Retailer Woolworths expects shopping in South Africa to become increasingly digital in the coming years as more people use less traditional platforms such as Tiktok and Instagram to do their shopping.
The group said it is positioning its social media platforms as an ‘extension of its marketplace’ through new tools such as ‘virtual try-ons’, allowing customers to try on their make-up products virtually on Instagram, with the option to purchase straight from the platform – a first in South Africa.
The retailer is also trialling a ‘phygital’ solution, integrating its social platforms with its physical outlets through an in-store InstaShop, letting shoppers browse their digital friends’ favourites on Instagram, while physically browsing inside of a Woolworths store.
Liz Hillock, head of online at Woolworths, said the move towards a more digital experience is a core part of the retailer’s focus going forward.
“Digital is an accelerator of growth that is shaping everything we do – from building deep connections to customers and communities, to driving sales across both digital and physical channels.
“Our brand extends far beyond our stores, web or app platforms, into what is essentially a customers’ chosen social marketplace. Showing up as relevant within each channel is critical, and we dedicate a lot of focus towards engaging with our customers and creating really compelling content for our customers to enjoy.”
Hillock said Woolworths is also considering the adoption of more nascent technologies such as Near Field Technology (NFT) or ‘immersive Metaverse shopping’ going forward.
“We predict a significant rise in live-stream shopping opportunities in South Africa, and as the technology becomes available to us, Woolworths intends to continue to lead in social commerce and be at the forefront of this phenomenon,” she said.
Lagging behind – but not for long
“Research shows us that about half of all adults in the USA made a purchase via social media in 2021,” said Sam Wilson-Späth, head of digital and social media at Woolworths.
“Social media advertising has long been a significant contributor to our bottom line contributing meaningfully to our web traffic each month and we are now focused on making those experiences as inspiring as possible.”
While South Africa lags behind the rest of the world in terms of social commerce adoption, Wilson-Späth noted that Woolworths plans to leverage its dominance in social media to take advantage of the inevitable growth of this sales channel.
She added that Woolworths has made significant investments into its online capabilities, including several alterations to its digital advertising and retail strategies, with a priority on expanding its sales channels to popular social media platforms like TikTok and Instagram.
“Social commerce is predicted to grow three times as fast as traditional e-commerce by 2025. Retailers need to focus on connecting social media recommendations into a seamless path to purchase.”
Other shopping changes coming
Arthur Butler, sector head of retail at FNB Franchising, also says that big changes are coming the shopping environment in South Africa, primarily driven by changing consumer trends and the aftermath of Covid-19 lockdowns.
Butler said the bank has seen a rush of diversification from retailers over the past two years, partially in response to Covid-19, but the changes are not short-term in nature.
“Retailers are exploring new products, new ways of delivering products, and new partnerships and loyalty programmes to create retail ecosystems. When done well this has resulted in innovative projects that improve the customer experience, lead to growth opportunities, and broaden revenue streams.”
Some of the biggest changes in shopping trends identified by FNB include:
E-commerce and online shopping
Covid-19 accelerated the trend, but e-commerce has been gaining traction for over a decade. When customers were faced with restrictions on movement and physical gatherings, companies from small business to national chains scrambled to launch or expand their online offerings, alongside the logistical infrastructure to support them, Butler said.
“This trend is unlikely to reverse. Millennials and Gen-Z are ever more digitally entrenched and will continue to expect seamless online retail experiences. FNB research suggests that the South African e-commerce market will reach more than R400 billion by 2025 on the back of more than 1 billion transactions per annum.”
Alongside the growth of e-commerce, retailers have rapidly expanded their delivery and logistical capabilities, said Butler.
“For example, one of the leading fast-moving consumer goods retailers in the country was the first to aggressively push delivery through an innovative app-based service. Its breakthrough success led the way for other brands to follow, as well as focused delivery services that have added groceries to their list of supported products.
“As long as the field remains competitive and pricing affordable, it’s unlikely that shoppers will give up the convenience this allows.”
Bread, milk and a shift in products
“Covid-19 hit the pockets of some consumers hard. Those whose work was curtailed due to lockdowns have had to budget carefully and have spent more on basics as a result,” said Butler.
“These basics – for example, milk, bread and grains – are typically low-margin items for retailers. It’s thus important to offer a range of products that might entice low-income shoppers to splurge, as well as maintain a healthy stream of shoppers who are still in a position to spend.
“As a result, we’re seeing retailers increasingly offer hot foods and on-the-go meals, as well as appliances and other non-food items.”
In-store partnerships – including restaurants
Butler noted it’s not just the environment outside their stores that retailers are adapting.
“They are increasingly looking to broaden the appeal of their physical stores through partnerships with other companies. You are likely to see increasing numbers of in-store franchises, for example, fast-food restaurants or coffee shops, within the larger retailers.”
Your store is your bank
Another growing area of partnership has been between large retailers and financial institutions, which have allowed customers to, for example, withdraw cash from till points, pay bills, receive government grants, purchase electricity and event tickets, and be onboarded for new bank accounts.
“This has benefited both retailers, who benefit from increased foot traffic, and customers, who are more easily able to access financial services, leading to greater financial inclusion,” he said.
Ecosystems and loyalty programmes
Several retailers are encompassing their partnerships and expanding services under loyalty programmes.
“By offering points and rewards for interacting and transacting within the ecosystem, retailers encourage customer loyalty, and generate vast amounts of data that can be applied to improve and tailor the customer experience.” he said.