Retail news. Semester 1 of 2014 table of contents

KFC eyes return to Zim

January 17, 2013 in Business, Companies

YUM! Restaurants International continues to expand the footprint of its KFC brand on the African continent, with plans to add stores in Tanzania, Uganda and Zimbabwe this year, the company said on Monday.

Report by BDlive

“Africa is undoubtedly one of the fastest-growing regions globally and KFC is fully committed to harnessing this opportunity and building a sustainable business model on the continent,” said Bruce Layzell, KFC general manager of new African markets.

Global brands are progressively looking to emerging markets to offset sluggish growth in traditional economies‚ and Africa presents a compelling investment case for retailers. The Economist Intelligence Unit predicts that by 2030‚ Africa’s top 18 cities could have a combined spending power of $1,3-trillion.

One of the main drivers of Africa’s growth spurt is the increasing pace of urbanisation and consumerisation.

The number of KFC restaurants in new African markets grew to 63 at the end of last year, in countries such as Angola, Nigeria, Malawi and Ghana. The figure excludes South Africa, Egypt, Morocco and Mauritius, which, if included, brings the total number of KFC restaurants on the continent to almost 900 outlets.

Local company Famous Brands, whose portfolio includes Wimpy, Debonairs Pizza and Steers, said heightened interest from prospective franchisees continued in the rest of Africa.

The company has outlets in more than 15 African countries including Nigeria, Ghana and Zambia.

There is a caveat: Africa is not an easy place to do business. Key risks include the lack of real estate‚ currency volatility‚ high taxes‚ corruption and red tape.

According to Spur Corporation CEO Pierre van Tonder, African expansion is made out to sound like it’s a pot of gold.

“But whatever you think is going to take 12 months there actually takes you 24 months. You need to be a facilitator in developing Africa‚ you need to be flexible‚ and you cannot take your corporate governance baggage out of South Africa and expect to develop in Africa‚” Van Tonder said last year.

Famous Brands CEO Kevin Hedderwick said: “We’ve been in Africa for 12 years, we are not like those guys who just started there yesterday. We’ve paid our school fees — it’s a tough place to trade.”

Bricks, mortar still important in shopping choice

24 Apr 2013

Late last year, research conducted by Cisco Systems predicted that global e-commerce would increase 13.5% annually over the next three years to reach an estimated $1.4 trillion in 2015 and, with rapid adoption of smartphones and tablets, anytime, anywhere virtual store browsing is playing a significant part in consumers' changing shopping habits.

In South Africa, where broadband internet penetration is still low - with approximately 6.8 million people connecting to the Internet via desktops and laptops - almost triple that amount, 16.8 million, are reportedly accessing the web via mobile devices. However, this is not necessarily translating into more e-commerce sales locally, since a large number of consumers now make use of multiple channels to shop.

"Many shoppers in South Africa access retailers' online stores on their desktops, laptops or mobile devices merely to compare and look up prices and specs for specific products and then still go to the brick and mortar shop to make the purchase," explains Simon Campbell-Young, CEO of Phoenix Distribution, a South African-based distributor of software and technology brands.

"There are various reasons for this: many people still distrust the security of making online transactions. However, even those who are not sceptical about paying online are often put off by the time it will take to have the product delivered to them and the cost in delivery fees. The postal service in South Africa is often criticised as being too slow and unreliable. Courier services, while faster, are too pricey to be a viable delivery option."

Omni-channel retailing

This evolving nature of buying, in which consumers are embracing digital technologies and devices in all stages of their shopping experience, has given birth to a new trend called omni-channel retailing.

"This new buzz term describes the approach of connecting the web, mobile and brick-and-mortar to make for a seamless customer experience," continues Campbell-Young. "It is the process of building a bridge between online and offline shopping. Brands have to do this in order to remain competitive. For example, brick and mortar shops can become more digital by using QR codes to provide more information about products. Some retailers already allow customers to browse in-store merchandise and then skip the checkout queues by paying for it online on in-store tablets. From their end, online shops can encourage sales with a 'click and brick' approach, allowing users to make the purchase online and then pick up the order in store."

Store shopping still important

The continuing importance of physical shops, where you have to jostle with crowds and stand in line at the cashier, in an increasingly virtual world was highlighted in a recent survey by UK-based Shoppercentric, called 'Shopping in a Multichannel World'. It found that 87% of respondents are still using a store as part of their purchasing journey and 45% of shoppers said that they will "always love going to the shops, no matter what new technologies are available."

Campbell-Young says that this convergence of online/offline shopping is going to benefit everyone along the retail channel and that it makes the relationship between suppliers and retailers more crucial than ever before.

"Retailers need to keep in mind that this new breed of omni-channel consumer is sophisticated and informed. They are going to have to anticipate the needs of their shoppers and see to it that the product they are searching for online is also in store. These shoppers have no patience with out of stock products or late deliveries. It will definitely be challenging at times, but beneficial to everyone.