Keeping on trend digitally

As we pass the third quarter of 2019, some interesting trends that were predicted have unfolded in the retail and online market segment. Although online remains relatively small locally, the “Online Retail in South Africa 2019 Study”, conducted by World Wide Worx, predicted it to reach 1,4% of total retail in South Africa in 2018 and hitting the 2% mark by 2022.

The study forecasted online retail passing the R14 billion mark by the end of 2018, as ecommerce started going mainstream. This is due to established online retailers enhancing their digital presence and many traditional retailers started to see significant growth in their online offerings.

In order to harness the online retail growth potential, we can expect to see some changes in the market during the year ahead. According to Karl Hammerschmidt, entrepreneur and CEO of RunwaySale (an online fashion retailer offering over 500 high-end brands at a discounted price to their exclusive membership), online retailers need to fully embrace mobile commerce (m-commerce) and simplify their offering, while continuing to align themselves with changing customer behaviour.

‘Mobile and artificial Intelligence (AI) will be the two biggest trends in 2019 but there are also other subtle, but important trends and changes that will impact online retailers.

Mobile – always connected

More than 60% of RunwaySale’s members use their mobile phones to shop during the week, rising to 90% on weekends. Mobile users are proactive and always connected – using their mobiles in the same way they used to use PCs. From communicating and entertainment to consuming news, looking for deals, comparing prices, ordering food, coordinating rides and updating their activities.

Mobiles keep customers updated and online 24/7, so why wouldn’t retailers want to tap into this and optimise the mobile experience? “A big challenge for the tech teams when it comes to mobile is improving speed and back-end features. Now, more than ever, we have to get things right to ensure everything from stock viewing to delivery and payment works smoothly on mobile devices,” says Hammerschmidt.

‘The checkout process needs to be user-friendly: handling the scale of people checking out simultaneously must not impact the user experience and everything should be done within one page. No endless scrolling! This will prevent cart abandonment, which is around 29% if things are too complicated,” he adds.

Artificial Intelligence

 Using a form of AI to understand your customer and to enhance the online experience is changing the way e-commerce does business. This intelligent data can drive the sales process and having chatbots assisting customers, no matter what time of day or night they are online, leads to satisfied customers.

Payments options expanded, rewards introduced

“People are trusting e-commerce more and are less nervous about using credit cards online. We will also see a rise in new payment gateways, plus rewards and the introduction of a cashback function. All aimed at increasing traffic and sales on the site,” says Hammerschmidt.

The direct-to-customer (D2C) business model is set to grow as is a subscription based service. According to a survey conducted by management consulting firm, McKinsey & Company, the subscription e-commerce market in the US has grown by more than 100% a year over the past five years. The survey revealed 15% of online shoppers subscribed to an e-commerce service over the past year, with 46% subscribed to an online streaming media service, including Netflix.

SA is following this trend. RunwaySale’s successful business model is based on an exclusive, free, members-only shopping society that provides access to designer brands at affordable prices. Now more than 1 million members shop regularly online. Subscriptions and D2C models create personalisation and provide solid customer insights.

Mobile apps will become more effective than emails and messages; in this way cross-sales and personalised promotions and connections can be maintained between the online retailer and consumer.

An online/offline mix

More brick-and-mortar stores are venturing online and some online retailers are now opening stores: think Amazon and YuppieChef. There has been a shift to having a presence both online and a physical space, although these might be smaller concept stores or pop up outlets. The thought is that people will browse and research in store but purchase online based on price and convenience.

“While the online market in SA is small, at only around 1% of total retail sales, it presents huge opportunities,” adds Hammerschmidt. “In our particular market segment, fashion, we have a long way to go to reach the UK figures of 28%, where one in every four dresses is bought online. But we want to be at the forefront of e-commerce and continue to build on our seven years of solid experience. 70% of our strategy items are tech, we continue to look at ways of being innovative, to challenge ourselves to be the best in every aspect to grow.

“In the ideal world we’d see a blurring of the line between online versus offline. But right now, transformation, creativity and strategy to deliver a cohesive customer experience is the way to stand out in this ‘prosumer world’'”.

About RunwaySale

 Launched in 2012 by entrepreneurs Karl Hammerschmidt and Elmien Smit, RunwaySale’s business model is based on an exclusive free members-only shopping community that has access to designer brands at discounted prices. Upon signing, the member is alerted via email, Facebook or Twitter about flash sales of this high-end merchandise. All of the offerings are for a limited period only. RunwaySale is the market leader in the segment and has a loyal, fashion-conscious and financially savvy customer. www.runwaysale.co.za

 

 

 

 

Teljoy: the evolution of a South African brand

South Africans are very loyal to the homegrown brands they grew up with, and among the most renowned is Teljoy, a brand that celebrates its 50th anniversary this year. Rami Sassen, CEO of the company, tells the story about its evolution across the decades.

Over the years, many overseas brands have made their way into the South Africa marketplace, particularly over the past two and a half decades since South Africa became a democracy.

But, as South Africans, we still tend to be most loyal to the local brand names we know and love – the ones we grew up with, that our parents trusted, our friends use and that we, as adults now ourselves, rely on in turn. Ouma Rusks. Rooibos. Mrs Ball’s Chutney. Nandos. To name just a few. And, of course, Teljoy.

In fact, South Africans have Teljoy to thank for installing the very first televisions in the country, which happened when, as a nation, we finally switched on to the wonders of the box in 1974.

By then, Teljoy had been in operation for five years already, since 1969 – the same year that the Boeing 747 made its maiden flight, The Brady Bunch was the first broadcast on the ABC network in the USA, and the first man walked on the moon – an event broadcast live around the world, including on television in other countries!

Realising that although South Africans couldn’t yet watch any of these events on television themselves, Theo Rutstein, the founder of Teljoy, knew that it was just a matter of time before the system arrived on our shores. So, he decided to put his money behind this vision.

As a result, with the seeds for an exciting business idea planted firmly in his head, Theo actually launched the company in 1969 with a forward-thinking campaign that gave people the opportunity to book a television then already for rent, in anticipation of the big switch.

And that’s how it came to pass that Teljoy installed the very first television sets in South Africa, in December 1974, and became the very first company in the country to supply sets commercially throughout South Africa.

From there, the ongoing evolution of the brand was set in motion, beginning with the establishment of bricks-and-mortar shops in key locations across the country, providing consumers with the rent-to-own model that has now become the company’s trusted business model.

From ever-increasing ranges of household appliances, to begin with, Teljoy gradually moved to supply furniture. Today, the company can supply customers with anything from the bedroom and dining suites, to couches, coffee tables and even lamps and patio furniture. There’s even a selection of strollers for babies.

Later, as technology and times evolved, a full range of electronics was added to the inventory, from computers and printers to cellphones, cameras, gaming consoles and beyond.

But it’s not only the product ranges themselves that have evolved over time. To keep the “joy” in Teljoy alive and exciting for consumers means being at the cutting edge of retail and understanding how clients themselves want to conduct business in a rapidly and ever-changing world.

Therefore, the way in which the company conducts its business has also kept apace: five years ago, Teljoy first established an online presence and by 2016 the business had gone completely online, centralising all operations to up the game in service delivery and to bring even more value to customers.

The company name is still out there, top of the SA brands, to such an extent that many customers don’t even realise that the bricks-and-mortar shops no longer exist. The transition to online has been a seamless experience for customers. In a world where traditional retailers are struggling to survive, Teljoy ensured its success through an early transition to online.

But perhaps the most interesting thing about how the brand has evolved is in handling the economy itself. Ahead of the pack already 50 years ago with its rent-to-own model, Teljoy’s business model is as relevant today as it was when the company was first established: there’s no doubt that times are tough, but people still need things. What better way to access what you need than by being able to upgrade or downgrade your account at any time, or even cancel it outright, thus avoiding the debt trap that so many South Africans fall into today or – even worse – being locked into hire purchase contracts that seem to last a lifetime.

Great brands endure when they are able to evolve with the times. The Teljoy story has proven to be one of them.

SA’s top 5 supermarket brands battle it out for the hearts and minds of South African consumers

In the war for the consumer’s share of wallet, South Africa’s top five supermarket brands will need to do much more to fully differentiate themselves on the many complex drivers of customer satisfaction.

The “South African Customer Satisfaction Index (SA-csi) for Supermarkets (2018)”, conducted by Consulta, provides highly scientific insights into the overall level of satisfaction of customers of South Africa’s big five supermarket brands: Woolworths, Pick ‘n Pay, Spar, Checkers and Shoprite.

While Woolworths maintained the best overall customer experience in the 2018 supermarkets index, it was with a decrease in overall score from 2016, while the differentiation is increasingly eroded between the top performing brands. The gap between Woolworths and the rest of the supermarkets measured is now too small to give Woolworths the outright best-in-category classification that they enjoyed before.

Focussed strategic planning and implementation by Spar since 2014 on convenience location, freshly prepared foods and customer engagement are paying dividends, with Spar enjoying significant and consistent year-on-year improvements in almost all measures of customer satisfaction.

The latest SA-csi for supermarkets clearly shows the increasing complexity faced by supermarket brands in meeting customer expectations. As South Africa heads into an environment of extreme economic pressure, retailers will need to invest in understanding how such an environment impacts consumer behaviour, and how they will create exceptional experiences for their customers.

The SA-csi is a causal model that links customer expectations, perceived quality and perceived value to customer satisfaction (the SA-csi score), which in turn is linked to customer complaints (and recovery) and customer loyalty intentions. The 2018 sample for the SA-csi for supermarkets included 1 619 customers who were randomly selected to participate in the independent survey which measures customers’ overall satisfaction and includes a customer expectations index, a perceived quality index and a perceived value index.

Highlights from the 2018 SA-csi for supermarkets in a nutshell:

  • On meeting customer expectations: Industry expectations for supermarkets have increased from the previous measure in 2016. All brands are meeting customer expectations. Woolworths, albeit with a decrease in score from 2016 to 2018, and Spar are leaders in this regard.
  • On perceived value: which measures how much value customers feel they received for the price paid against the quality of the experience, Checkers comes out as the leader, although Spar was the only brand that showed a marked increase in its perceived value score from 2016. It is notable that Woolworths struggles with this aspect of their value proposition and is driving the perception of being the most expensive supermarket brand.
  • Complaints handling: in general, the supermarkets category of the SA-csi performs well on the degree to which complaints are handled by comparison to world standards (close to 50%). Checkers performed best at handling complaints while Shoprite was rated lowest. Pick ‘n Pay recorded the most customer complaints specifically about expired food, incorrect shelf prices and its Smart Shopper loyalty card. All brands experienced an increase in complaints while complaints handling and recovery showed a decline across the board  ̶  complaints handling scores have a direct correlation to customer loyalty.
  • Customer loyalty: Shoprite had the lowest customer loyalty score and a marked decrease in its score from 2016. Woolworth has the highest loyalty score with a marginal increase from 2016 and is indicative of the strong brand equity that Woolworths still enjoys. Woolworths outperforms the industry average on net promoter score (NPS) at 46,8%, which measures the likelihood of a person recommending a brand, while Pick ‘n Pay has the lowest NPS score which also falls well below the industry average. Spar and Checkers are the only brands that have shown an improvement in NPS scores from the 2016 measurement.
  • Best overall customer experience: Woolworths maintained the best overall customer experience albeit with a decrease in score from 2016. The smaller leader gap between Woolworths and the rest of the supermarket brands is likely to put pressure on the customer loyalty and NPS scores for Woolworths in future. Checkers and Spar both scored on par with the industry, while experiencing solid increases in their overall customer satisfaction scores compared to 2016, with Spar showing the biggest improvement. Shoprite had the lowest  overall customer satisfaction score, well below industry average.

“While there were top performers in each of the measures of customer satisfaction, there were no outright winners who performed best across all categories and who are successfully managing all facets of customer satisfaction. Similarly, while brands may have maintained their lead in certain measures, they have done so with decreasing scores when compared with previous years. It’s clear that competitors are using the Sa-csi data to up the ante on previous shortcomings – evident in a number of significant score improvements – while previous leaders may have been lulled into complacency or suffered reputational setbacks which have impacted their performance and customer perceptions. Scores well below par or in a seemingly stagnant state should be cause for intervention if retailers are to maintain profitability in an increasingly competitive environment where consumers are quick to vote with their wallets and shift loyalty when dissatisfied,” explains Professor Adré Schreuder, SA-csi founder and chairperson.

In a time when extreme economic pressure and the accelerating rate of technological developments are significantly influencing how consumers and shoppers behave, customer satisfaction is a big deal, while getting it right is complex and multi-faceted.

“We have come a very long way from when all it took was some customer service from efficient and friendly staff to do the job.  The context of retail has evolved rapidly to extend across bricks and mortar experience to online and digital presence, while consumer drivers such as value, time, experience, healthy eating and ethical living are all culminating in a continuum of disconnect between shopper expectations and the retailer’s ability to satisfy them,” concludes Prof Schreuder.

Key take-outs based on the findings:

  • In tough economic times which South African consumers are currently experiencing, the price of goods is likely to influence consumer loyalty even though they are satisfied customers. It is important to note that price-motivated loyalty is not permanent, so while customers may display less brand loyalty now, supermarkets cannot afford to stop investing in positive shopping experiences.
  • While Woolworths had the advantage of differentiation in the past in terms of instore design, experience and packaging which appealed to the upper end of the market, competitors have made significant headway in this regard. Woolworths have failed to innovate in the instore experience, while Checkers has made dramatic improvements to instore presence as well as packaging. For many consumers, there has been a shift where consumers believe that they can now get equivalent quality, at lower cost.
  • Spar’s sustained focus on community involvement and a key strategic emphasis on convenience location since 2014 are bearing fruit. Spar has focused on getting the basics right and ensuring that they are able to deliver on being in-stock of every product, every day, making it the go-to for a convenient stop to get the daily incidentals which remains a key driver of consumer behaviour. South African consumers are facing an increasingly stressful, time-starved lifestyle which has created a burgeoning demand for convenient solutions that can help simplify their lives.

As a strategic tool for gauging the competitiveness of individual firms and predicting future profitability, an organisation’s customer satisfaction performance, as measured by the SA-csi methodology, provides a predictive indication of how well the firm will perform in terms of future revenue and earnings growth.

Founded by marketing research doyen and customer satisfaction expert, Prof Adré Schreuder, and supported by both academia and industry, the SA-csi is the first independent, comprehensive national customer satisfaction index with international comparability in South Africa and has collected data from more than 400 000 consumers since its inception in 2012. It produces scientifically robust and independent customer satisfaction benchmarks for a multitude of companies, industries and economic sectors, which together represent a broad swath of the South African national economy. The SA-csi forms part of a global network of research groups, quality associations and universities that have adopted the methodology of the American Customer Satisfaction Index (ACSI) via its international licensing program called Global CSISM.

About the “South African Customer Satisfaction Index” (SA-csi)

The SA-csi forms part of a global network of research groups, quality associations, and universities that have adopted the methodology of the American Customer Satisfaction Index (ACSI) via ACSI’s international licensing program called Global CSISM.

Developed by Prof Claes Fornell at the University of Michigan’s Ross School of Business, the Index uses customer interviews as inputs to a multi-equation econometric model. The SA-csi methodology is distinguished from other measures of quality by four significant characteristics:

 

  • ACSI uses a cause-and-effect model that measures satisfaction quantitatively as the result of survey-measured input of customer expectations, perceptions of quality, and perceptions of value (ie quality for cost).
  • The ACSI model links satisfaction quantitatively with customer-survey-measured outcomes: complaints (a negative outcome) and loyalty (a positive outcome).
  • ACSI has a uniform, customer-based definition of quality: “Customer satisfaction with the quality of goods and services consumed.”
  • ACSI treats satisfaction with quality as a cumulative experience, rather than a most recent transaction
  • The 2018 SA-csi benchmarks customer satisfaction using an internationally-recognised model to achieve an overall result out of 100. It provides a weighted average of various aspects of a customer’s experience with the brand, the degree to which the product or service has met, fallen short of, or exceeded their expectations, and how well it compares to the respondents’ anticipation of their experience.
  • Customer expectation refers to the total perceived benefits a customer expects from a company’s product or service. If the actual experience customers have with a brand exceeds the expectation, they are typically satisfied.
  • One of the ways South African consumers can contribute to the SA-csi measurement is by joining Consulta’s propriety research community, ConsultaPanel. ConsultaPanel allows the general consumer a safe but true community platform to contribute to the total offering of day-to-day consumer products and services, by voicing their opinion and participate in our research activities.

 

Methodology

  • The index represents a weighted average of a range of facets related to customer satisfaction. Consulta, the independent consulting company that compiled the index, surveyed 1 619 randomly selected customers of the biggest supermarket chains in South Africa – including Checkers, Pick n Pay, Shoprite, Spar and Woolworths.
  • The research is conducted independently, without sponsorship from any of the entities, and offers impartial insights into South African supermarkets. The 2018 SA-csi for Supermarkets benchmarks and blends a customer expectations ndex, perceived quality Index and a perceived value Index to achieve an overall result out of 100.
  • The SA-csi provides a weighted average of the various aspects of a customer’s experience with the brand, the degree to which the product or service has met, fallen short of, or exceeded their expectations, and how well it compares to the respondents’ ideal of what they anticipate their experience to be.

 

 

 

 

 

Three consumer trends shaping the packaging and printing market in 2019

 

Trend #1: Smarter choices with existing packaging options

“In 2018 we experienced unprecedented fuel hikes, a technical recession as well as a VAT hike. These costs are being passed onto the consumer as goods and products become more expensive, and the cost of living escalates. Yet, at the same time, consumers are demanding more from packaging, such as more sustainable and waste reduction options,” says Stewart.

A study conducted in 2018 by EcoFocus Worldwide found that grocery shoppers in 2018 have greater expectations of packaging than ever before – especially when it relates to healthy food and beverages. Consumers were demanding not only clean labels and food products, but also clean packaging.

Stewart says that while consumer concerns regarding reducing waste may drive new opportunities in the packaging space, many sustainable and waste reducing packaging alternatives are still in infant stages in South Africa; while those that do exist are more expensive to produce. The bulk of these costs are passed back to the consumer in the form of higher priced goods. This presents a catch-22 for consumers who are both cost-conscious and want their packaging to align to their environmentally-aware lifestyles.

“Consumers will need to make smarter choices when it comes to packaging. Take the plastic bag for example. Research by the Environmental Policy Research Unit at the University of Cape Town suggests that South Africans use about eight billion plastic bags annually. This means that plastic won’t be disappearing anytime soon,” says Stewart.

A smarter choice could be to use a 100% recyclable plastic bag.

ITB Plastics, a division of Novus Holdings, has produced a 100% recyclable LLD plastic bag that is also washable. This bag is made with recycled material; is thicker than an ordinary plastic grocery bag (a sturdier product with added strength – robust for carrying up to 20 kg) and; it can be used up to 200 times (before being handed in for responsible recycling). It can also carry frozen and wet products without disintegrating. It is also cheaper than cloth bags.

“It is up to us to use plastic bags responsibly rather than discarding it where it will end up as pollution. Using a plastic bag as a bin liner is one way that will allow it to enter the waste stream, where it is easily retrieved by recyclers.”

Trend #2: Convenience drives the need for more flexible packaging

According to research by consulting firm Deloitte, the global flexible packaging market is expected to grow by 5,2% annually through 2022 due to the very many benefits that this packaging offers such as aesthetic appeal, longer shelf life, lower weight and ease of use. This finding is echoed by LEK Consulting, a global management firm that in 2018 surveyed 200-plus brand managers who identified the increased need for flexible packaging.

“Consumers continue to have a great need for convenience solutions that can also guarantee the freshness of products, which is driving the growing trend for flexible packaging such as pouches and bags,” says Stewart.

Trend #3: More designer, personalised packaging and printing

Stewart says that more and more consumers are looking for personalised, bespoke options when it comes to labels, packaging and printed material.

“The trend toward mass personalisation is being driven by the advent of targeted online content, putting consumers in the driver’s seat. Consumers want something unique to them. Social media, the advent of digital content and how users interact with it have changed the type of experiences that people want.”

At the end of 2019 Novus Holdings launched a limited edition, bespoke gift wrap conceptualised by SA musician Jimmy Nevis to capitalise on the trend of consumers’ need for unique goods.

“In addition, we have seen that the humble label is being used as an extension of companies’ marketing efforts. Personalised labelling – the trend that sees brand owners and consumers personalise a label with a message or an image – will continue to gain traction in 2019,” concludes Stewart.

About Novus Holdings:

Previously known as the Paarl Media Group, Novus Holdings Limited services South Africa and the African continent through its print production of all short to long run requirements of educational materials, magazines, retail inserts, catalogues, books, newspapers, commercial work, as well as security and digital printing.

Novus Holdings is committed to making a sustainable difference in the communities in which it operates, as well as driving skills development and transformation within the industry.

 

 

 

 

HomeChoice makes progress in difficult retail environment

HomeChoice International PLC, the leading participant in southern Africa’s retail homewares and financial services sectors to the expanding urban middle-income mass market, announced steady growth despite a tough second half for the year ended 31 December 2018. Revenue increased by 8,5%, and headline earnings per share remained largely unaltered from the previous year, at 507,7 cents. The group declared total dividends for the year of 194,0 cents per share, up 1,6%.

Chief executive officer South Africa, Shirley Maltz, commented: “Notwithstanding the challenging retail environment, we are seeing the benefit of our continuous investment into improving our customer experience and accelerating our digital transformation, which are both key strategic focus areas for the group. Credit extended via digital channels increased by 43,9% to R1,6 billion.”

Maltz expanded: “Another highlight for us is that the group continues to attract more than 20 000 new customers monthly, attracted by our curated product offers. The group’s active customer base increased by 10,0% this year.”

Capital expenditure, at R126 million, has increased notably in this period and has involved rolling out four additional showrooms and two ChoiceCollect containers, opening a second distribution centre in Gauteng to provide quicker, more convenient deliveries and re-platforming and upgrading technology across the business.

Financial results exhibit moderate growth and strong investment

Group revenue increased to R3,2 billion (2017: R3,0 billion), benefiting from a solid contribution from the financial services business, with loan disbursements up 21,5%. This was tempered by weaker retail sales of 6,3%.

Group EBITDA (earnings before interest, tax, depreciation and amortisation) increased by 3,6% to R821 million. Despite significant cost focus, the group could not sufficiently mitigate weaker top-line growth in the second half of the year. Headline earnings increased by 1,3% to R529 million. The group declared a final dividend of 99 cents and a dividend cover of 2,6 times was maintained.

Retail disappoints in H2

Retail revenue increased by 7,4% to R2,5 billion. After a strong sales growth of 18,9% in H1, trading in the second half of the year was impacted by operational challenges at the South African Post Office (SAPO), with delays in the delivery of catalogues and parcels. The non-delivery of monthly catalogues had a substantial impact on sales. The group spent significant effort to assist SAPO and has also sped up the roll-out of showrooms and container hubs to provide additional channels for customers to collect their products. Increased marketing expenses to stimulate sales and additional courier charges to deliver the products to customers were incurred, translating into an EBITDA decrease of 2,9% to R453 million.

The business is however well-positioned to continue its strong historical performance in 2019. Digital sales contribution increased to 16% and will be further enabled with the launch of new e-commerce site. Supporting the much-loved HomeChoice private label, there are now 120 external retail brands on offer which provide variety to existing customers and attract new customers looking for quality homeware, fashion, furniture and personal electronics. The group has also had very positive customer response from the showrooms and ChoiceCollect, with further rollouts planned for 2019.

“Longer-term targets are for 20 showrooms and up to 100 ChoiceCollect containers across the country,” said Maltz.

Financial Services generates solid performance

Loan disbursements in the financial services business increased by 21,5% to R1,8 billion. Pleasingly, loans to existing customers increased to 84,5% of total disbursements, with strong acceptance of MobiMoney, our three-month, digital-only facility product. Revenue increased by 12,2% to R746 million and EBITDA grew by 13,7% to R357 million, highlighting the annuity aspect of the financial services business. Over 40 000 new customers were acquired during the year, increasing the base by 11,4% to 176 000.

Insurance has demonstrated strong growth in funeral products. Gross written premiums increased by 70% over 2017. “The opportunity remains to add more personal insurance products to the portfolio. This vertical represents an attractive growth opportunity to diversify income and increase customer share of wallet,” added Maltz.

At least 86% of customers are now registered on our digital platforms and a third of loan transactions concluded, are done outside of normal trading hours. The richer Mobi platform creates a portal for a multitude of products and value-added services to be offered to customers via their smartphones. The introduction of airtime, data bundles and electricity sales has indicated the potential opportunity to increase customers’ digital engagement with the group.

Stable credit

The group continued to expand a quality credit book with gross trade and loan receivables increasing by 7,5% (on an IFRS 9 comparable basis) to R3,5 billion. Group debtor costs at 17,2% of revenue was marginally above 16,8% in 2017, and remains within the group’s acceptable risk tolerances. Non-performing loans declined, while NPL cover was bolstered by increased provisions.  The improving performance metrics are testament to the group’s ongoing conservatism in managing its credit book.

Strong cash generation

Cash generated from operations increased by 32,0% to R474 million, driven by a decrease in retail credit growth in H2, good cash collections, a reduction in loan terms and actively managing cash requirements in working capital.

“The strong cash generation capability of the business is evidenced by the fact the group has managed to grow a credit book of more than R3,5 billion while maintaining a net debt to equity ratio (excluding property) of 22,2%,” Maltz said.

Outlook

“We will continue to position ourselves as a leading digital partner in the mass market, with an omni channel offering that provides an attractive and seamless retailing experience across all channels,” concluded Maltz.

The group has serviced this market for more than 30 years and has built up a loyal customer base of more than 870 000 active clients. This base, together with our established digital platforms, offer enormous opportunity to extend our product ranges and service offerings.

About HomeChoice International PLC

HomeChoice International plc is an investment holding company listed on the JSE Limited. The group provides retail and financial services to the mass market in southern Africa. HomeChoice services its large, primarily female and middle-income customer base through two trading operations, HomeChoice (Retail) and FinChoice (Financial Services).

 

African retailers have the opportunity to re-imagine a data-driven sector

By Toros Esim, head of Digital Retail and regional director of Digital Strategy for the Middle East and Africa at Orange Business Services

Transforming retail starts with the business model, not the technology

In a continent the size of Africa, comprising more than 50 countries, it can be very tempting to make sweeping generalisations about the adoption of digital technologies, and the transformation of the retail sector across the continent.

The potential scale of the opportunity cannot be ignored – the large and young population, emergence of a middle class, strong retail revenues and second fastest growing consumer region in world. The successful transformation of the sector starts with addressing the business model, built on new streams of customer data, and enabled by technology. The opportunity for retailers in Africa is to re-imagine the retail sector across the continent through a business transformation process.

Industry statistics suggest that the Africa retail sector is growing strongly but it’s a much more complex picture across such a very diverse range of countries. Half of the consumption in growth in Africa is expected to come from just three geographic areas, East Africa, Egypt and Nigeria.

Retail covers such a broad spectrum of operations from the informal family-run store to the large malls, from fashion to fresh foods. Despite all this variation, we can see that there is recognition in parts of Africa of the potential to follow the global shift to an increasing emphasis on e-commerce and online shopping; the first movers are already making their moves not just in Africa – but also beyond.

African companies are now buying European companies – more than $1,5 billion was spent in acquisitions 2015 alone with Shoprite, Spar, and Foschini Group, for example, all on the acquisition trail. Scale is important and 10 of the fastest growing retailers in Africa are present (on average) in eight countries across the continent and have a store count of around 900 stores. Acquisition provides additional scale, expertise and technologies that can be transferred to the region.

Yet, there is some common ground – a large and growing population (1,3 billion) of young people (average age under 20) combined with strong internet penetration is resulting in a generation of tech savvy young people and creating the potential to make digital leaps based on the ubiquitous mobile phone.

As in many regions around the world, consumers in Africa are ahead of the curve when it comes to the adoption of mobile technology and established players in a range of industries are playing digital catch-up, from banking to retail, while new digital native companies look for the opportunity to disrupt the industry.

But the digital transformation of retail goes beyond the physical/online store, as the retail sector draws together manufacturing, production and processing, with logistics and supply chain, and then selling/transacting and customer service, culminating in the consumer experience.

For retail, this means that the real opportunity for digital business transformation is the development of a new business model, aligned with the customer expectations and driven by customer data. This includes  ̶  but goes far beyond – e-commerce.

Abstract Futuristic infographic with Visual data complexity represent Big data concept node base programming

Speed is of the essence

To build a new business model for retail, retailers first need to understand what they want to improve. Asking the right questions is the first step in finding the answers. A data culture is created by making better business decisions.  This starts with collecting data, analysing it, and then creating inferences from it to improve your decision-making capacity. This enables a business to identify the possible improvements to the existing models and to explore potentially new business models that could deliver much more than just incremental improvements to business performance.

However, the commitment to becoming a data-driven company needs to be solid and consistent across the entire organisation. This enables all your employees to become data ambassadors and data translators.  Fundamentally, this is all about appreciating that your data is a key differentiator for your business and creates unique value, and sharing this belief and commitment as part of your organisation’s data culture.

The opportunity for retailers in Africa is to transform their businesses and become data-driven operations, harvesting increasingly rich customer data, from an expanding range of digital and physical customer touch points.

The digital business transformation process is a change management challenge, led by management, driven by people, enabled by technology. Successful retail transformation means understanding the value of different forms of data and the six key steps of the data journey, while not being mesmerised by the technology – whether it’s AI, IOT or Cloud.

The technology enables the creation of retail customer data that can be harvested to benefit retailers through the deeper insights data can provide into customer behaviours. This leads to the capacity to be able to anticipate behaviour. The shift to a data-driven retail business model does not mean losing the physical stores and retail environment. Retailers in Africa are already introducing new e-commerce platforms, which create a new set of digital touchpoints with customers, in addition to the rich customer touchpoints of the physical retail store experience, and all producing new data.

But it’s not just about the in-store experience

By re-imagining the business model, retailers can adopt the enabling technologies that will create efficiencies and reduce costs across the supply chain and enhance the customer experience online and in-store – it’s a digital transformation without the risk of external disruption – in effect, retailers should transform themselves before someone disrupts their business from the outside.

Collect  ̶  Collecting data from multiple streams is a challenge and must respect the privacy and regulation requirements from a wide range of sources and sensors including financial transactions, social websites, connected objects and devices, and robots.

Transport  ̶  Data transport is all about networks, including mobile, fixed, international, virtual, wireless sensing networks using (LPWAN), and more. The key is to combine technologies to provide the most reliable tailored solutions for customers, while paying extra attention to questions of governance, privacy and security.

Secure  ̶  It should be a given that data must be secured end to end to ensure trust; cyber defense must meet the need for more efficient methods of combatting cyber threats, combining technology and people power to secure organisations’ activities and help protect them against multifaceted threats. Security models must be improved, enriched and reinvented on a permanent basis meeting the challenge of finding a balance between agility and security.

Store and process  ̶  When it comes to data storage, cloud experts must roll out tailored solutions – public, private or hybrid  ̶  for their customers, while paying extra attention to questions of governance, privacy and security.

Analyse  ̶  The challenge is to transform the precious commodity of data into pertinent and rewarding information and successful transformation is achieved through data-driven strategies that cut across silos at every step, from developing a data project to measuring performance.

Collaborate and create  ̶  Cyber intelligence experts help organisations turn information into insights and transforms it into value. Application design helps develop simple and intuitive decision-making tools. Data intelligence offers a multitude of data management tools and analysis services to support decision-making: dashboards, data visualisation tools, business sector indicators.

The shift to a data-driven culture is technology enabled but not technology-driven.

It is a deeper, more radical transformation and this needs a lot of imagination.

 

Four decades of memorable moments: Sun City is 40!

It has been 40 years since Sun International’s legendary Sun City opened its doors, marking the start of a new era in leisure and entertainment for South Africa. Emerging from the dry African bush in what was then known as Bophuthatswana, the resort, launched by hotel magnate Sol Kerzner, instantly captured the hearts and imaginations of entertainment-hungry South Africans. For the first time, they could explore the previously forbidden delights of topless extravaganza dancers, concerts by international bands and artists, and the thrill of glamour gambling.

Over time, Sun City has evolved into one of the most exciting and all-encompassing entertainment and leisure destinations in the country. It is where wildlife, vibrant nightlife, golf, outdoor adventure, an award-winning spa, a world-class casino and adrenaline pumping fun for all ages combine in one spectacular location. Sun City also borders the game-rich and malaria-free Pilanesberg National Park where visitors can spot the Big Five in their natural habitat from hot air balloons, in safari vehicles, on foot or on mountain bikes.

“After four decades, we are still inspired to give our guests experiences that will live long in their hearts and memories” explains Raul de Lima, Resort GM at Sun City. “Our 40th anniversary is certainly an auspicious milestone that we will celebrate with a super charged line-up of entertainment and events during the course of the year.”

Sun City has recently undergone an ambitious multi-million-rand refurbishment to revitalise its iconic appeal and ensure that it retains its rightful place as South Africa’s entertainment mecca. Today, visitors have a choice of over 30 restaurants, lounges and bars (ranging from fine dining restaurants to casual and family-friendly eateries); state of the art conferencing facilities and a suite of spectacular activities that have broad appeal. There are now seven thrilling water slides at the Valley of Waves; the Chimp & Zee aerial rope adventure course; the Sun City Bike Park; the Adrenaline Extreme adventure hub; Breakout, the mind-boggling obstacle challenge; the Vortex Lounge, and Sun Central which houses movie houses, the SA Hall of Fame and other fantastic attractions.

Sun City boasts a choice of hotels and accommodation. The Palace is a five-star hotel offering grand African luxury; the five-star Cascades offers secluded luxury, the four-star Soho is the resort’s lively Vegas-style hotel, and the three-star Cabanas provides contemporary, island-style accommodation. The resort’s timeshare offering, Sun Vacation Club, boasts self-catering accommodation with a choice of exciting amenities.

“We will not lose momentum garnered over the past 40 years. We continue to source the latest innovations in gaming and leisure to ensure that Sun City remains an iconic premier lifestyle resort on South Africa’s tourism map for another 40 years and beyond. As the old adage goes: life begins at 40,” concludes de Lima cheerfully.

Although the opportunities to create memorable moments at Sun City are vast and diverse, here’s a list of 40 must-try experiences:

Top 10 restaurants and bars

  • Legends ̶  a trendy grill house that pays tribute to the icons that have graced Sun City since 1979.
  • Bocado – offering one of the most beautiful settings to enjoy vibrant Mediterranean dishes.
  • The Grill Room – boasting some of best steaks and grills in the North West.
  • Plume – a chic-classic restaurant offering an evolving, crafted menu.
  • Crystal Court – for the most extensive breakfast buffet and decadent high tea.
  • The Brew Monkey – a gastro pub with a decidedly rustic microbrewery feel.
  • Vibes – retro-styled sports bar.
  • Tusk Bar & Lounge – for cocktails and light meals at The Palace.
  • Luma Bar and Lounge – for lunch and sundowners on the deck at Cascades.
  • The Shebeen – for authentic South African food and beer in a laidback setting.

Top 10 leisure activities

  • The Valley of Waves – featuring an array of thrilling water rides and slides.
  • The Cascades Forest of Lights where the lush tropical gardens and waterfalls are transformed into a magnificent landscape of colour.
  • Encore – the upmarket nightclub located at the heart of Sun City’s always-on party zone, Soho.
  • Rejuvenating spa treatments at the internationally acclaimed Gary Player Health Spa and Gym.
  • Segaetsho Cultural Village – enjoy an authentic Afriganza experience, with traditional and modern infused dance, music, crafts and indigenous games
  • SA Hall of Fame – an interactive hub paying homage to South Africa’s icons.
  • The Crocodile Village
  • Slots and tables games at the casino.
  • Ten-pin bowling.
  • Take the Leeto-Kgolo Heritage Tour on bicycles.

Top 10 adventure/ adrenaline activities

  • The Zip 2000 – one of the world’s longest and fastest zip slides.
  • Accelerator – a heart pumping challenge at Adrenalin Extreme.
  • Breakout – solve a series of puzzles and problems in order to escape a locked room.
  • Para-sailing
  • Jetovator
  • The Maze of the Lost City
  • Game drives
  • Balloon Safari
  • The Grizzly Quad Challenge.
  • The Chimp & Zee Rope Adventure Park – an aerial adventure at treetop level above the Valley of Waves.

Top 10 Sporting activities/facilities

  • Gary Player Country Club
  • Lost City Golf Course
  • Bike Park
  • Tennis
  • Mountain biking
  • Hiking trails
  • Airsoft Call of Duty (target shooting)
  • Drift trikes
  • Rock Venture Mini Golf
  • Segway tours

 

I-Drop Water and Bluewater unveil innovations in affordable drinking

South African innovator, I-Drop Water, have revealed the Waterpod, the latest and most advanced water purification solution designed to offer a self-service drinking water refill solution for shoppers in all locations, at an affordable price.

With the growing emphasis on alternatives to single-use plastic water bottles and sachets, the drinking water industry and large-scale retail are starting to embrace this alternative approach to the sale of safe drinking water. Since 2016, I-Drop Water has installed water purification and refill machines in over 100 retail outlets in five African countries, all of which has culminated in the development of the new Waterpod.

According to James Steere, co-founder of I-Drop Water and director of Bluewater’s African operations, “The Waterpod is a completely new and innovative way for affordable drinking water refills to be sold in retail environments across Africa and beyond. It is the result of almost four years of product development, testing and data that we’ve gathered from across the length and breadth of Africa.

“The self-service purified drinking water refill industry is gaining traction around the world, primarily for the significant price and environmental benefits it offers to shoppers compared to bottled water,” said Steere.

“In the United States, self-service drinking water refills are available at tens of thousands of grocery stores. However, to date, water refill options in Africa have typically only been available through small dispensers in offices or gyms, or costly, semi-industrial purification machinery in kiosks and stand-alone water franchise shops.

“The Waterpod provides an opportunity to open up the entire market by offering the benefits of a small, compact water refill machine with the high-spec purification power of much larger systems, all designed to deliver a great user refill experience for sizes between 1 litre and 25 litres, even in the most complex African water environments.”

How the Waterpod works

“What we know from our work across Africa is that water conditions vary far more than anyone could imagine. One part of Johannesburg can have a completely different water composition, pressure and reliability of supply to a neighbouring suburb,” says Steere.

“The compact and versatile Waterpod represents a step-change in this industry by delivering the optimal purification for a specific water environment by combining the necessary technologies ideal for each site in less than one square meter of floor space. Cost savings are passed to the shopper through a lower price of up to 90% less than bottled water, and to the shop owner through a high gross profit on a per-litre sale. All of this is monitored in a real time GSM internet of things platform that we’ve developed specifically for this application.”

Bluewater investment in I-Drop Water

The development of the Waterpod has been boosted by investment from Bluewater, which has partnered with I-Drop Water to introduce Bluewater’s SuperiorOsmosis™ water purification technology to the African market. The “Bluewater Pro” is designed for direct consumer application and is a powerhouse point-of-use water purifier that helps both professional environments and homes create their own supply of pure drinking water from municipal or borehole sources.

The partnership between Bluewater and I-Drop Water has also given rise to the development of the Bluewater Trailer, a mobile solution for pure drinking water on location and used by large-scale events and with applications in the film, mining and construction industries, where location-based water purification is required.

“This exciting new tech rollout is another step towards meeting the challenges of a water-stressed Southern African region and indeed the world,” said Anders Jacobson, president of Bluewater. “This innovation embodies our partnership mantra of ‘Swedish ingenuity meets African innovation’, and is a unique offering aimed at reaching a market of over 2 billion people around the world who still risk their health every day by drinking unsafe water. We are excited to be on this journey with I-Drop Water and look forward to further sharing Bluewater’s unique technology and products throughout the African continent,” said Jacobson.

About I-Drop Water

I-Drop Water is a for profit, mission-driven company established to bring safe drinking water to everyone. We’ve built an innovative business model that uses nano-purification water filtration technology and GSM-enabled platform to empower grocery store owners anywhere to purify and sell safe, affordable drinking water to their customers. Shoppers refill multi-use containers and pay by the litre for the drinking water they need. With I-Drop Water more people can afford safe drinking water, less plastic waste is produced and local economies benefit by supporting their local grocery stores.

Visit www.idropwater.com

No water necessary: P&G Beauty unveils new hair care brand

The Procter & Gamble Company announced the launch of its first new retail hair care brand globally in four years, inspired by and co-designed with women in Cape Town during the water crisis Capetonians experienced in early 2018.

The new WATERL<SS hair care collection from P&G Beauty launched in Cape Town in March, exclusively at select Clicks stores, one of the leading retailers in South Africa. The range is designed to cater to the different hair care needs of women of all hair types and ethnicities, without the need to use a drop of water. The WATERL<SS collection includes:

  • An ultra-lightweight Foam Dry Shampoo that instantly revives hair, without residue, absorbing excess oil and leaving hair with an amazing scent that reactivates throughout the day.
  • A residue-free Dry Shampoo spray that makes it easy to keep hair beautiful in an instant no matter where or when you need it.
  • A range of Dry Conditioners that provide hair with the softness and smoothness of a traditional rinse-off conditioner, without needing a drop of water.
  • A range of alcohol-free Hair Refreshers with signature fragrances designed for all hair types, providing instant odour-detox, static control, and anti-frizz benefits.

According to the World Wildlife Fund, only 3% of the world’s water is fresh water and by 2025 two-thirds of the world’s population may face water shortages. Leading market research firm, Mintel, has also found that 27% of consumers are now trying to reuse or use less water.

The new WATERL<SS brand was recently previewed by P&G’s chief marketing officer, Marc Pritchard, during the World Economic Forum in Davos, Switzerland as part of the new “innovation agenda” from P&G, the 50L Home, that was announced during the Bloomberg Year Ahead Event.  The 50L Home, initiated by P&G, will bring together companies, policy makers, and communities to develop and scale innovations for the home that help solve the urban water crisis.

“At P&G Beauty, our goal is to be both a force for good and a force for growth. Water is a precious commodity that is under great stress, and we believe that we can play a role in helping people achieve the end result they desire despite water shortages through insightful and meaningful innovation”, said Alex Keith, CEO, P&G Beauty. “This is the intent behind the WATERL<SS brand: whether she has to or wants to use less water or is just on-the-go and needs a quick refresh, we are committed to providing every woman with products that work for her unique hair care needs.”

“With South Africa battling severe climate change, we are excited to partner with P&G Beauty to provide consumers with this world-first innovation in water-less haircare that will not only help them reduce their impact on the environment, but change the way they look at hair maintenance,” conclued Jamie Lane, head of Trade at Clicks.