Stock image via Envato Elements
Stock image via Envato Elements
In the UK, the decline of the once-ubiquitous high-street store seems to be continuing unabated. Beales, a 139-year-old department store chain, went into administration in January and on Friday 7 February 2020 announcing it would be closing 12 of its 23 stores.
In 2019, the Waitrose supermarket chain shut 12 of its outlets. John Lewis, a high-end department store chain described by the Guardian newspaper as the favourite retailer of Britain’s middle class, is currently hinting at closing some of its 36 stores.
In the US, traditional retail is also suffering. But the picture appears slightly less clear-cut, with several experts predicting an upturn in its fortunes after several years in the doldrums. The reason for its demise, as in many parts of the world, has been the rapid growth of online shopping.
According to the industry publication Retail Dive, more than 9 000 stores closed in the US in 2019 and a further 700-plus have already closed in 2020. Macy’s, the upscale American department store chain founded in 1858, said last week that it would be closing 125 stores over the next three years.
Yet, in direct contrast, fashion retailer Nordstrom has opened three new stores in New York in recent months. Sephora, a beauty store chain, is opening 100 new stores in North America in 2020.
In January 2020, delegates attending the important US National Retail Federation’s Big Show in New York heard that the key to the industry’s future success is to be found in bricks and mortar.
“The best retailers have innovated, so that the physical store has the upper hand again,” one senior executive noted at the Big Show.
Another observed: “Digital advertising has become marginalised [and] we are swimming in a sea of media and communication from brands. Stores are the new channel for retail. Stores are an incredibly powerful means of bringing people together.”
So what is the situation in South Africa, where online shopping is also on the rise – albeit at a slower pace than in Europe, North America, Australia and parts of Asia.
A large number of retail outlets have closed in recent times – among them the likes of Edgars, Boardman’s, Red Square and Stuttafords – but this has arguably been more to do with a tough economy and limited consumer spending rather than a large-scale move to online shopping.
The Rethinking the eCommerce Opportunity in South Africa report published in September 2019 by business advisory firm Accenture noted:
“With little impact from online competition, traditional retailers in South Africa are putting most of their efforts into their core brick-and-mortar stores.”
The study said that on the surface it seems like a low-risk choice.
“Brick-and-mortar stores generate almost all retail revenues and profits, while online operations are expensive to maintain and often unprofitable. They also find it difficult to measure the return on investment of their online offerings. What’s more, South Africans are still eagerly trekking to department stores and specialty shops at the local mall.”
Accenture also pointed to a study by credit card company Visa, which found that 63% of South Africans said they prefer to make purchases at a mall. Another study, by retail and property research company Urban Studies, found that 76% of South Africans visit a mall at least once a week.
“South African retailers are therefore taking a narrow approach to building ecommerce businesses. They are not investing in creating the full range of convenient and engaging online experiences that consumers are coming to expect and that pure-play ecommerce companies provide,” Accenture said.
“This will leave South African retailers feeling the pressures that retailers have felt in other parts of the world.”
In other words, we’re still very fond of our bricks-and-mortar shopping experience right now. But expect a steady swing towards online retailing in South Africa in coming years.