The research division of leading Pan-African property services group, Broll has released its latest report, titled “The Evolution of Retail” which analyses the local retail property sector and the emerging trends.
Competition in South Africa’s retail market is intense, with more than 25 million square meters of retail space, over 2,000 existing shopping centres and nearly three million square metres of retail space in the pipeline.
As highlighted in the report: “New offerings within centres, new retailer products and unique experiences for customers are vital in order to attract market share. The retail market is changing and evolving at a rapid pace, with innovation being one of the key success factors to survival.”
The retail competition is made even more intense due to the country’s diverse population, with several cultures and ethnicities to market to, there is a multitude of opportunities for various retailers and brands to thrive.
Elaine Wilson, Director of Broll Property Intel further asserts the importance of dynamism in the local market, stating: “In the face of increased competition, shopping centre owners, developers, managers and retailers need to be alert to and agile in responding to the latest trends, consumer behaviour and technology in a fast-paced, ever-evolving industry.”
South Africa has an estimated population of 57.73 million, and most crucially, 46.4% of this total fall into the ‘youth’ bracket, which make up South Africa’s future customer base.
Generation Z & Technology
Understanding the various generation groups is essential for retailers to identify the potential target market and their receptive price points.
Generation Z are the future consumers, the digital generation born between 1995 -2009 who have grown up with smartphones and social media ever-present.
It is estimated that Gen Z will represent the largest group of consumers around the world through to the year 2030.
According to Broll’s research, Gen Z in South Africa represents around 26% of the population, and are expected to enter the workforce and account for the dominant share of spending power by 2020.
As showcased in Broll’s 2018 ‘Future of Retail’ report, the future of retail is no longer governed by a ‘one-size-fits-all’ methodology, and the market change rapidly through the ‘Omnichannel’ method and embracing of technology in the sector.
Defined by Canadian e-commerce company, Shopify as “a fully integrated approach to commerce that provides shoppers with a unified experience across online and offline channels”, Theresa Terblanche, a Divisional Director at Broll warns that: “Retailers cannot afford to miss out on opportunities that Omnichannel presents.”
“With the increase in comparative shopping occurring online as well as via social media, Omnichannel has become the
order of the day for all retailers,” stresses Terblanche.
Despite the tech-savvy habits of Gen Z when seeking information and shopping, Gen Z’s emergence in the South African market has not been the Deathstroke that many analysts predicted.
In actuality, Gen Z consumers now represent a future of retail that Broll attributes is “as much about the personal in-store experience as the purchase itself”.
This “holistic experience” is driven and enhances brick and mortar by technology rather than replacing it.
Novelty and experimental stores have been a growing trend in retail markets across the world with notable examples coming from the sportswear and apparel giant, Nike, who are at the forefront of merging the digital and physical aspects of their business.
Dion Chang, the founder of forecasting agency Flux Trends, explains: “The reality is that within an unpredictable economic climate, merged with vast forms of communication, retailers and brands need to create ways to engage with consumers in a way that draws them to the product and store. Keeping in mind that the shopping experience is no longer divided between online and offline, but a no line experience.”
The Role of Online
As outlined by Broll, online retail has grown substantially over the years both globally and in South Africa.
Figures from South African market research firm World Wide Worx showed that over 14 billion South African Rand was generated in 2018, accounting for 1.4% of the countries total retail, with 2% estimated by 2022.
In addition, 2018’s year-on-year (y-o-y) online retail growth recorded 25%, showcasing the prospects for the sectors’ continued growth.
Figures by Google show that 65% of South Africans over the age of 16 are online, bringing a total of over 30million online enabled internet users for retailers to target.
In 2018, South Africa’s digital y-o-y growth saw a 7% increase, resulting in a 20% increase in social media users.
The ‘Evolution of Retail’ report also focuses on the growing trend of international retailers and luxury brands entering and exiting the South African market.
Broll’s report states that: “Over the last few years SA’s retail market has seen the entry of a number of international retailers, be it luxury brands that play on consumer’s aspirations, or middle-market retailers (such as H&M) that consumers have been hyped up about”
However, despite the influx of foreign brands entering the market, Theresa Terblanche warns that: “The challenge in SA is that the shoppers that can afford these brands often opt to rather purchase these items during their overseas trips at cheaper prices, instead of at home for an inflated price”
Please take a look at Broll’s full report to learn more about the changing face of retail in South Africa.