief in sight.

“There isn’t a lot of positive newsfor consumers on the horizon, andthis suggests retail sales will remainsu b d u e d , ” Heath adds.

Looking at specific retail sectors,she says that food sales are growingin the region of 7% to 9%.

At the same time, consumers ap-pear to be pulling back on basicssuch as food, but they are having theoccasional splurge on categoriessuch as fashion.

“Consumers are mainly spendingcash on their splurges and not usingcredit. As a result, cash sales in all ofthe retailers are increasing, includ-

ing Mr Price, Edcon (Edgars), Tru-worths and Foschini, compared tocredit sales that are either static oreven, in some cases, declining.

“Consumers are cutting back ontheir everyday spend, but treatingthemselves every so often, and ap-parel sales are holding up relativelywe l l , ” Heath explains.

Building materials are also show-ing some strength as consumers optfor home improvements in the pre-sent sluggish residential propertym a r ke t .

She says the “red lipstick effect” isalso evident. During tough economic

times, women, for example, tend toopt for red lipstick and shorterskirts. “People look for cheaper waysof updating their look.”

She notes that Dis-Chem is tradingwell, as it is seen as a value retailerby consumers seeking to save mon-ey, and people are trading down intotrusted lower-cost house brandssuch as those offered by Dis-Chemand Clicks.

Since about 2012, there has been astrong divergence among incomegroups and their ability to spend.Upper-income consumers are stillable to spend, as illustrated by Wool-worths Foods sales growing at 14% to15%, compared to Shoprite’s 8%.

The international trend towards“disposable fashion” is very evidentin South Africa.

“Mr Price has a very nice nicheposition that appeals to all con-sumers. People are not necessarily‘trading down’ in this context, butrather taking advantage of a fashionoffer at a great price.

“People no longer think they willtrade up when the economy im-proves, as they like the clothes andtheir ability to change their lookeach season. They keep going backand simply buy more when they arefeeling cash-flush, a point supportedby Mr Price’s management, whichsays they tend to retain customersonce they shop in the company’sst o r e s , ” Heath says.

Andrew Gillingham

T O TA L S P O RT S is a contempo-rary brand that targets active,health-aware people who lovesports. It has become one of SouthAfrica’s premier sports destina-tions and has won first place in theSpecialist Sports and Outdoors cat-egory of this year’s Retail Awards.

Carmen Garzouzie, brand headof Totalsports, says the company’sstores carry a range of top-performance brands that are com-plemented with good activewearproducts for people who enjoy well-ness, sport and an active lifestyle.

“Totalsports is an energetic andinspirational brand that providesan informed, professional in-storeservice environment. People knowthat when they visit one of ourstores, they will find the latestinnovation and technology provid-ed by the leading brands. We areknown for this in the marketplaceand this is why customers trustus,” Garzouzie says.

To t a l sp o r t s ’ national footprintmakes it very accessible to its cus-tomers, whether they are in thelarge cities or smaller communi-ties. The company is also veryactive in promoting a variety ofsporting events in South Africa. Agood example of its approach is theTotalsports Ladies Race, which isrun in Durban, Stellenbosch andJohannesburg each year.

“We run two of the events, name-ly those in Johannesburg and Stel-lenbosch, on Women’s Day, and theDurban event is run within thesame month. The events are awe-some and the streets are lined withwomen wearing their pink Total-sports Ladies Race T-shirts.

“The race is designed to be ac-cessible to everyone, so it is run

over 5km and 10km distances. Wewant to inspire people to reachtheir peak performance, and this isa level that is relative and real toeach individual. The TotalsportsLadies Race is about people havinga great day and enjoying them-selves; it is a day of celebrationwith friends and family,” she adds.

“Increasingly we are finding thatwhile the focus remains on thesport, many of today’s youth andnew participants want to socialisewith their friends while they en-gage in their sport. Today, sport isinteractive. It is not just about theloneliness of the long-distance run-ner; it is about being youthful, in-teractive and close to yourfriends.”

Totalsports also plays host to theinternational franchise Xterra inSouth Africa.

“The Xterra event held inGrabouw at the beginning of everyyear is the largest Xterra event inthe world. International athletesparticipate in the event; one of ourbrand ambassadors, Dan Hugo (al-so a brand ambassador for Puma),is an Xterra legend, and he holdsthe podium for the event,” G a r-zouzie says.

The Xterra triathlons incorpo-rate swimming, running and cy-cling. Events are also held in Buf-felspoort and Knysna. “The Xterraevents are for the more seriousathletes, but we also have the Xter-ra Lite, which is more accessible interms of the distances and is aimedat newer participants.

“We strike a balance between thehardcore, serious athletes whoconstantly want to push their lim-its, and the growing number ofindividuals who want to be activeand healthy, while socialising withtheir friends,” Garzouzie says.

Another important key to theTotalsports brand is that it catersfor the fact that South Africanslove sports and they want access tosports gear that features theirfavourite sporting teams.

Tough economic times, coupledwith a weak rand/dollar exchangerate, have resulted in high double-digit inflation in the sports geararena. “It is not a consumer-friend-ly environment at the moment andpeople are very focused on un-derstanding the value equationwhen they are buying an item.

“Trust is also an imperative, asperformance sports gear is a sig-nificant investment and peoplewant the assurance that it is rightfor them,” Garzouzie notes.

RACE TO THE TOPTotalsports caters for the fact that South Africans love their sport

TELECOMMUNICATIONS

AFFORDABLEAND ACCESSIBLECellular customers are extending their trustin the PEP brandMark Sampson

IN THIS DAY and age when stay-ing connected to friends, familyand colleagues is so important, cel-lular handsets and airtime are eas-ily available and much more af-fordable. This year’s results in TheTimes/Sowetan Retail Awards haveseen a slight shake-up from theprevious year, with big players inthe industry – MTN and Vodacom –being knocked down a notch bywhat some would consider an un-expected contender.

Having come third in the cat-egory in 2013, PEPcell hasn’t nec-essarily appeared from nowhere,but this year it finds itself at No 1for good reason.

Trends in the market indicate theneed for cheaper and more ac-cessible cellular merchandise forlower-end users, and this is wherePEP is positioning itself. Gone arethe days when cellphones wereavailable only to more affluentusers; with more choice in terms ofsuppliers and a wide variety ofhandsets, users across all LSMs areable to afford to stay connected.

Beyers van der Merwe, seniormarketing manager of PEP, saysthe initiatives and campaigns of theclothing-turned-cellular providerare all focused on its customers,while maintaining its promise ofbeing a trustworthy low-cost store.Understanding the customer is vi-tal to the success of any company,and with the current economic cli-mate, offering more for less is awinning formula.

“Always striving to make ourcustomers look and feel good isvery much part of PEP’s credo,”Van der Merwe says. Keeping com-munication with the market to-the-point and honest, with the rightprices, is also an ongoing pro-gramme.

The results show that while PEP-cell’s rating increased from 58.99 to65.77 year-on-year, the maingrowth has arisen from increasedusage, from 12% in 2013 to 21% thisye a r .

As with MTN and Vodacom,maintaining a presence in the mar-ket is always important, with thenumber of outlets across the coun-

try influencing awareness and us-age. PEP has a strong nationalfootprint, with 1 700 PEP stores and280 PEPcell outlets. Convenienceand accessibility play a key role insuccess, and the larger the foot-print of the brand, the easier it isfor customers to have access towhat they want.

The in-house cellular store isnothing new, with the results in-dicating a number of other bigretailers are also benefiting fromthe symbiotic relationship. BothEdgars and Woolworths haveclimbed significantly in the stand-ings. Customers can do clothesshopping and, at the same time, getanything they require in terms ofcellular needs.

With 49 years in the market, PEPhas already established itself as areputable brand, which consumersnow associate with PEPcell. Overthe years the trust it has earnedwith its loyal customers, by as-sociation, helps it to establish thesame relationship as a cellular sup-plier.

According to Van der Merwe,PEPcell has embarked on some far-reaching advertising campaigns toestablish the company as a cellularsupplier. “The ‘Win your Dream’campaign was very successful,with consumers entering to wintheir personal dream. At the end ofits first season, over 8 million en-tries were received.

“PEPcell also did well by creatingPEPclub, an in-house loyalty pro-gramme, which was well receivedby customers and allows us to in-teract better with them,” he says.“These campaigns have done wellto drive traffic to the stores, whichcreates awareness of the brand andincreases revenue for both PEP andPEPcell.”

Increased accessibility and de-creasing prices for handsets anddata are trends set to continue inthe South African cellular market.With a variety of other big retailersusing the same in-house cellularstrategy, the telecommunicationscategory promises to continue tobe an exciting one to watch, whereinnovation and accessibility arewinning over consumers and mar-ket share.

“Today, sport isinteractive; it’s not

just about theloneliness of the

long-distancerunner”

She says another element is thatan increasing number of sportsparticipants want to look goodwhile they engage in theirfavourite sports. Today, it is lessabout the old smelly sweats andmore about making a sportingfashion statement that reflects thei n d iv i d u a l ’s taste and lifestyle.“They want to look good and per-form well.”

Garzouzie comments that this isan international trend that is re-flected by the new products beinglaunched by the leading globalbrands. Increasingly, sports andactivewear offer style, fashion andcolour.

Theresa Heath, retail analystat Stanlib


11

ENTERTAINMENT STORES

NEW WORLD, NEW APPROACHEntertainment storeswill need to leveragethe digital revolution

Alf James

THE TIMES/SOWETAN RetailAwards Survey results indicatethat bricks-and-mortar specialistentertainment stores are underthreat, with this category decliningfrom 43% use in 2013 to 35% in 2014.

Furthermore, 25% of people in thesurvey say they download music ontheir mobile device, and 14% ofrespondents claim to use an appstore (Google Play, BlackBerryWorld or Apple App Store).

While these figures might notdenote a major trend for onlineshopping, they do show that peopleare using the internet to procureentertainment, which is sure toimpact on the bricks-and-mortarentertainment store.

According to Mike Wronski,managing director of social mediaand analytics firm Fuseware, to-d ay ’s connected consumer expectson-demand audio and video en-tertainment, and the internet is themost convenient and cost-effectiveplace to access these forms of me-dia. With international scalabilityand no bricks-and-mortar over-heads, digital media companiessuch as Amazon and Apple havealready disrupted traditional en-tertainment stores around thewo r l d .

In 2013 SAS and Verdict Researchreported that the home entertain-ment sector in the UK would be abig loser, with declines in books,news and stationery of 2.8%, and asteep fall of 6.3% in music and video,

due to the lure of online.“Customers continue to eschew

the high street in favour of thecheaper online channel. This willresult in further consolidation inbricks-and-mortar retail, with thelast remaining specialist, HMV,likely to close further storesthroughout the year,” said the re-port, which forecast online to ac-count for 80.1% of total music andvideo sales in 2013, and 97.7% by2017, highlighting the bleak outlookfor physical retailers.

“Every year the technology pow-ering electronic media consump-tion gets better and more conve-nient, and the compression codecsbecome more efficient at streamingto low-bandwidth devices,” Wr o n -ski says. “This is both a result and adriver of the increased demandfrom consumers. However, mobileentertainment consumption inSouth Africa still has some way togo, as data rates are still too ex-pensive for the large majority ofusers to consume audiovisual con-tent.”

Mobile gaming has become oneof the world's most lucrative newmarkets in recent years, he adds,and is a large portion of digitalentertainment spend by con-su m e r s .

Content-specific apps, such asKindle, Netflix and Soundcloud,

have been downloaded millions oftimes across the world, and areactively used by consumers to dis-cover and consume all types ofcontent on their mobile devices.

CEO of online retailer kala-hari.com, Caren Genthner-Kappesz, comments that SouthAfrica is following the internation-al trend with regard to mobiles h op p i n g .

According to kalahari.com’s an-nual Mobile and Tablet Survey,when it comes to shopping online,three things stand out for SouthAfricans: 48% of kalahari.com cus-

tomers say it’s more secure to shoponline; 85% of kalahari.com cus-tomers shop online because it’smore convenient to buy what theyneed wherever they are; and it’ssimply easier to check for pricesonline.

Th at ’s why shopping apps rankin the top 10 most downloaded apps,according to kalahari.com.

The South African 2014 Master-Card Online Shopping BehaviourStudy found that 33% of those ac-cessing the internet via mobilephone intend to shop using theirdevice or have already done so, a

jump of 9% from 2012. The like-lihood of shopping online using acomputer or tablet, or at a physicalstore, instead of a mobile phone,has declined by an average of 5%.

The MasterCard survey revealedthat the most popular items pur-chased by those who’ve made apurchase using their phone in thelast three months include mobilephone apps, music downloads,movie tickets, computer softwareand coupon/deal site offers.

Wronski says, just as the carreplaced the horse-cart, the in-ternet is superseding outdatedbusiness models with much betteralternatives, which consumersare able to use in the way theywant, when they want, whereverthey want, at the touch of ab u tt o n .

“Entertainment stores need toleverage the digital revolution, in-stead of trying to fight it, and ex-plore opportunities to connect theconvenience of digital entertain-ment with the tactile advantagestores have of being in the ‘realwo r l d ’,” he says.

“Digital mediacompanies such asAmazon and Apple

have alreadydisrupted traditional

entertainment storesaround the world”

Mike Wronski, managing director of social media and analyticsfirm Fuseware

Thank you to our loyal customers for voting us the

hardware retailer of the year for the 5th year running.

For more info, please visit www.cashbuild.co.za or contact us at sharecall no. 0860 100 582

We believe that by working together we don’t just build better homes, we build a better nation.

LOWEST PRICES ON QUALITY BUILDING MATERIALS, TOOLS, PAINT & HARDWARE


Retail

Survey

2014

12

LIQUOR STORES

A HAPPYRELATIONSHIPThe large Spar footprint plays a critical role in the success of Tops at SparMark Sampson

TOPS AT SPAR, with its family-owned type of business attitude,has once again taken the No 1 spotin the Liquor Stores categoryof The Times/Sowetan RetailAwards. An increase from 64.20 to66.23 from last year’s results maynot be that significant, but the 10%margin between it and its nearestcompetitor, Pick n Pay Liquor, is.

An obvious trend in the cat-egory is the winning formula of apositive relationship between gro-cery and liquor store, situated inclose proximity of each other. Re-sults from the survey placeShoprite, Pick n Pay and Spar inthe top three spots of the GroceryStores category, and their asso-ciated liquor outlet – Tops at Spar,Pick n Pay Liquor and ShopriteLiquor Shop – in the top threepositions of the Liquor Stores cat-egory, in reverse order. In thisfast-paced world, clearly the con-venience factor is paying divi-dends.

Mark Robinson, group liquormanager for Tops at Spar, sug-gests that the large footprint ofSpar across South Africa plays abig role in the success of Tops at

Spar. In almost 72% of locationswhere you find Super Spar, KwikSpar or Spar, you will also find aTops at Spar, meaning consumersneed go no further to buy liquor.With a total of 612 Tops at Sparoutlets across the country, thebrand is present at all times.

The strength of the Spar brandis critical to the success of Tops atSpar, Robinson says, adding thatthe look and feel of the storenationwide are the same, irre-spective of LSM.

He adds that the stores arespecifically designed not to followthe traditional liquor store pat-tern; they are clean and unob-trusive to add to the experience,as well as the look and feel of thebrand.

“The clean, friendly nature of ourstores, linked with making it a funexperience for the consumer, ispart of our strategy,” he says. “Wehave a little bit of fun with ouradvertising campaign, and thencarry that through into our storesto create an experience for thec o n su m e r . ”

A number of ongoing advertis-ing campaigns, such as the“D r i n kt i o n a r y ”, have worked verywell, Robinson explains. “It serves

as a way for us to engage with ourconsumers, and them with us, in afun way. So we have intercom-munication with our consumers,which helps to maintain the re-lationship and presence in thec o n su m e r ’s mind. Although theadvertising and experience has afun look and feel, we don’t losesight of the seriousness of alcoholuse, and abuse, making sure wemaintain integrity while sellingalcohol.

“The ‘D r y ve r ’ campaign is acase in point, as it gives con-sumers the opportunity to act re-sponsibly if they have had ‘one toom a ny ’, and avoid drinking anddriving. Due to the nature of theproduct, the entire industry ismaking a big push to createawareness and maintaining a re-sponsible drinking culture,” headds.

“We have a littlebit of fun with

our advertisingcampaign, and then

carry that throughinto our stores”

Pic

: Jer

emy

Gly

n

VOTED #1 RETAILER

FOR MEN’S AND WOMEN’S CLOTHING AND FOOTWEAR

AT THE TIMES AND SOWETAN RETAIL AWARDS

Awarded as winners in these categories for a third year in a row.

Documents

INTRODUCTION BUILDING RETURN ON INVESTMENT · The Times/Sowetan Retail Awards are undertaken in partnership with TNS South Africa A TOTAL OF 2 750adults aged 18 years and older were