“Currently, the approach is not about actively engaging with clients on multiple platforms, such as web, mobile and social media. Getting the e-retail model right locally, from a communications perspective, is key to the growth of the e-commerce sector.”

More needs to be done to engage consumers effectively to make e-retail a thriving sector, a source of employment and a viable alternative to traditional shopping.

He explains that South African consumers, of which over 8.5 million and 4.5 million use the Internet and Facebook respectively, are becoming increasingly savvy and, like their European counterparts, expect e-retailers to respond to their needs in a personalised manner across multiple channels. “No longer are they willing to tolerate scattershot, impersonal SMS and email communications that do not speak directly to their requirements, but look to retailers to provide them with information and offers that are relevant to their lives.”

High growth rates

According to research by Cisco Systems, global e-commerce, which includes online retail sales, will increase 13.5% annually over the next three years and reach an estimated $1.4 trillion in 2015. The research also estimates that while the US, UK and Japan will command more than 53% of e-commerce sales by 2015, countries such as Spain, Brazil, China, Russia and Mexico each will grow e-commerce at rates of 26% or more annually through 2015.

Dijkstra says that a thriving e-commerce sector will aid skills development in South Africa, as well as create more jobs to stimulate the economy. Christo Botes, Executive Director of Business Partners, a specialist risk finance company for SMEs echo this sentiment, saying that some of the company’s existing clients are thriving in the e-retail space, but the key to growth is finding a niche.

“For example, one of our clients is enjoying significant success with a virtual showroom model whereby he sells cars online. South Africa definitely has massive potential in the e-commerce arena which can potentially be a key driver for SME growth in the country going forward,” says Botes.

End 2011 stats reveal that the UK is currently Europe’s leading e-retail economy, with sales estimated to have reached £68.2 billion in 2011 and accounting for 17% of total retail sales in the UK. Sales via mobile devices in the UK have also grown from 0.4% of total e-retail sales to 5.3% in just two years.

“In 2011, more than 10% of all mobile Internet users in South Africa shopped online using their mobile phones and globally, it is estimated that 50% of online purchases originate from a combination of online search and social media content. These channels need to be embraced and utilised by local e-retailers, to improve the frequency of consumer engagements.”

Change mind-set

Dijkstra advises that local e-retailers should adopt the mind-set of a physical retail store and treat consumers accordingly, by continually managing their expectations. “For example, some consumers have to currently wait over two weeks for a product to be delivered and their expectations during this process need to be managed via multiple communication channels.”

He says that myriad factors such as rising fuel costs and the introduction of Wi-Fi on-board domestic flights, creating captive audiences, all point to e-commerce becoming more of a viable option for consumers, if the right communication channels are utilised.

“Online shopping has become universal and anything that you can buy at a store can now be bought via e-retailers, from computers and clothes to groceries and cars. The list is endless, as is the potential for growth of South Africa’s e-commerce sector,” concludes Dijkstra.

Source: Bizcommunity

This is according to Integer Group chairman Jeremy Pagden, who was in the country to drive the expansion of its SA operations.

The Integer Group, a division of TBWA Worldwide, is one of the largest promoters of retail and shopper marketing networks and has a presence in 18 countries. Shopper marketing is a process that aims to identify shoppers who would buy certain products, targeting them through various marketing methods.

The Integer Group is growing aggressively in SA.

“It is our intent to grow by a factor of three over the next two years,” Pagden says. “SA has a sophisticated retail model, we feel it’s a market where the potential of shopper marketing can be fulfilled. There are some very smart retailers and all the great brands live here,” he says.

Shopper marketing is still in its infancy and was not even a known term 10 years ago, but it is growing.

In a study by global consulting firm Booz & Company, 83% of leading consumer packaged goods executives said they would be increasing shopper marketing spending by more than 5% annually between 2011 and 2014. This was surpassed only by online marketing.

Booz & Company estimates annual shopper marketing spending is US50bn in the US and Procter & Gamble alone spends over 500m to target consumers at the point of purchase.

In SA the segment has not been isolated in the published advertising spend figures but Pagden says developments in the media and retail sectors will drive the growth of the sector.

“The macro-factors that led to the definition of ‘shopper marketing agency’ were twofold,” he says. “These were the fragmentation of media and the consolidation of retail, which is happening in SA. A third influence came later in the form of the smart phone. Shoppers . wouldn’t buy a high-consideration product without doing some kind of research online,” he says.

Pagden says it’s easy to make a sale, “you just discount the product by 50%. But you’re not doing your brand any favours. There are smarter ways of making sales than discounts. This involves a three-lens model that includes the brand, the shopper and the retailer in a single strategy,” he says.

Source: Bizcommuntiy

This year’s Biz Trends Report was sponsored by Aegis Media.

During the live audio stream just over 4900 unique IP addresses “streamed “, whilst 2475 remained for the entire live audio stream. The Digibate also trended on Twitter in the Johannesburg area.

Panel of experts

The panel of experts that was moderated by Dawn Rowlands, CEO of Aegis Media Sub-Saharan Africa, included Andre Redelinghuys, head of strategy at HKLM; Richard Procter, joint MD of Vizeum; Dan Calladine, head of Media Futures, Aegis Global Management; Richard Mullins, MD of Middle East and Africa, Acceleration and Toby Shapshak, editor of Stuff.

A key area under the microscope was the integration of mobile commerce and other marketing technologies in the retail sector, in particular at store level. According to the panelists, local retailers still lag behind and need to understand that the future is an integrated approach to connecting with consumers and no longer just relying on the retail space for business. It has been proven that customers tend to trust and readily adopt brands that engage with them and their needs and the challenge is how to interpret the adoption process as soon as possible within the retail space.

Proper training is essential

“Retail staff need to be properly trained and know how all the integrated elements between point of sale, digital screens and mobile technology work so they can show consumers and encourage interaction and dialogue between the retailer and the key market,” said Rowlands.

In Europe, there is a leniency towards the retail outlet posing as a mere showroom, where consumers can discover and explore items such as iPods and computers, yet have free range to research the product online and shop around for the best price. It is therefore key to combine all marketing technologies into the retail sector and allow for a seamless engagement.

Other insights taken out of the Digibate included a detailed look the current economic situation globally and within Africa and how the advancement of mobile technology is being used. How data is interpreted and delivered to market was another key conversation and it was agreed that the attention to detail in the delivery of key brand messages through mobile platforms is highly important.

The debate was held on Friday, 4 May 2012.

Listen to the podcasts

If you missed the show, download or listen to the podcasts here on Bizcommunity or on BizRadio.

Listen every month

The Thought Leader Digibates are held monthly and include a panel of leading media-marketing experts who will discuss, debate and share their knowledge – gleaned over years of experience – with a wider audience. The official Twitter hashtag is #aegisTL.

Source: Bizcommunity

“The shopper is on the hamster wheel, there are not a lot of things that are changing as rapidly as we may think.

“Considering everything that is happening on the global stage, the changes are small adjustments to the turbulence in the market, they are not dramatic,” said Craig Henry, retailer service director South Africa & Sub Sahara: The Nielsen Company.

Henry was speaking at a breakfast briefing in Johannesburg on retail/market trends.

According to Nielsen’s research, internet shopping was here to stay.

“There is no doubt internet shopping will grow, but it will do so very slowly.

“The future for online shopping is dependent on the type of service offered, the value of that service and whether or not that service is considered something that shoppers want to invest in,” Henry commented.

A recent study from MasterCard, revealed that online shopping had increased in SA and continued to show potential for growth.

The company’s Worldwide Online Shopping Survey said that the number of South Africans shopping online had steadily increased over the past two years, with 58% of respondents in the survey of active internet users saying that they used the internet for shopping.

This was an increase from the 53% that said that they shopped online in 2010, and the 44% that gave the same answer in 2009.

Arthur Goldstuck, MD of World Wide Worx said that the findings backed up their research into the way online shopping evolves.

“We have shown that once people are experienced internet users and go online regularly, their propensity to shop online increases dramatically.

“The key is to convert that propensity into shopping behaviour, and this survey pinpoints where and why that conversion is happening,” he said.

According to Dirk Dijkstra, head of communications at Ensight, an international multi-channel marketing company, myriad factors such as rising fuel costs and the introduction of Wi-Fi on board domestic flights, creating captive audiences, all pointed to e-commerce becoming more of a viable option for consumers, if the right communication channels were utilised.

“Getting the e-retail model right locally, from a communications perspective, is key to the growth of the e-commerce sector.

“Online shopping has become universal and anything that you can buy at a store can now be bought via e-retailers, from computers and clothes to groceries and cars.

“The list is endless, as is the potential for growth of SA’s e-commerce sector,” Dijkstra said.

On Tuesday, Nielsen also said that both modern trade and globalisation would continue to grow.

“As retailers expand their footprint, we will see more and more global brands available in our market,” they predicted.

Source: Bizcommunity

Group turnover for the six months ended March was at R21.7 billion compared to R19.1 billion during the previous period.

Although trading in the first half was slightly better than expected, the food retail environment remained challenging, the company said.

Consumers are under pressure as a result of escalating utility, food and transport costs, and a lack of job creation in Africa’s biggest economy.

There is also strong competition in the sector from the other retailers.

“There is lots of change taking place, it’s very competitive, we’re not talking about any monkeys out there – they are all good operators,” Hook told I-Net Bridge/BusinessLIVE.

Global giant Wal-Mart acquired a 51% stake of local consumer goods distributor Massmart (MSM) last year.

Its entrance into SA has local players scrambling to step up efficiencies amid the biggest competition shakeup the South African retail space has seen.

On Wednesday, Spar Group reported diluted headline earnings (HEPS) per share of 283.6 cents compared with 262.1 cents a year ago. HEPS were up 9.1% to 305.4 cents.

The company largely acts as a wholesaler and distributor of goods and services to the independent members that operate under its brand. The group services 867 Spar stores, of which ten are corporate stores.

Although its liquor division Tops, saw an increase in wholesale turnover for the period of 19.7% to R1.6 billion, the group felt the effect of the six-month moratorium on new liquor licences in Gauteng.

“We have issues with getting licences in Gauteng. We are concerned, but having said that we opened something like 25 Tops stores in the first six months of the year.

“We are having to work with the liquor board. There are new guys involved and they are looking at the whole thing – it’s not handled like it was in the past,” Hook told I-Net Bridge/BusinessLIVE.

The moratorium was imposed in August last year after it was revealed that employees at the Gauteng department of Economic Development had been issuing fraudulent licences.

Spar’s DIY and building material division, Build It reported wholesale turnover growth of 19.2% to R2.25 billion.

The retailer’s total operating expenses increased by 11.5%, with fuel costs up 38% being a major contributing factor, and the once-off KwaZulu-Natal distribution centre strike costs adding a further R12 million.

“It was the first strike we’ve had in 17 years – it was only in KwaZulu-Natal and it was about wages. It took five weeks to resolve it, but things are back on track now.

“We negotiate on a decentralised basis so it was only that distribution centre that was affected. We believe it was more union inspired than our staff – they were led a little by the nose,” Hook said.

Looking ahead, Hook said he did not anticipate that market conditions would change significantly over the remainder of the financial year.

Competition from other retailers, he said, was likely to remain intense, food inflation was likely to remain at around current levels and the recovery in the economy would remain slow and protracted.

The Pinetown-based company will spend around R180 million on transport and material handling equipment and improvements in its IT systems.

“We will open about 25 Spar stores this year, 40 Tops stores, about 20 Build It stores and another 15 pharmacies,” Hook commented.

Source: Bizcommunity

“We are expecting the prevailing business environment to not improve for the next reporting period with our key cost drivers like maize and soya remaining at high levels. Although Astral maintains its position as a low cost producer in the poultry market, it will be difficult to recover the increased production costs under these market conditions,” said chief executive, Chris Schutte.

The company posted a 14% drop in operating profit to R324 million in the six months to March 2012, as the poultry division weighed on the overall earnings.

Feed costs rose 23% in the period under review, which resulted in a margin squeeze in the division. Operating profit in this particular division declined 37% to R144 million, including the R17 million provision, regarding the proposed settlement with the Competition Commission on various anticompetitive matters.

The proposed penalty is still to be settled with the commission and then reviewed by the Competition Tribunal.

Poultry imports, primarily from Europe and Brazil, continued to climb to record levels resulting in pricing pressure on locally produced poultry which, in turn, led to a significant increase in promotional activity during the second quarter to manage higher stock levels.

These factors resulted in the inability to recover significant increases in feed and other input costs, such as energy, in the selling price of chicken.

The feed division on the other hand maintained its profit margin and reported a 25% increase in profits, in line with the higher revenue realised. The Other Africa operations reported increased profits and the service and ventures’ profits were the same as the previous year.

Source: Bizcommunity

Most South Africans acknowledge the challenge we face in respect of alcohol abuse and I am broadly supportive of Health Minister Dr Aaron Motsoaledi’s efforts in addressing most of our health issues. However, the recently unveiled Draft Control of Marketing of Alcoholic Beverages Bill reveals a worryingly sinister approach by the Department of Health on this issue.

There are two problems with the department’s approach: it is almost always politically expedient to resort to banning as a form of constituency-pleasing, and the pro-banning lobby bases its position almost entirely on what is known as “social learning theory”. This theory conceptualises the effect of advertising as a two-step process in which advertising increases consumption, which in turn produces more alcohol abuse and therefore more social and medical ills.

The reality
The reality is that this argument has been disproved, repeatedly and in many countries, by a long succession of research projects independent of the alcohol industry. Joseph Fisher, an American research professional specialising in alcohol, compiled and published a worldwide survey entitled “Advertising, alcohol consumption, and abuse” – a broad collection of studies from all available markets published as the most comprehensive and authoritative review of the subject in existence.

The body of research on the relationship between alcohol and consumption is large and varied – even when the research of alcohol manufacturers and interest groups is excluded.

In this summary, I cover 22 studies from the USA, Canada, the UK, Germany, France and Australia, as well as more than 740 research papers, journals, articles and government publications from all over the world.

In essence they investigate the relationship between alcohol advertising and consumption, as well as the relationship between advertising and alcohol experimentation. They also cover the relationship between advertising regulations and restrictions, warning labels and advertised warning messages and consumption, as well as the relationship between advertising exposure and negative behaviour such as drinking and driving.

A tenuous link between advertising and consumption
The studies have found that moderate warning messages are the best short- and long-term deterrents to excessive alcohol consumption. The link between advertising and alcohol consumption is, at best, tenuous.

A series of experimental and other consumption-correlation measures showed that the average effect of advertising on consumption was below 1, 5% of total volume. This is an additional one-and-a-half drinks per 100 consumed.

There are three highly acknowledged, independent, quasi-experimental studies examining the relationship between advertising exposure, intoxication and abuse. The association between advertising and negative or anti-social behaviour was measured at 0.2%, 0.8% and 1.2% respectively, an average of 0.5%. Of far greater importance were the differential associations with drinking peers, and parental and peer approval.

Exactly the opposite to what one would expect
The relationship between alcohol advertising and at-risk groups throws up one interesting result: no correlation was noted with the repeated exception of abuser groups (alcoholics and heavy users). A large body of work demonstrates a causative link between these users and exposure to advertising – in the inverse. In other words, alcohol advertising strengthens the resolve of alcoholics not to drink, rather than the reverse.

So, if advertising has such a negligible effect on consumption, why do South African manufacturers spend more than R2bn a year on it? This question goes to the heart of the purpose of the advertising industry. The answer is that in a competitive marketplace, manufacturers must fight for category and brand share.

Banning alcohol advertising will have the unintended effect of stifling competition within categories and entrenching dominant players. Existing players will maintain their market share while launching new brands to stimulate competition will be impossible. Having worked in advertising in the tobacco industry when the advertising ban was introduced, I have seen this myself.

The ban will bite – but not only as intended
A ban will force manufacturers to allocate large chunks of their advertising, R&D and marketing budgets to their operating profit, a significant proportion of which will find its way back to offshore shareholders as increased dividends. A ban on advertising will shut out the small entrepreneur fighting for a tiny share of the liquor market. Most importantly, an advertising ban will hurt employment opportunities in the alcohol, advertising, media and related industries – and probably even destroy existing jobs in those sectors.

Our high levels of alcohol abuse are related to many factors that need to be addressed elsewhere – primarily in the restoration of the family unit and social fabric so deeply fractured by apartheid – and in all the levers and interventions that go with that.

Banning alcohol advertising is not the answer.

Source: Bizcommunity

Following Nestlé’s move to incorporate non-artificial colours into its products, it undertook an extensive search for a natural blue colorant. This discovery has allowed Smarties to answer consumers’ demands and bring the much-loved blue Smarties back to the range.

The refreshed eco-friendly packaging makeover sports a clearer, cleaner design with less clutter and improved visual cues relating to the offering.

In-store campaign

In order to inspire this creativity and encourage fun amongst children, the brand has conceptualised an in-store campaign titled the Blue is Back ‘Box-a-thon’ with an ‘under the sea’ theme. To participate, consumers must purchase a ‘blue is back’ pack and utilise ‘out-of-the-box’ thinking to create something with the pack in celebration of blue. By uploading entries to the mobisite, consumers stand to win weekly prizes.

“The campaign aims to communicate that we are listening to our market and have found a way to bring blue back to the range while stimulating imagination and rewarding kids for being creators. It activates and engages consumers while promoting team work and inventive thinking,” says Ravi Pillay, head of corporate communications at Nestlé.

Schools’ programme

Additionally the brand has committed to building strong relationships between it, schools, educators, parents and learners. This will be executed through a school’s programme in partnership with the Pick n Pay School Club. The focus of the school’s programme is to recognise and develop the artistic spirit in learners. Schools will receive activity booklets, educational posters and teacher’s guides to assist teachers in executing the set activities as well as take home guides for parents.

“We want to assist with the creative development of young children from Grade 1-3. This initiative will reach over 513 000 learners and will range across a number of subjects including; life orientation, arts & culture, literacy, mathematics and technology,” adds Pillay.

The campaign will be supported by in store point-of-sale material as well as on-pack, radio and online elements.

Source: Bizcommunity

“This partnership reassures the South African market that KODAK still has a strong presence and continues to thrive in Europe, which boosts the confidence of local retailers as Kodak is still a leading brand in the printing industry,” said Anthony Doyle, Sales Director, Optus Brands, South Africa. “It shows that Kodak has continued to innovate to deliver a unique in-store experience and a full suite of photo services, so consumers can easily create meaningful, high quality photo products to share life’s moments.”

DM was one of the first European retailers to use Kodak Picture Kiosks, and in 2008, installed one of the first Kodak Adaptive Picture Exchange (APEX) dry lab systems. By year-end, DM will have 150 APEX dry lab systems installed in their stores. The APEX system helps retailers improve productivity and lower operating costs.

Source: Bizcommunity

In addition, says Lardus van Zyl, chairman of the Red Meat Producers Organisation, red meat prices that rose too sharply last year put some customers off buying it.

“There was also a decline in red meat consumption after Christmas, which is normal, but it added to the supply situation,” says Van Zyl.

High feed prices for livestock – caused by the expense of maize and other grain – encourage farmers to slaughter their animals to avoid the feeding costs.

Drought has a similar effect, as farmers cash in on their livestock when adequate grazing for herds becomes difficult to provide.

Van Zyl says that since December producer prices for red meat have fallen by 20%-25%, depending on the grades of beef.

In a statement on his organisation’s website recently, Van Zyl pointedly thanked retailers for feeding through price reductions to consumers and requested “those who have not yet done so to please do it”.

He also encouraged consumers to compare prices and to consider buying beef and mutton in bulk to receive better value.

This week Van Zyl said lower red meat prices have been evident at retailers over “the past two weeks”.

The industry is hopeful that red meat consumption will rise if consumers feel the benefit of lower prices.

Arnold Pretorius, CEO of SA’s largest beef producer, Karan Beef, agrees that “retail prices have lately fallen into line with a 25% decrease in the price of beef since January.

“The passing on of the lower prices by retailers to consumers took a while,” he says.

Pretorius says all the feedlots have been “taking a bath” since January.

“We are losing about R1300/head on our livestock. Work out what that is when you have 30000 head.

“With the cost of feed we have to sell beef at R34/kg, which is not sustainable. Consumers cannot pay that. At R15/kg for calves our break-even producer price is R27,50/kg. The bottom line is that feedlots are losing a fortune.

“We have to accept the feed costs. There is no way around that. The only leeway we have is for farmers to take R14/kg for the calves, but some are already unhappy with R15/kg, though if they accept the lower price we can all make money.”

He says the glut of beef on the market is “working itself out of the system” and that farmers who have just entered the industry are suffering.

Absa agribusiness head Ernst Janovsky says farmers who continue to feed livestock will need to find ways to produce their own feed or buy at cheaper prices.

He predicts that maize prices are set to rise sharply because China’s grain surplus is shrinking steadily.

Pick n Pay deputy CEO Richard van Rensburg denies that retailers – “we monitor all of them” – kept red meat prices high artificially.

“It wouldn’t pay us. Over the past few months our margins on meat have actually dropped.”

He acknowledges the oversupply of beef and says the company has held discussions with the biggest feedlot companies on strategies to clear the oversupply and offered to help get rid of it.

“We’re now selling red meat at no margin to help clear the oversupply. The feedlots are taking a knock, but so are we.”

Van Rensburg says when Pick n Pay hypermarkets dropped prices two weeks ago, the turnover in red meat shot up by more than 40%.

However, he says the prices are “temporary” and will start to rise again in three to four months.

“Feed prices are not coming down and that will keep meat prices high.”

Source: Bizcommunity