Read time: 3 minutes

Tech-savvy startups poised to challenge retail heavyweights

By , Journalist
Africa , 30 May 2016

Tech-savvy startups poised to challenge retail heavyweights

Retailers in Africa should adapt quickly to data driven logistics and distribution or risk losing out to more agile, responsive startups.

Guy Lundy, an African retail trends analyst says "in an age of digital revolution, the grocery retail industry is having to invest massively to meet the needs of ever more demanding, tech-savvy customers."

He says the increase in investment in websites and digital platforms has fuelled growth within the online retail space. Those who lag behind will need to catch up ... and do so quickly.

"Digital disruption is forcing retailers to literally shape up or ship out. This is as a result of technology-driven start-ups who are setting up business models that could potentially render them moribund in the next few years," Lundy said.

Competition in South Africa

Jon Wright, a retail trends expert with research company, IGD, says South Africa has one of the highest internet penetration rates in sub-Saharan Africa, with approximately 50% of the country's population having access to the internet.

"While spending on grocery ranges is likely to remain only a small part of online retailing in the medium term, the channel will provide competition for retailers in key urban centres and in non-grocery categories," said Wright.

The reality is that while South Africa has a relatively small online customer base, this could soon change with an emerging sophisticated urban market and extensive rollout of fibre broadband.

Some SA grocery companies "now have online shops", while others "are way behind the curve and offer no online purchasing opportunities," says Lundy.

An added challenge is that many retailers are not translating big data into competitive advantage, he said.

Lundy suggests retailers use big data analytics to drive efficiencies. This allows innovative retailers to combine data obtained from loyalty schemes with data from other sources - such as social media, point-of-sale records, inventory tracking and website analytics, to predict shopping trends.

This also helps them to "design targeted customer campaigns and connect with their customers" in new ways.

Read more
Daily newsletter