Retailers threatened by online competitors are distracted from the truth that consumers are just consumers and should be treated the same, regardless of where they are shopping, writes SIMON VAN DER MERWE, Head of corporate and trade business at weFix.
Headlines like these appear regularly in the South African business and trade press: “Online shopping blasting holes in traditional retailer profits” and “Retailers acknowledge the threat of online retail on physical stores”.
Statistics tell a different story.
According to World Wide Worx, it was only in 2016 that online retail sales made just a 1 percent dent in overall retail sales. Last year, Effective Measure’s E-Commerce Industry report noted that more than half of respondents had still not purchased anything online.
Then, just-released Statistics SA Retail Trade Sales figures show a 5,3 percent increase year-on-year in December 2017, with an overall increase of 3 percent in 2017 compared to 2016.
In November last year – the month of Black Friday, Small Business Saturday and Cyber Monday, neatly packaged by some as Black Friday weekend – Stats SA recorded the highest retail trade sales figures in the second half of 2017.
The irony is, of course, that these massive sales originated online in the United States and have only recently seeped into local brick-and-mortar stores looking to cash in on the pre-festive-season-shopping extravaganza.
By my estimation, traditional retail is as alive and well as it can be given the ongoing economic and political uncertainty that was South Africa’s reality last year.
Still, this is no reason for brick-and-mortar retailers to be complacent.
After all, a third of Effective Measure’s respondents shop online between once a month and once a week, and another third are shopping online more frequently than they did the previous year.
My advice to brick-and-mortar retailers, the cornerstone of our weFix footprint and therefore a cornerstone of our strategy, is to leverage the many ways that online stores will never be able to compete with ‘real-life shops’.
- Customer service from real people still has an edge – invest in sufficient staff on the floor, train them properly, and select personnel with engaging personalities.
- Online stores do not have passing foot traffic – sure, visitors may stumble across the online store while browsing the web (and a site’s design should certainly be as enticing to these users as possible), but this traffic is arguably less focused and of less volume than customers ‘captured’ in a shopping mall or other retail space. Take advantage of this fact by making it easy for customers to visit you. In other words, select your store location and décor very carefully.
- Bring your brand to life for all five senses – granted, it can cost more to invest in bricks-and-mortar store space and inventory, depending on the sophistication of a competing online store. However, it is so much easier to create a unique, holistic, creative brand and shopping experience in the physical world and this is something that retailers should take advantage of when design their spaces, planning inventory etc.
A final statistic worth reflecting on – again from Effective Measure – is that 30 percent of respondents report that they often browse in-store before making a purchase online. By contrast, 28 percent browse online, then purchase in-store.
I believe this reflects the trend towards online and offline shopping becoming just shopping.
A local brand that is recognising the need to unify channels, rather than separate them, is local ecommerce darling YuppieChef. In October last year the company opened a bricks-and-mortar store in Cape Town’s Willowbridge Mall.
Designed by well-regarded interior design company ARRCC, this is a far fancier retail experience than the space from which one could previously collect orders ordered online.
Our approach has been focusing on partnerships with mobile device brands, insurance companies and other machine manufacturers. weFix originally worked only with Apple devices, but we have since added Samsung, LG and Huawei to the suite of mobile devices that we repair, as well as Yoco wireless card machines and DJI drones.
No longer are we merely a repair shop – we operate sophisticated technician-staffed labs in Cape Town and Johannesburg, supported by a robust framework to manage large corporate trade volume for the likes of FNB and Energizer.
It will be interesting to see how the imminent 1% VAT increase (South Africa’s first since 1993) and increased luxury goods taxes which we anticipate will affect at least some mobile devices, will affect the retail trade sales figures in the coming months. I suspect that the upward trajectory will continue, even if at a somewhat more modest pace.
Ultimately, I don’t believe that retailers are facing an online vs offline battle at all – we’re battling for consumers, period.
Our challenge is to integrate the best of both worlds into our business models.
What US game of phones means for Huawei
The Trump administration shocked the world with its ban on US companies supplying Huawei. ARTHUR GOLDSTUCK digs deeper.
The Trump administration shocked the world with its ban on US companies supplying Huawei. ARTHUR GOLDSTUCK digs deeper.
In the same week that the wildly popular Game of Thrones series reached its climax with major characters meeting their startling destinies, US president Donald Trump took the game of phones to a new level in a move that was as startling.
By declaring a trade ban on Huawei, he in effect blocked any US technology from being supplied to the world’s fastest growing smartphone manufacturer. The immediate consequence: Google revoked Huawei’s access to the Android operating system, the Google Play Store, and Google apps like Maps, Gmail and YouTube for all future phone models.
However, Google announced on Twitter, through its Android account, that it would not pull the plug on current devices. It said:
For Huawei users' questions regarding our steps to comply w/ the recent US government actions: We assure you while we are complying with all US gov't requirements, services like Google Play & security from Google Play Protect will keep functioning on your existing Huawei device.— Android (@Android) May 20, 2019
This means that the current market-leading phone, the Huawei P30 Pro, won’t be affected by the ban. Huawei said it had stockpiled chips from US suppliers with this possibility in mind, so it should at least be able to meet demand for the current model.
Huawei is also known to have worked on its own operating system for some years now, with a view to it eventually replacing Android and reducing the company’s reliance on Google. However, the severity of the ban, and its catch-all nature, shook the market. A smartphone without any Google products is a phone that will see little demand outside China, which itself has banned most Google apps and services.
Notably, the first impact of the shock wave was on American companies that supply Huawei. Chipmakers Intel and Snapdragon were hit, and a wide range of other corporations, from Microsoft to Corning, could also be affected. Apple could be next, as the Chinese government may well block the assembly of its products in China. Currently, all iPhones are put together at factories in China. Should it retaliate in this way, Apple will have to develop a new supply chain, both delaying its next versions and increasing its cost due to its loss of a cheap source of labour.
That is not to say that Huawei won’t be a big loser in this trade war. It’s a massive blow. Until now, Huawei could carry on blithely in the face of a sales ban in the USA, knowing it is dominant in the rest of the world in both 5G equipment and in handset sales.
However, its smartphone leadership is founded on a particularly good implementation of Google’s Android ecosystem. Losing that means it has to go back to the drawing board in developing and evolving its own operating system and even apps environment. It can do it, but it will lose years of development to Apple and Samsung.
The bottom line, then, is that everyone loses in this trade war. If the Huawei ban is no rescinded, Donald Trump will have dealt a crippling blow to the entire smartphone industry. This could, in turn, presage a slump in technology shares on the stock markets of the world.
It may, then, appear baffling that the US administration would take such drastic steps. The ostensible reason is that Huawei is subject to a Chinese law that requires local companies to cooperate with authorities. This is interpreted as meaning that Huawei would install secret backdoors in handsets to give the Chinese government access to them, and secret spy technology in 5G networks to allow the government to eavesdrop on all communications.
This is clearly an absurd accusation, as any evidence to this effect would instantly destroy Huawei as a credible provider of technology to the world. No such evidence has been presented, and most arguments to this effect have been on the level of conspiracy theory rather than presentation of facts.
It also speaks volumes that the US has not banned trade with China’s Lenovo, which acquired the IBM hardware business a few years ago, and the Motorola handset division more recently. Motorola is still perceived to be an American brand, while Huawei is perceived not just as the challenger brand it had been for some years, but in fact as an invader brand.
Can foreign policy be based on mere perception? In the case of the Trump administration, that tends to be the rule rather than the exception. And the perception is further clouded by the halo effect that surrounds Apple products in the USA. The iPhone makes up well over a third of all American smartphone sales. Typical iPhone users tend to be rather enthusiastic about their loyalty to the brand, to the extent that they are usually disparaging of any other brands.
Grudging respect for Samsung, which has been going head-to-head with Apple for much of this decade, does not extend to Huawei, which emerged seemingly from nowhere to become the world’s third biggest smartphone brand. Its current sales trajectory has it overtaking Apple very soon, and reaching the number one position by the end of the year. Until, that is, Donald Trump brought its momentum to a halt.
Again, why not ban Motorola and Lenovo in the same breath? The answer may well lie in the pathology of the Apple fanboy. American-born Motorola and Lenovo handsets pose no threat to Apple’s dominance of the US market, whereas the interloper, Huawei, is a fundamental threat. It is, therefore, the enemy, merely by virtue of its existence as serious competition when it is seen as having no right to compete with the likes of Apple. Trump is known to be an enthusiastic iPhone user, using two of the devices simultaneously, and would almost certainly buy into this mindset. That, in turn, makes it a natural kneejerk reaction simply to ban American companies from doing business with Huawei.
Whether this is merely idle speculation is beside the point. The ban also represents self-inflicted harm, which extends the pathology argument to an entire administration.
It will be a blow to both countries, symbolic of how a trade ban can hurt the country imposing the ban. It also casts a dark shadow over world trade, and is a shameful example of how trade wars wreck so much in their paths.
- Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram on @art2gee
Time for smart energy
South Africa is experiencing an energy crisis that requires the public and private sectors, along with households to work together. Fundamental to this is embracing innovative technology that provides more efficient ways of managing the country’s energy.
Riaan Graham, sales director for Ruckus Networks, sub-Saharan Africa, said: “With the number of connected devices expected to top more than 75 billion worldwide by 2025, the Internet of Things (IoT) can be considered an important tool in reaching this goal. Already, connected devices can be used to deliver smart energy that sees a more optimal use of resources.”
This approach relies on a smart grid of connected sensors pointing to areas where energy is wasted. In turn, the supply to these points can be allocated to higher priority areas resulting in a better use of resources.
Aiding this drive towards connected devices is government pushing towards the establishment of smart cities. These cities require a technological infrastructure built around various sensors connected to the internet to not only generate data, but control things as diverse as traffic lights, street lamps, and other electrical devices.
Graham said: “These smart cities enable lighting to be automatically switched off when not needed. Sensors on the connected devices will detect when people are on the street and turn it off or on accordingly. What might seem like a novelty, can make a massive difference in reducing energy waste.”
According to Kate Stubbs, director of business development and marketing at Interwaste, IoT is just part of how technology can be used to create a more efficient environment.
“South Africa produces an average 108 million tonnes of waste annually,” said Stubbs. “Of this, only 10 percent is recycled. There is significant potential to use this waste and convert it to energy. This is more than just the traditional way of viewing recycling. Instead, it is using technology to extract value out of waste through initiatives like refuse and waste-derived fuel.”
The first South African Refuse Derived Fuel (RDF) plant was launched in 2016 and not only aims to reduce landfill, but also the country’s carbon footprint. As the name suggests, the plant converts general, industrial, and municipal waste into an alternative fuel that is used in the cement industry.
Stubbs said: “Spin-off benefits of this plant includes the creation of additional employment opportunities and a reduction of South Africa’s greenhouse gas emissions. Waste management entails so much more than what many people think. But the key remains a combination of technology innovation and a willingness to use the resources generated by this.”
Graham agrees about the need to readily accept the innovation technology brings as the country is teetering on a significant energy disaster.
He said: “New technologies are critical in helping the countries and their cities of the future promote sustainable energy use. For example, Nairobi has introduced smart street lamps that use LED lighting saving money and resources on energy costs. These lamp poles also have Wi-Fi embedded in them that sees air quality probe sensors submitted vital data for city planners on where there are pollution hotspots.”
Stubbs feels these are good examples of how energy management approaches in the connected world need to be non-linear.
“The traditional ways of adopting technology, recycling, and managing energy must be seen as relics of the past,” she said. “Instead, we must all work together and readily embrace modern solutions or risk our country entering a new dark ages.”