Retailers chase mobile bandwagon - Palesa Vuyolwethu Thsandu // Sunday Times

E-commerce habits are making their way into emerging markets
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I don’t know in five or 10 years whether brick and mortar will be 70%, 80% or 90% of the business — customers will decide

BRICK-and-mortar retailers are battling to keep customers in stores as the move towards online shopping is fast becoming a reality. The developed world is succumbing to the digital assault on retailing, and as the war treks its way through to emerging markets, retailers are finding that mobile access is the key driver for growth.

Businesses such as Alibaba, representing 80% of the e-commerce market in China, are driven by consumer demand for single platforms that enable users to access various distribution channels.

Speaking at the Consumer Goods Forum Global Summit in Cape Town this week, Alibaba CEO Daniel Zhang said the company had built a good mobile media matrix, but saw itself “not [as] a commerce company or a service company. It is a data company.”

He said: “We view all our businesses — including commerce, payment and logistic marketing — as a case to create data.

“We use the data we generate to refuel the businesses, and participants in the ecosystem to help partners to do business easier in the fast-changing digital world.”

Last year, China’s e-commerce spend exceeded $600-billion (about R9.125-trillion), with Alibaba contributing $485-billion of that, making it one of the largest retail commerce companies, with coverage of 95% of Chinese mobile users.

And Zhang is not the only one seeing opportunities in the face of disruptive technologies.

Tesco CEO Dave Lewis announced that the retailer would be looking at reducing food waste in the supply chain in an attempt to address food shortages.

Tesco will communicate with UK-based charities via an app to donate any food left unsold in its stores.

“The intention is to make it [the app] available for anyone who may use it in a retail operation ... this will enable us never to waste things that are saved for human consumption,” said Lewis.

The UK-based retailer, which was a latecomer to the digital revolution, has been struggling to compete with rivals such as Sainsbury’s and Amazon.

Rita Manso, senior director at Daymon Worldwide, a group that provides innovative and strategic solutions for retailers, said e-commerce was the fastest-growing channel of consumer purchasing.

“All the other channels grow at about 4% to 5%; e-commerce has been growing consistently above 30%.”

Manso added: “Consumers in less-developed countries tend to leapfrog all the steps that normal society would have in order to have the latest technology in their hands, and the endgame is the smartphone.”
Walmart CEO Doug McMillon admitted that his company, the world’s biggest retailer, has been slow in entering the digital arena, which saw players such as Amazon rise to the occasion and grab some of its market share.

“Our e-commerce business is not growing fast enough and it’s taking too long ... we didn’t invest enough, we weren’t willing to lose money to the extent that we needed to in the early days, and we left room for other people to do it,” said McMillon.

“I don’t know in five or 10 years whether brick and mortar will be 70%, 80% or 90% of the business — customers will decide. But we have got to have the capabilities to serve them however they want to be served and be indifferent to whether or not stores are involved.”

In sub-Saharan Africa, mobile penetration is expected to rise to 48.7% by 2020, with the population getting access to mobile devices, which means consumer spending habits are likely to shift.

Mark Curtis, the chief client officer at Fjord, a subunit of Accenture Interactive, said that often the difference between emerging and developing markets was that emerging markets were late adopters, so it might take up to five years for them to catch up.

“The hidden advantage that emerging markets have is the ability to take on new technology without going through the evolutionary path. You’ve gone straight to mobile and corporations aren’t held back by a recent investment in systems that they would have to change again.”

For Manso, retailing changes every time a consumer steps into a shop and “because it’s so linked with necessity, it is important for companies to be up to date with these transformations. It [e-commerce] is a source of growth for any player in the market. I see this as a critical point in retailing.”
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