Challenges facing retail marketing in SA QH #IEApplication 2014

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Challanges facing retail marketing in South Africa. This is the answer to Question H for my #IEApplication 2014

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Challenges facing retail marketing in SA QH #IEApplication 2014

  1. 1. CHALLENGES FACING RETAIL MARKETING IN SOUTH AFRICA MARJORIE DANIEL IE MBA CANDIDATE 2014 #IEAPPLICATION
  2. 2. OVERVIEW 1. South African retail environment 2. Retail marketing challenges 3. My role in the medium term 4. References
  3. 3. 1. SOUTH AFRICAN RETAIL ENVIRONMENT Fierce competition exists in the SA retail market. The large retailers buying power, Wal-Mart’s entry into the local market, integrated supply chain solutions and Private Label products are some of the indicators. Growth and demand is expected to be modest, and mostly driven by the continued rise of a black middle class according to PWC, October 2012. “South African retail and consumer products outlook 2012-2016.” A skills shortage, especially among middle management. Most retailers have had to develop significant in-house training capacity in order to continue developing skills. Adoption of new technologies and online retailing has been slow due to internet access being expensive and slow. A new consumer trend is online price comparison through price checking website s such as Guzzle and Price Check, followed by in-store purchase. The high (24.7%) unemployment rate is the country’s largest inhibitor of growth. Currency volatility. The below graph was published in 2012 and currently the Rand Dollar exchange rate is at R11.13, much higher than the predicted R8.3 directly impacting the margins of retailers. *PWC, October 2012. “South African retail and consumer products outlook 2012-2016.” www.pwc.co.za/retail-and-consumer
  4. 4. 2. THE RETAIL MARKETING CHALLENGES a) Engaging customers b) Keeping customers engaged c) Attributing sales and measuring performance of specific marketing channels d) Rapid changes in technology and the implications
  5. 5. A) ENGAGING CUSTOMERS Understanding and influencing the customer journey Understanding social behaviours and trends such as social media and online shopping With new technology customers have access to more information and can plan their purchases better. I.e. product, price, availability
  6. 6. B) KEEPING CUSTOMERS ENGAGED I.E. VISITING STORES, ONLINE SHOPS AND PURCHASING Providing the right product at the right price using the right channel Great customer service Strengthen loyalty and emotionally tie them closer to the brand. Basically win their minds and hearts. Know your customer, with rapidly developing technology this is easier than 10 years ago. • An example of innovation in this area in the Insurance sector in South Africa would be HealthID from Discovery. Giving doctors access to previously prescribed medicines, blood test results and patients' health measures such as body mass index and blood pressure. • Sophisticated loyalty programs to targets specific segments of the market with offers and initiatives. • Analytics Customers expect captivating communications and offers targeted specifically at them.
  7. 7. C) ATTRIBUTING SALES AND MEASURING PERFORMANCE OF SPECIFIC MARKETING CHANNELS Calculating ROMI (Return on marketing investment) Creating co-ordinated system integration across POS, CRM and financial systems. Therefore resulting in: • Ability to measure long term marketing objectives such as brand equity using customer lifetime value information • In addition to short term objectives such as total revenue and profitability • Quickly and accurately test pricing strategies • Accurately measure effectiveness and efficiency of various media channels
  8. 8. D) RAPID CHANGES IN TECHNOLOGY AND THE IMPLICATIONS Price optimization technologies, pricing strategies should be pro-active and not reactive. With pricing being one of the most powerful levers for increasing operational profit, proactive pricing can significantly boost financial performance. Various initiatives to roll out free Wi-Fi in malls across South Africa, could generate additional footfall. Due to the log-in nature of free Wi-Fi, this creates an opportunity to capture shopper demographics and preferences and in time the information can become available to retailers. • This will result in even bigger data analytics for retailers • However compliance with legislation and protection of personal information need to be kept in mind. Interactive screen and window display systems, that allows the following: e.g. Adidas campaign • Convert passers-by into shoppers. • Creates 24 hour virtual store with life size products. • Utilizing retail space outside of normal trading hours. Considering the drive towards informal retail being formalized in South Africa by means of new developments in informal settlements for example the 4 malls in Soweto, one has to start questioning the use of “dead time” in these malls: • Interactive screens could be an opportunity to engage consumers in after hours retail shopping or • Uplifting the community through access to free education online such as the Khan academy and Couresa.org
  9. 9. 3. MY ROLE IN THE MEDIUM TERM My role in the retail sector in the medium term is to use my skills in marketing and my passion for IT and finance to create sophisticated marketing process models. Resulting in the communication of performance data in a way that empowers business leadership to make quick, intelligent, fact based decisions based on historical, strategic and tactical trends. Compiling business cases for new and innovative marketing technologies. To mentor and coach energetic and aspiring marketing talent in South Africa.
  10. 10. 4. REFERENCES 1. Elizabeth Cameron, Divisional Manager, Manufacturing, Marsh Africa , 22 February 2012 “Fierce competition amongst South African retailers leads to new risks in retail industry” http://www.fanews.co.za/article/risk-management/32/general/1218/fiercecompetition-amongst-south-african-retailers-leads-to-new-risks-in-retailindustry/11511 2. Fitch Ratings, October 2010 “Rising competition and margin pressure” http://www.moneyweb.co.za/moneyweb-soapbox/rising-competition-and-marginpressure 3. PWC, October 2012. “South African retail and consumer products outlook 20122016” www.pwc.co.za/retail-and-consumer 4. Duncan McLeod, 16 January 2014. “MWeb in aggressive free Wi-Fi play” http://www.techcentral.co.za/mweb-in-aggressive-free-wi-fi-play/45889/

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