Retailers in tough battle for customers By Zandi Shabalala

From Business Report, October 14, 2013

Featuring Roger Tejwani, retail strategist for NOAH Capital Markets

Johannesburg – As the battle for market share intensifies, retailers are increasingly adopting a more customer-centric view by streamlining services to appeal to consumers who are more cautious about spending.

Consumer spending has eased in a tough credit climate, resulting in slowing revenue growth for stores such as Pick n Pay, Shoprite and Massmart.

“In tougher times retailers have to look for ways to protect and expand their market share. Customer retention is a big part of that,” Noah Capital Markets analyst Roger Tejwani said.

He said there were also more retail sector competitors coming into the country giving local consumers more options. The internet also allowed consumers to compare prices, advancing competition by making the market more transparent.

Tejwani added that the local retail market was relatively small with few genuine consumers who buy. He said the only way for retailers to do “better than the next guy” was to offer value-added services.

Woolworths said it would improve its customers’ experience through more focused communication. Although the upmarket food and clothing chain has been spared revenue declines as its customers are less affected by the poor credit climate, it said it would introduce more initiatives to ensure customers were always satisfied.

Paula Disberry, the group director of retail operations, said tailoring Woolworths’ offering according to customers’ needs began with initiating contact with them for feedback.

“Thanks to our WRewards and financial services, we are able to track about 70 percent of our revenue. We know where and what customers are buying,” she said.

Pick n Pay has launched a mobile application for its Smart Shopper loyalty programme, which allows customers to retrieve points from the smartphone application, eliminating the use of in-store kiosks.

“When we launched Smart Shopper some years ago, we said it would evolve as we learnt more about what our customers were looking for… This latest innovation is going to make life easier for our customers,” Smart Shopper general manager Steve Hoban said.

The retailer’s reported earnings a share fell by almost 30.8 percent to R1.113 for the year to March as consumer spending slowed down. It recently confirmed it would be shedding 400 management jobs.

Chief executive Richard Brasher said in Pick n Pay’s 2013 Sustainable Living report that it would strive for customer and supplier engagement as it was in “transition” and “we are driving a back-to-basics approach. This includes a strong customer focus and a proactive, disciplined culture.”

The SA Customer Satisfaction Index recently found that among clothing retailers, local customers were most satisfied with high-end retailer Woolworths and the least satisfied with Edcon’s Jet stores. The index showed other winners included Ackermans and Pep, while customers were less satisfied with Mr Price.

The chairman of the index, Adré Schreuder of Consulta Research, said: “It is interesting to see that the industry leaders are brands that spread across South Africa’s demographic spectrum. If you satisfy your target customer group, then your brand can survive these economic times.” – Business Report