MTN Business reckons retailers that fail to embrace mobile risk falling behind their peers. At the same time, mobile solutions present an opportunity for smaller retailers to remain competitive in the face of big, international entrants.
Nomalanga Nkosi, GM for business marketing at MTN Business, says retail is no longer just about “product quality or after-sales service”. Rather, she says the increased prevalence of social media and smartphones has turned the SA consumer into “a new kind of king”.
Nkosi was speaking at an MTN Business breakfast in Midrand on Monday highlighting the importance of mobile and e-commerce for SA retailers.
“Consumers know what they want and they expect [retailers]to meet their specific needs through multiple access points,” says Nkosi.
But rather than embracing technology, Nkosi says the bulk of SA retailers allow others to drive innovation, which they then copy. With African broadband penetration expected to increase from 12m to 265m people by 2015, she says retailers that take an early lead in mobile and electronic commerce stand to make big gains.
Nkosi says that despite implementation costs, technology can drive down costs, and that mature consumers like the convenience of online payments. She says mobile technologies also present new opportunities to grow customers, distribute coupons and advertise.
Retail industry expert Simon Mathers, speaking at the same conference via Skype, says the greatest challenge to retailers expanding beyond their home markets is understanding local differences.
He says global retailers are increasingly looking to developing markets because of pressures at home. He cites Walmart, the US retail giant, which at the end of 2010 was generating almost 60% of its annual sales outside America. Amazon, meanwhile, made 45% of its sales overseas.
Walmart is of particular interest to SA retailers, having recently acquired a 51% stake in Massmart for US$2,4bn. Mathers says Walmart’s entry shouldn’t scare other retailers if they’re serious about their business. He says Walmart will increase competition, but “isn’t going to change the league table overnight or suddenly shift current market share”.
He points to the example of Walmart’s acquisition of ASDA in the UK. ASDA has been second to Tesco for many years. “That hasn’t changed. What Walmart has done is brought in a standard that has improved the offerings of its competitors.”
In terms of smaller retailers, Mathers says if they’re surviving against the likes of Pick n Pay now, there’s no reason they shouldn’t continue to do so. Small stores don’t survive because of better prices, “but because of broader services and value equations. Walmart will enhance the small players because small players will work harder to differentiate.”
Mathers says there are increasing opportunities for mobile commerce and e-commerce with more African consumers getting online. “Mobile solutions present retailers with greater opportunities for direct contact with customers and the ability to sell to anyone, anywhere.”
Mobile commerce is still very young but even small businesses are seeing the importance of having a Web presence. However, Mathers says, many haven’t yet realised a website “can’t just be a poster anymore — it’s not just about telling people where your stores are. A website now needs to facilitate a dynamic process of trading and communicating with customers.”
It’s also crucial for businesses to realise a website and a mobile site are not necessarily the same, particularly for purchases. “User friendliness needs to extend to all platforms, and each calls for different solutions. Next year, there are going to be more mobile phones connected to the Internet than PCs, so it’s crucial to understand mobile as a trading instrument.”
Smartphones are “creating more savvy consumers”, says Mathers. “Consumers are using their smartphones to research and even compare items when in store. Moreover, they’re using their smartphones to find local businesses. So the importance of being represented on mobile platforms can’t be overstated.”
In the UK, Tesco has an application where customers can scan barcodes on products and, with a single touch, have them added to a basket, paid for by credit card and delivered.
Mathers says it’s this level of convenience and the impulse purchases it can drive that make applications of this sort so useful to retailers, but cautions that applications must be kept simple if consumers are to embrace them. — Craig Wilson, TechCentral