We’ll need nimble skills to negotiate the choppy waters of the general retail market in 2020. While some businesses are riding the unpredictable business tides others are being washed out to sea. A lot will depend on strong business leaders being tenacious, focused and flexible.
The retail and wholesale sector in South Africa is traditionally the second biggest provider of formal employment, employing 3.4 million people – but in the third quarter of 2019 but things took a downturn when 21 000 jobs were lost. But perhaps surprisingly, Stats SA report inflation to be the lowest in over eight years. This is in part, due to the prices of many goods and services are increasing at a slower rate, while some prices have even fallen. And while this is good for the consumer, it’s tough for the retailer. What Michelle Kemp, Massmart Corporate Reputation Manager says about the Game Store restructuring rings true what many local businesses need to look at doing, “Our intention is to get the retail basics right so that customers have a much more pleasant shopping experience.”
Key retail updates on the market from Finance 24 include:
- Edcon saved most of the 1 000 jobs under threat, being rescued by its lenders and landlords who took part in the R2.7bn recapitalisation deal.
- Shoprite and Pick n Pay are creating a solid footprint in other African countries.
- Shoprite’s operations in the rest of Africa experienced problems in 2019, with Angolan sales shrinking by more than 38%.
- Pick n Pay’s African earnings “dived 79.8% year-on-year” from September 2019 as Zimbabwe and Zambia saw debilitating currency devaluation and hyperinflation.
- Pepkor are exiting Zimbabwe after a R70m after-tax loss.
- A potential number of 1 440 will be affected by Massmart’s closures of DionWired and Masscash outlets and they’re looking to “overhaul” its operations locally after seeing losses as high as 4 billion in 2019.
- Massmart’s Game Stores will be phasing out frozen foods, movies and music and focusing on clothing and apparel basics.
- Business Tech reports further that as of February 2020, the Massmart Group will be consolidating its four divisions – Masscash, Masswarehouse, Massbuild, and Massdiscounters – into two units.
Globally it’s worth looking back to 2010, when the FMCG industry boasted 23 of the world’s top 100 brands and had increased its return to shareholders (TRS) by nearly 15% a year for 45 years, performance second only to the materials industry.
Today, in terms of e-commerce, categories such as Fashion, Electronics, FMCG are worth approximately US$2.8 trillion according to an E-Commerce Report by Neilson, who says this equates to 10% of the global retail market and is growing at about 20% and be worth more than US$4 trillion by 2020.
Retailers to Watch in 2020
Walmart – Their in-store Health Centres are a first for a large retailer, putting “key health services under one roof.” Their offerings (the second one just opened) include, “Primary care, dental, optometry, counselling, laboratory tests, X-rays, hearing, wellness education and behavioural health.” Walmart aim to roll out more, as Sean Slovenski, President of Walmart U.S. Health and Wellness says, “We think we can make an impactful difference in affordability, convenience and, most importantly, accessibility.”
Amazon – Who are aiming to become the chief grocery provider for of groceries for affluent U.S. households with reported plans by Seattle-based Amazon to launch a supermarket chain separate from Whole Foods. “We anticipate that Amazon will focus on three areas to help strengthen its grocery business over the next year or two,” predicts Bill Bishop, the Chief Architect at Brick Meets Click.
Carbonite.co.za – This South African online business has successfully tapped into a hidden “geek” market, trading in loyalty points. Phillip de Wet, Business Insider SA says of the business, “Carbonite is a long-established forum built for the more geeky and technology-minded, so as various online tokens took off, trading among the Carbonite early adopters also became popular.”
For entrepreneurs on the look-out for new business opportunities, Silvertree Internet Holdings Co-founder and MD, Manuel Koser suggests looking into these markets – indigenous personal care, new beverages and ethical snacks. Plus, anyone finding an answer to secure curb side pickups in SA will have it made, it’s a key global trend as Oliver Chen, MD of Cowen Inc, points out, “We expect more shoppers to adopt and appreciate curb side pickup, which we view as an ideal manifestation of combining physical and digital retail.”
Eben Esterhuizen, General Manager, The OnShelf Group
Note to the Editor:
The OnShelf Group’s foundation is as an FMCG specialist and they thrive by having a culture of tenacity with a smart solution-oriented approach. They are a preferred healthcare sales agency as well as operating within the Retail, Liquor and Fresh FMCG spaces.