Archive for month: January, 2016

By Jessica Knight.

The Internet of Things (IoT) is an increasingly talked about topic in all sectors – particularly in retail. It’s a concept that not only has the potential to impact how the retail sector sells products, but how consumers buy them.

The majority of US retailers strongly believe that IoT will drastically change the way companies do business in the next three years. According to McKinsey Global Analysis Institute research, IoT in the retail environment – where consumers engage in commerce – has the potential to be the 4th largest ‘setting’ – despite significant uncertainty about the rate of adoption by consumers.

Another recent study reveals that consumers appear to be ready with adoption of IoT devices expected to rise quickly with nearly two-thirds of consumers intending to purchase a connected home device by 2019, while ownership of wearable technology is expected to double year-on-year in 2016, with an estimated $2bn being spent on IoT in the next few years.

So what does IoT mean for retail in 2016 and what are the key areas we can expect to see affected?

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Fashion:

ZARA has led the way with a new look at the role RFID (Radio Frequency ID) tags could play in their business model. They started this journey three years ago and by the end of 2016 will have rolled out an end-to-end RFID platform. Key to this was allowing the RFID tags to be embedded in the security tags, which allow them to be reused. These tags offer benefits in in-store workflow, improvements in accuracy and reduction in the time taken to do stock counts – the business case is compelling.

 

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Automated vending:

Companies are deploying fully automated, reduced-line stores. They can be put into retail areas and achieve targeted penetration in a low-cost way, while reducing risk.

 

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Intelligent replenishment:

By allowing for monitoring of stock levels, smart packaging will now allow fridges or pantries to order new goods when stock runs low.

 

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Connected homes and stores:

Connected homes will offer connected health and wellness devices, pantries, appliances and even connected medicine cabinets, while connected stores include technologies such as contactless checkout, scanning, iBeacons, smart mirrors, smart shelves and RFID.

It’s easy to see why IoT is such a hot topic at present. Although there are real challenges involved, such as privacy and security, as well as the necessity for agility and innovation and seamless connectivity, IoT opens doors to many opportunities. The new rule for the future seems to be that whatever can be connected, will be.

The business case for IoT for retailers lies in connecting with their customers in new and relevant ways, as well as driving efficiencies in their supply chains. We are already seeing pilots in South Africa with connected ‘smart’ sensors in store and planogram ‘robots’ to manage consistent instore execution. Local retailers are forging new relationships with smart, innovative partners who will accompany them on their journey.

 

This article originally appeared in Bizcommunity

Author: Craig Page-Lee (@cpl_ignite )

While only a relatively small percentage of South Africa’s population makes purchases via their mobile phones — at this stage — the reality is that this growing segment will eventually present a major challenge for the bricks-and-mortar retail sector, not just here but also in the rest of Africa.

The potential for a growing online retail sector on the continent will surely become a reality in our lifetime. What will this mean for informal traders? What is the power of mobile’s role in helping build the formal retail sector, defined by the ever-increasing number of new bricks-and-mortar retail environments rolling out across Africa, and what are the opportunities for online and informal traders?

Even greater opportunities

While we may think that tech and mobile may only benefit the formal retail sector, the expected growth in online purchases may actually present even greater opportunities for the informal traders, especially as they’re much closer to consumers and are still a cheaper route to market for many products and brands.

With a population of about 51m people¹ and with 89% (>45m people) owning a mobile phone, SA is ranked no. 28 on the “List of Countries by Number of Mobile Phones in Use”². It is further reported that just over 40% of the population owns a smartphone (>21m), close to 60% owns a feature-phone, and that there are over 63m mobile handsets in use, giving SA a mobile penetration of about 130%. With over 15m Internet users in SA³, more than half (57%⁴) of SA’s internet traffic comes from mobile phone users, reportedly. If every one of those smartphone users makes only one m-commerce transaction a year (applying an average transaction value of just R50 per user, per year), that equates to almost R1bn in value for retailers in SA — the potential for m-commerce within SA alone is beyond question.

While it’s easy to say that there is little, or no, threat to bricks-and-mortar retailers as online shopping still only accounts for just over 1% of total retail spend in SA, the SA marketplace has a number of effective and well-supported online retail sites focusing upon fashion, home and lifestyle products (eg superbalist.com), and covering a broad range of everything (egtakealot.com). In Nigeria, we see the likes of jumia.com.ng, a successful online retailer that has become the leader of e-commerce on the continent. All of these have the capacity to present themselves as real challengers to established FMCG and fashion retailers.

Same online approach

Not only that, what with the influx of a multitude of international fashion retailers into SA (all with equally effective digital shopfronts in their respective home-base locations), we will see the same online approach being adopted to support their SA offerings.

Nevertheless, I genuinely believe that the biggest opportunity exists for the informal traders of Africa.

First, consider the number of clients or customers these traders have each day and, secondly, consider the relationships these traders build over time with their customers — especially those that have regular travel journeys and shopping habits.

With a lower cost of data and the rapidly increasing adoption of mobile banking platforms outside the borders of SA, the opportunity exists to convert traditional informal retailing practice into an online-led engagement and retailing behavior. Imagine the scenario where a consumer can message the informal trader or street vendor, place an order and collect on the way home — irrespective of the products being sold?

How it could play out

This is how it could play out:

The trader or street vendor is able to message the “opt-in” groups and advise on fresh stock delivery — even with images. Consumers can place their orders, make payment via the likes of M-Pesa and advise the retailer or street vendor upon expected arrival time. The packages can then be made up for collection by the consumers on their journey through the day. By building a contact list (on mobile database) of opt-in consumers, the retailer or street vendor is one step closer to the development of a loyalty programme and is able to select the best products to be put aside for the loyal, supporting customer.

The limitations for such a simple platform are, however, very similar to high-end m-commerce transactions, those being;

• Mobile-handset screen size, resolution and navigation capability
• Network capability and cost to use — as many consumers are cash-strapped across Africa. The cost of conducting m-commerce impacts directly upon the amount of products and services that may be purchased

More successful

In a way, m-commerce in other parts of Africa could actually become more successful and more broadly used than in SA, considering the ease and frequency of use of online payment gateways. This should apply to feature phones as well.

But are we being too ambitious in our thinking on the power of mobile as a retail channel on the content and, if so, how long before we see greater adoption and ubiquitous engagement in m-commerce across sub-Saharan Africa?

A recent Millward Brown Digital Survey (2015) determined that close to 80% of US marketers confirmed that they would increase spending on mobile as a channel if they could track ROI better. With the ever-increasing number of mobile users in Africa, this presents a huge opportunity for brands to exploit this ubiquitous channel. Going beyond simple mobile measurement in Africa remains a challenge, though, as marketers target people predominantly.

Must for marketers

Understanding consumer behavior, especially within the informal sector, and how the brand conversation flows seamlessly across devices are a must for marketers as they strive to develop a deeper understanding of this broad and complex mix of consumers. Surely formalising ways of capturing data (via mobile platforms) in the informal sector will bring greater value to any brand than ever before?

In closing, and to paraphrase a quote from PayGate CEO, Peter Harvey, as the world of e-commerce grows in Africa, growth will come from young startups and innovation from niche players. I hope that the VC funders and traditional retailers are ready to invest in the next generation of retail on the African continent — through the mobile phone.

Source: Marklives.com