Thursday, July 25, 2024
No menu items!

Capital Connect Research Shows South African Customers Feel Disconnected

Must Read

Formal retailers in South Africa are losing billions of rands in annual sales because of a disconnect between the customer touchpoint mix that they prioritise and those that their customers prefer.

This is one of the key findings of a big data research study conducted on behalf of Capital Connect, a fintech that offers fast and flexible business funding to South African retailers.


The research is based on an analysis of data for the period between January 2015 to June 2023, and reveals that retailers that continuously tracked and aligned with customers’ preferred touchpoint mix were more successful in growing their retail footprint, than retailers that did not adopt touchpoint-focused sales and marketing strategies. Customer touchpoints refer to the channels where a consumer interacts with a retailer.

Retailers lose revenues to alternative shopping channels and abandoned purchase plans

The research regression analysis indicates that retailers could potentially have rung up 17.9% more in retail trade sales volumes since 2015 if there was a closer alignment between their customer touchpoint mix and those that their customers prefer. These sales were lost because consumers pursued alternatives such as:

  • Delaying or even abandoning plans to buy certain products.
  • Purchasing products outside of South Africa’s formal retail sector, for example from an international ecommerce store, the informal sector, a second-hand provider, a wholesaler, a home-based business, or a community market.
  • Spending their money in other ways, such as servicing debt, repairing old products or investing.

“Our analysis of consumer touchpoint preferences and formal retail trade sales data shows that shoppers and retailers alike see the physical shop (brick and mortar) as the most important retail touchpoint,” says Professor Carel van Aardt, Research Director at the BMR. “But there is a significant disconnect between the role retailers see the other touchpoints playing and their actual importance in driving sales.”

Retailers across all subsectors identify the following customer touchpoints as the top five drivers of retail sales in order of importance:

  1. Having a physical shop (bricks and mortar)
  2. Newspaper, radio, and television advertising
  3. Customer service
  4. Online shopping
  5. Loyalty programmes

Physical Stores Remain the Most Important Touchpoint

The study confirms that the physical store is indeed the top driver of trade sales for all subsectors. However, there are significant differences between each subsector in which touchpoints are most important in driving sales and those that retailers believe to be the most important:

General dealers Specialised food and beverage stores Pharmaceutical and medical goods stores Clothing, textiles, and footwear retailers Household furniture and appliance retailers Hardware paint and glass stores
1. Having a physical store

2. Customer service

3. Customer email and SMS messages

4. Product catalogues

5. Websites

 

1. Having a physical store

2. Online shopping

3. Thank you and confirmation emails and SMS messages

4. Video advertising

5. Websites

 

1. Having a physical store

2. Thank you and confirmation emails and SMS messages

3. Salespeople

4. Customer reviews

5. Receipts

 

1. Having a physical store

2. Thank you and confirmation emails and SMS messages

3. Customer feedback

4. Promotional catalogues

5. Websites

 

1. Having a physical store

2. Thank you and confirmation emails and SMS messages

3. Packaging

4. Receipt

5. Online customer service

 

1. Having a physical store

2. Thank you emails and other customer emails and SMS messages

3. Marketing campaigns

4. Websites

5. Packaging

 

Across all subsectors, customer email and SMS messages are more important in driving sales than retailers appear to appreciate. Such messages help to build loyalty and drive repeat business for retailers.

For general dealers, customer service emerged as the second most important driver because consumers want a personal touch and expect retailers to prioritise their needs. In specialised food and beverages, meanwhile, online shopping appears to have gained significant traction.

By contrast, online sales does not feature strongly in retail pharmaceutical and medical goods, where consumers want to be able to speak to a pharmacist for medical advice.

In clothing, textiles and footwear retail, online promotions, catalogues, and customer emails are key, but most customers still prefer to view and try clothes in a physical store.

Product information and presentation (packaging, blogs, product pages etc.) are important drivers of sales in hardware. Packaging and receipts play an enlarged role in the household furniture and appliances sub-sector, where purchases are expensive and warranties are important.

- Advertisement -

Bolt Unveils New Safety Enhancements in South Africa

Bolt is introducing a rider verification function that allows its South African customers to self-verify. As part of this in-app...
Latest News
- Advertisement -

More Articles Like This

- Advertisement -