As I type this, I have both Checkers Sixty60 and Woolies Dash baskets on the go, and every few days I peek at my Takealot basket to see if I am ready to hit “buy” on the long list of stuff I need for a DIY project I’ve been contemplating. A few weeks of searching online for just the right slip-on low-heel black pumps (that’s a type of shoe for the sartorially challenged) has turned up nothing of note, leaving me facing the dismal prospect of having to head to a mall in real life. Quelle horreur!
Of course, not everyone is a superuser who orders everything from food to furniture online. A new report from research firm Forrester has e-commerce forecast to grow from 2023’s $4.4-trillion to $6.8-trillion in 2028, accounting for 24% of the global retail market. E-commerce, or online retail, now accounts for 20% of the market.
This, Forrester says, shows that “physical stores will continue to play a significant role”, though we’ve seen a rash of closures from major retailers that can no longer carry the burdens of their offline channels. In the UK, about a dozen big-name brands have announced planned closures of select bricks-and-mortar locations, including Clarks, WH Smith and M&S.
The Centre for Retail Research counted more than 10,000 shops (locations, not brands) closing down in the UK in 2023, and estimates more than 100,000 jobs lost across the sector — giving plenty of fuel to the “death of the high street” type reporting beloved by UK press of a certain spicy flavour.
In the US, according to an article on Forbes.com, citing a report from UBS, as many as 45,000 shops could be on the road to ruin (again, locations, not brands) particularly in the clothes, electronics and décor categories.
Mall growth
In SA, however, the high street has long been overshadowed by the mall, and even though there have been some big bust-ups in the space lately, huge developer and investor cash is still flowing into building and extending malls — with regulators giving the go-ahead for five major malls late last year, and others tabling plans since.
The way the headlines portray this relationship — between online and offline retail, between Amazon and local firms — is sometimes misleading. Even if the share of the pie consumed by online or by Amazon is growing, the pie itself is also growing.
Online is making its presence felt locally, with e-commerce hitting record sales figures in 2023, according to a report from World Wide Worx and partners (Mastercard, Peach Payments and AskAfrica). Released in early May, “Online Retail in SA 2024” finds that we rung up R71bn at virtual checkouts last year.
Though the 6% market share that World Wide Worx ascribes to online retail is a long way off the 20-something figures of the global market, the growth in the sphere is — to use that delightfully versatile South Africanism — hectic: online sales value extended 29% to R71bn, up from 2022’s R55bn. It is on track to hit 10% of total retail in 2025, according to World Wide Worx CEO Arthur Goldstuck.
Who’s clicking?
So who are the South Africans clicking “add to basket” like their lives depend on it? With huge respect to the work that goes into actually quantifying this, the profile is what you’d imagine: South Africans in urban centres (37%) with at least postmatric qualifications (50%). In their baskets, you’ll find mostly clothing (30% of sales) and groceries (22.3%).
The big winner here is also relatively easy to guess: Shoprite Checkers’ Sixty60 service experienced a wild 63.1% increase in the second half of 2023. Even the beleaguered Pick n Pay experienced huge 76% gains (albeit off a lowish base). Woolworths clocked a 47% increase (and I am responsible for a big portion of that some weeks). Contrast that with the hugely established and dominant Takealot with a low 6% climb.
Amazon, the latest and in terms of sheer corporate heft greatest, addition to the “e-tailers” mix will be hoping to tap into that clothes and goods buyer — and every commentator and analyst is watching its efforts closely. Strategists at Amazon should perhaps consider the growth in groceries noted above in particular. Is there a world in which they can make their Amazon Prime foodstuffs market work for the SA consumer?
A month after its local portal launch, according to MyBroadband, interest may already be waning. The tech-focused publication dug through Google Trend data to show the spike and subsequent lull in searches for Amazon.co.za and Amazon SA, levelling off to prelaunch levels within a week of the launch.
For writer Hanno Labuschagne, this is a sign of dwindling interest, and anecdotally there has been a whiff of underwhelm from the local chattering (or tweeting) classes. Critics have pointed out the product selection left a lot to be desired, having made us wait many years for the launch everyone knew was coming.
These are all entirely solid points. But as I have said before, I believe Amazon, in particular, has the corporate (and budget) capacity to weather it out. It is settling in with a long-term view, counting on the market to grow outside the graduate-on-a-laptop consumer — assuming the economic growth is enough to start bringing the volume of Africa’s young, mobile-led from ikasi to ikart.
• Thompson Davy, a freelance journalist, is an impactAFRICA fellow and WanaData member.
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