South African retail gets a kick start for 2012
If Walmart’s entry in SA has done anything, it’s given South African retailers a kick start to expand their footprint in Africa. They can no longer be complacent with the operations already in place and are now compelled to look more closely at the future of their business.
But, expansion into Africa is not an easy road for South African retailers because they have to compete with a long-established and active informal trading sector that African consumers have become accustomed to. Informal traders rarely pay import duty, they’re not expected to create employment and they don’t contribute to building communities or infrastructure. Formal retailers understand the long term benefits of investing in and developing the communities that they serve, but there is a premium attached and it is vital that the consumers they service are aware of the benefits.
Pep stores have been proactive in developing the communities in which they operate, which has led to the success of this discount apparel retailer in Africa. Apart from developing infrastructure and growing operations, retailers also need to structure the store footprint efficiently. Clustering stores in specific areas helps the retailer manage its operations and supply chains more efficiently.
Walmart’s entry, combined with retail’s rush into Africa has resulted in a busy and fascinating year. But, its endeavours to win over newly-found groups of consumers, while competing with Walmart and an established informal trading sector, will provide an equally fascinating backdrop for retail in 2012.
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