Broll reveals state of play in SADC property market

Broll reveals state of play in SADC property market

For a prospective investor or developer who has set their sights on expanding a retail or commercial property portfolio in Southern Africa, or one who is entering the region for the first time, the way forward may appear complex and uncertain. Conflicting reports, dubious statistics and misconceptions can cloud their route. So how can an investor or developer who wants to spread their investment wings in Southern Africa make an informed and strategically sound decision?

Broll Property Group’s latest research report on certain SADC (Southern African Development Community) countries, entitled SADC Market Snippet 2018, is a powerful and invaluable tool, designed to assist with understanding some property market conditions in the region.

Lyttelton Shopping Centre, one of many managed by Broll

The SADC was established in Windhoek in 1992 to grow the economies of Sub-Saharan African states and foster cooperation and peace amongst its members. Broll Research has put a group of SADC countries, where property investment opportunity presents itself, under the spotlight, and has crafted a brief report which looks at:

  • Country facts;

  • Economic indicators;

  • Global rankings on indices e.g. corruption or competitiveness; and

  • Key indicators in the retail, office and industrial property markets.

 

Research that’s key to investment

Broll Research specialises in converting property data into market knowledge, providing clients with decision-making research that spans the retail and commercial property sectors.

Broll’s research teams across sub-Saharan Africa enable the company to add value to clients’ portfolios, by partnering with them to make well-informed decisions and grow the performance of their investments.

In Mauritius average rental yields of 7.75% – 8% are being achieved within the retail market”

The Broll SADC Market Snippet Q1:2018 takes each of the countries in turn and presents an easily readable and accessible six-part picture to guide the investor on property market conditions in each country.

Investors get the big picture

By extracting data such as GDP alongside ease of doing business rankings, as well as office rentals and yields, there emerges an absolutely fascinating picture tailor-made for investors. As an example –

Country

Real GDP Annual Growth Rate (%)

Real GDP per Capita/ US $

Ease of

Doing

Business

2018

(Rank/190)

Commercial Market

Prime Net Achieved Rent (US$/m²/month)

Average Yield (%)

Average Vacancy Rate (%)

Botswana

4.3

7,767

81

10

8-9

N/A

Madagascar

5.0

429

162

14

14

20

Malawi

4.4

492

110

10

9

20

Mauritius

4.0

10,568

25

13

8.5-9

4-10

Mozambique

4.8

528

138

28

9.5

65

Namibia

3.1

5,935

106

15-18

9

2

South Africa

2.0

7,571

82

15-17.5

8-9

5-15

The report is packed with a wealth of critical data for investors and decision-makers. Taking a closer look at a particular country in the report, for example Mauritius, one finds a country of 1.3 million people, rating well on the democracy index, which is managing to keep corruption levels at bay and is high on the best-countries-for- business index. This ranks it as a favourable location in the SADC region in which to do business.

Mauritius with 58.6% of the population urbanised, intense mobile phone usage at 142 phones per 100 people, internet access with 46.2 users per 100 people and a Real GDP annual growth rate of 4.0%, offers potential for investors and developers. Asking rents are being achieved within the retail market with average yields of 7.75% – 8% being evident. The average yield for offices is generally a bit higher at 8.5% – 9% and demand within the market is forecast to be stable with supply increasing over the next 6 months.

The Broll SADC Market Snippet 2018 is an outstanding guide for retail and commercial property investors, packed with useful data and statistics that will make decision-making that much easier.

To download the “SADC Market Snippet 2018” report go to www.broll.com/publications

How brands and stores benefit through the revolutionary bonsella® in-store rewards programme

How brands and stores benefit through the revolutionary bonsella® in-store rewards programme

 

Patrick Winter,Head of Strategic Partnerships at Retail Engage – innovator and custodian of the revolutionary bonsella® rewards programme

In April Shopping & Retail SA visited Retail Engage, the innovator and custodian of the revolutionary bonsella rewards programme for independent stores, and chatted to Patrick Winter, Head: Strategic Partnerships, to find out just what makes bonsella® tick.

 

S&R:. Why should independent stores be excited about bonsella?

PW: bonsella® is the first entity in South Africa who are strategic partners to the independent sector. We do this by giving our stores a free multi-million Rand loyalty programme to use, managing this programme with our team of experienced agents in each store, bringing additional brand spend to all of our stores (through airtime and other deals) and also by providing our stores with unique 3rd party services, such as in-store banking. This helps draw more feet, keep current shoppers happy, increases basket value and increase profit margins.

S&R: How many stores do you see bonsella rolling into going forward, and how many shoppers will this programme enrol?

PW: Our target has always been to reach 10m bonsella members in South Africa, which we are confident we will achieve through 500 stores, given that we sign-up over 20,000 members per store on average. Given that we are also expanding into the liquor, hardware and lifestyle sectors, this number of 10m could be closer to 15m at maturity.

S&R: At what pace will you be rolling out the bonsella programme to remaining stores across the country?

PW: After 4-years of testing the model and ensuring we have a platform that works for all of our stakeholders, we launched our growth campaign early 2018. This means that we are currently growing at around 15 stores a month. By December this year, we expect to be in around 125 stores, with just over 1m members, and expect to be at full maturity by July 2020.

S&R: Clearly the brands are benefiting significantly through the success and capability of the bonsella model – please elaborate.

PW: Brand have historically battled to spend marketing budget in the independent sector due to its fragmented nature, inability to target shoppers directly, and lack of reliable data to measure the effectiveness of this spend. bonsella has answered this in the following manners:

      • Provided brand with a platform to target shoppers directly (airtime, SMS, in-store campaign etc.)
      • Has access to all transactional, loyalty and consumer data across our stores
      • Provided brands with a single marketing partner in this sector
      • Provides brands with a unique platform to perform myriad other services such as stock reviews, brand activations and research
  • Most campaigns to date, have provided our clients with >50% ROI

S&R: Is technology, or lack of, a significant challenge in the roll-out programme? (i.e. till software, analytics, management systems and so on).

PW: Our roll-out of bonsella stores is based on strict criteria, looking at store size, technology and location. In South-Africa alone, there are estimated to be over 200,000 stores in the independent sector, of which a high % match the bonsella criteria. Our primary challenge is thus not the number of stores or related technology, but rather making sure we partner with right stores in each area of operations.

S&R: Still on the technology front, you have developed the app and in-store research platforms – do you have other technical developments in the pipeline? If so please elaborate.

PW: Absolutely, we have a number of exciting initiatives planned for Spaza owners, Traders and Stokvels and our retail shoppers. I cannot give in any more details on these, so you will need to watch this space!

S&R: Describe the geographic spread of independent stores throughout South Africa, and how Retail Engage will be engaging them.

PW: It is common knowledge that KZN is the dominant area when it comes to the independent retail sector in South Africa. This will form part of core growth, although we certainly plan to expand to all regions in the country alongside this. In terms of engagement, we have recognised that personal relationships and great customer service is critical to adding value to stores and ensuring you keep them as partners for life. This is proven through our current store universe, where have had the majority of our stores on-board for over 2-years now. This stems from a well structured regional team, and personal relationships with the key players in each of our stores.

S&R:: On the international front:describe your expansion programme model…. will you be focusing on African countries first? And what business models do you envisage – the same as bonsella or variations thereof?

PW: The bonsella model has been designed with scalability in-mind and growing a global brand. Put it this way, wherever airtime is valued as a commodity in-country, bonsella works! This is applicable in most developing countries around the world, although the initial expansion may be focused on Africa where we are fortunate enough to have a partnership with a leading entertainment provider. Through this partnership and market demands, we envisage growing into most major African territories from mid-2018 onwards.


S&R:: Will you be maintaining your focus on informal and independent stores throughout?

PW: Absolutely, this is a critical aspect of the bonsella model, and is the sector where there is the largest growth potential for both our brands and 3rd party service providers.

Independent stores, the heartbeat of rural retail

Rivesh Sudhama, regional manager of bonsella® in KZN

The Golden Sun store in Tongaat

Independent stores, the heartbeat of rural retail

In February Shopping & Retail SA visited KwaZulu-Natal to explore the vibrant independent retail sector. Although myriad independent stores are spread out all around the country, KZN is recognised as the national pulse of independently owned retail outlets.

Rivesh Sudhama, regional manager of the specialist loyalty group in this sector, bonsella®, met us at King Shaka airport to chaperone us through a range of independent stores from Tongaat, to Hammarsdale and Pietermaritzburg.

Our first stop was the Golden Sun store in Tongaat, a relatively young family owned store established some fifteen years ago by Yashim. This no-frills operation is functional in its design and layout, is very clean and very efficiently run. Golden Sun boasts 10 tills and processes a staggering 10 000 transactions per day.

“Loyalty is key for these shops,” explained Rivesh. “Most if not all customers are from the local community and surrounding district, and will visit the store two to three times per week, purchasing smaller baskets more often as they are mostly weekly paid. And pricing in these stores is also highly competitive,” continued Rivesh.

In this and other regions, bonsella® have established a strong presence with their unique and highly successful loyalty rewards programme. Each independent store has one or more smartly dressed and well-presented bonsella® consultants on the floor, complete with tablet and bonsella® app. By interviewing customers on an ongoing basis and feeding live data into the app, bonsella® are able to offer FMCG brand managers unprecedented near-live and accurate research data. The primary benefit for shoppers is to receive a “bonsella” (meaning gift) in-store, either through being sent instant airtime at the till-point for buying bonsella® promotional items, or various other in-store competitions and give-aways. FMCG brands benefit directly from this service by being able to reward and communicate with these shoppers directly.

Having integrated into more than 20 Point-of-sale (POS) systems across the country, the airtime is received in real time at the till, much to customers’ delight, with no more more than a swipe of the bonsella® card required.

“It’s all about activity,” explains Rivesh, who then outlined the bigger promotions, where, for example, a store or brand may make a microwave available which through the “bonsella® Universe” enables a customer to “swipe-and-win” – standing a chance to win the microwave. When these competitions are linked to products in-store, and combined with most of the familiar favourite brands being on promotion, this draws significant interest and a high level of customer participation.

Hammarsdale PowerTrade Cash and Carry shuttle ferries customers continuously from the local taxi rank to the store

On then to Hammarsdale where Rivesh introduces us to the Hammarsdale PowerTrade Cash and Carry store. This store too impresses with its functionality and clear efficiency, and is unique in that it houses both a wholesale and retail section under one roof, enabling spaza-shop owners to purchase their bulk supplies as well as catering for its regular community. Innovation abounds and is epitomised here by the store’s brightly coloured Mercedes Sprinter shuttle, which ferries customers continuously from the local taxi rank to the store.

In Pietermaritzburg Rivesh guides us to a local eatery where we chat about retail over our pleasantly hot bunny-chow – delicious – before heading off to the Save Group corporate head office to meet with the chief buyer, Suleman Parak.

The Save Group is renowned for its eight Save Hyperstores stores in KZN which services customers across the full range of LSM (Living Standards Measure) demographics. Save’s largest store is its massive main store in Pietermaritzburg which has “everything under one roof”, 54 tills and is also the largest appliance retailer in the Midlands. All stores are serviced by Save’s own distribution centre

Save’s largest store is its massive main store in Pietermaritzburg

Suleman notes that bonsella® has been rolled out in most of the Save stores and will reach its full potential in the main store within the next two months as system software integration completes. He notes too that bonsella® is very well received by Save customers.

Shopping & Retail SA will continue to explore the many facets of independent stores for you, our readers, unlocking opportunities for store owners and FMCG brand managers alike, and will share the many innovative trading solutions emanating from this sector.

Click here to find out more about bonsella

South African retail spending grew 3.8 percent this festive season

South African retail spending grew 3.8 percent this festive season

Mastercard SpendingPulse showed a significant increase in retail spending in December 2017 as consumers benefited from a stronger Rand and lower inflation.

Early ‘Black Friday’ shoppers crowd the Lenox Square Mall in Atlanta, November 26, 2015. The mall opened early for people wanting to get some holiday shopping sale deals.

Mastercard SpendingPulse reports that South African consumer spending showed a healthy improvement over the festive season, with retail sales volumes rising 3.8 percent year-on-year after removing the effects of inflation. This marks the strongest monthly performance for South African retail spending since May 2013.

The latest SpendingPulse South Africa report details holiday shopping in December 2017 and covers retail sales across all payment types, including cash and cheques.

Sarah Quinlan, Senior Vice President Market Insights for Mastercard

Including the effects of inflation, retail sales for December 2017 grew 7.5 percent year-on-year. Inflation contributed just 3.7 percentage points to overall sales growth, which marks a significant deceleration in price inflation, bringing consumers much needed relief over the holiday season.

“The spike in consumer spending during the holiday season took retail sales to new highs,” says Sarah Quinlan, Senior Vice President Market Insights for Mastercard. “Sturdier GDP growth, a lower inflation outlook and the stronger Rand, which in turn drove down import prices – all benefited consumers over the holidays.”

Key findings of the Mastercard SpendingPulse South Africa December 2017 include:
Pharmaceuticals, Medical Goods, Cosmetics and Toiletry sales climbed six percent year-on-year, after adjusting for inflation, showing the strongest growth the sector has seen in a year thanks to lower import prices.
Price inflation in clothing and footwear fell to its lowest since 2012, while food and beverage prices rose at the slowest rate since October 2015.
The General Dealer sector – which includes food and other day-to-day essentials – grew a mere 0.9 percent year-on-year when the effects of inflation are excluded. Though growth remained slow in this sector, this was the first December period since 2013 to see positive growth in general dealer sales volume.

“The price index for General Dealer sales continued to rise at a quicker pace than total retail sales, largely due to faster growth in food prices in the wake of an enduring drought,” says Quinlan. “Consumers hit by high Christmas food prices cut back on meat purchases and were less inclined to splurge on discretionary goods, instead searching for deals and promotions.”

Mastercard’s SpendingPulse reports are released monthly to subscribers ahead of other sources, providing timely, accurate, and unbiased insight into the South African economy. The report also includes an overall retail sales and price index to illustrate whether spending growth is being driven by increased shopping, inflation or increased promotions.

Mastercard SpendingPulse™ reports on national retail sales and is based on aggregate sales activity in the Mastercard payments network, coupled with survey-based estimates for certain other payment forms, such as cash and cheque. SpendingPulse™ reports and content, including estimated forecasts of spending trends do not in any way contain, reflect or relate to actual Mastercard operational or financial performance, or specific payment-card-issuer data. SpendingPulse is provided by Mastercard Advisors, the professional services arm of Mastercard.

 

Customer experience – the new differentiator

Customer experience – the new differentiator

With headlines dominated by a challenging economic climate, differentiating your business from the competition is more important than ever.

This is according to Veronique Filip, Customer Advisory and Experience Lead at Deloitte, who says there’s a growing realisation among business leaders that the most effective way to stand out from the crowd is by offering superlative customer experience.

Veronique Filip, Customer Advisory and Experience Lead at Deloitte

Leading by differentiation, says Filip, is when a company delivers more unique value, and in an age of instant digital communication and empowered customers, the notion of value has evolved way beyond product and services.

“For these new consumers, the value is in having accurate information in the format they prefer, in addition to buying exactly what they want, when they want it and how they want it – all while interacting with the company at their convenience.”

Filip says numerous global studies have indicated a strong correlation between customer experience and higher share of wallet and revenue, and point to customer experience fast becoming the primary point of brand differentiation, replacing the established norms of product and price.

She adds that customer experience is particularly important to preventing churn in emerging markets, and a good customer experience can help South African companies compete globally.

These findings are reflected in Deloitte’s own recent research in the South African financial services sector, which offers an illuminating insight into customers’ pain points as well as their expectations.

Comments from customers reveal that they often feel deeply hurt by a perceived lack of loyalty, reciprocity, or sensitivity from their banks. “My bank was not there to help me when my debit orders were rejected – they made me feel intimidated, like I owed them and I was the only person this had ever happened to,” said one customer – who later switched banks.

Other comments reveal that problems dealing with call centres, unhelpful and incompetent staff, discovering hidden bank charges and other issues can force customers to leave their bank. Even if a specific interaction does not cause churn, it may still result in a customer speaking negatively about their bank: “I thought about leaving, but I don’t want to sit at a branch again. You know how if you’re in an abusive relationship you get comfortable? I feel like that,” said one customer.

Positive experiences, on the other hand, often result in referrals. Friends’ and family members’ experiences are customers’ most valued sources of information about where to open a bank account or take out an insurance policy. A typical comment was “I picked my insurance company because one of my friends claimed from them twice and said it was seamless.”

Deloitte’s research also found that people are willing to buy more products if they have a good experience. One customer commented, “If they offered good service, I wouldn’t mind having all my products with one provider: it’s easier”.

These findings point to the business benefits of an effectively implemented customer experience strategy. Filip notes, “A deep understanding of customers’ pain points and their expectations of a company offers the promise of increasing revenue through churn reduction, additional purchases, word of mouth recommendations and acquisition of new customers.”

Addressing customer pain points, once they’ve been identified, need not be a costly or complicated exercise, says Filip. “Sometimes it’s as simple as managing a customer’s expectation: for example, informing them that it will take two days for them to learn whether their loan has been approved.” An important point to remember is that when wanting to improve your customer experience, companies should focus on making the right changes rather than trying to improve everything.

The right customer experience measurement system can help companies prioritise changes, as well as measure progress and benchmark against competitors. However, it can be difficult to find an indicator that can deliver on all of these areas.

Filip says that while many of Deloitte’s clients were aware of the growing importance of customer experience, they complained about a lack of effective measurement systems to aid them in implementing a customer experience strategy. Common complaints included frustration about a lack of granularity, actionability, local relevance and correlation to business results.

This gap in the market led Deloitte to develop the Deloitte eXperience Index (DXi), which consists of an industry-wide barometer, a diagnostic of root causes of customer experience issues, and a framework for ongoing measurement.

“DXi is an overarching indicator which also encompasses the correct level of granularity, offering insights per touch point, channel and perception metric. In addition, it offers insights per customer segment. It will provide companies with competitive and customizable results which can be linked to outcome metrics such as revenue.”

Marketing in a recession and beyond

Marketing in a recession and beyond

People don’t stop shopping it’s just the consumer’s behaviour that changes

By Gill Randall, Joint CEO of SPARK Media says that markets don’t stop in a recession.

Gill Randall

Through our membership of the Ehrenburg Bass Institute (EBI) for marketing science, we have access to consumer behaviour tracked from way before, during and post the previous recession, and that data has revealed very clear shopper insights. One of the biggest lessons we’ve learned is just how habitual consumers are.

Consumers find it difficult to modify their regular behaviour. So in belt tightening time, they find it much easier to change non-regular behaviours. Regular behaviour would be defined as going out for lunch or coffee or shopping at their favourite stores, they’ll continue to do this, but just at a reduced frequency or expenditure level. Non-regular behaviours, however, like buying big appliances or re-decorating will be postponed or discarded.

The 2008 – 2009 recession resulted in purchase declines across all categories, with the after effects felt and seen in continued declines up until 2013. As the economy recovered, purchasing again picked up between 2013 and 2016 showing increased purchases across most categories.

But even during a recession, life continues to happen: appliances and cars that break down still need to be repaired or replaced, people still get married, move houses, start families, change jobs and so on, money will still be spent, again, just at a reduced level and frequency.

Thinner markets mean that less people are actively buying at any given time. They’re spending less and buying less frequently which generally means that smaller marketing budgets have to work harder. And along with tightening budgets, consumers are also extensively searching for bargains, therefore an increased mental availability for brands in tough times do go a long way in getting those much needed sales.

This is where the now generally accepted ‘reach’ and ‘continuity’ strategy becomes ever more critical. Less active shoppers, shopping less frequently must equate to advertisers adopting a wider reach of the whole category more often (continuously) to maintain conversion rates of available share of wallet.

Additionally, in good times and in bad, the principle of Share of Voice (SOV) applies – so marketers whose ad spend is above (or below) their relative market share tend to improve (or decline) in overall market share during these times. That’s why holding or, (yes please), raising your ad spend in a recession generally leaves your brand’s market share better off at the end of a recession than at the start. It’s simply a matter of SOV. But, if budgets are to be cut, don’t stress too much – competitors are more than likely in the same boat, but do try to ensure the retention of relative SOV.

Extensive EBI analysis shows that at best 50% of a brand’s business comes from regular shoppers and that better than 50% comes from the balance of buyers in the category. The bottom line is that target markets are not just regular shoppers, it’s all buyers in the category. Aim too narrow and ads won’t be seen by the big groups of flirtatious customers!

Local papers remain the only real mass reach print media available. ROOTS 2016 shows that 63% of urban decision makers read their local paper versus 25% of any other daily newspaper or 22% of any other weekly paper.

To sum up, in a recession purchases are fewer and further between than normal and the ratio of ‘need’ purchases to ‘pleasure’ purchases is far higher. Shopping is also less planned and more random. Random shopping can happen anytime, so brands need to be in the market continuously to attract the buyers as they consider their choices amongst a myriad brand offerings.