SA retailers see e-commerce uptick

World Wide Worx predicts SA's online retail market will be worth over R9 billion in 2016.
World Wide Worx predicts SA's online retail market will be worth over R9 billion in 2016.

Local retailers are seeing a steady uptick in online shopping numbers as more South Africans embrace e-commerce.

In Pick n Pay and Mr Price's latest results, both retailers showed strong growth in online sales.

Mr Price says its local online sales grew by 63.6% for the 53 weeks ended 2 April. Mr Price says the online business is now generating positive returns and all its MRP brands are now "full omni-channel retailers". This as the group saw total revenue for the year grow over 8% to R19.6 billion.

In the year ended 28 February, Pick n Pay saw its strongest turnover growth since 2010. This included a 38% increase in turnover growth from Pick n Pay Online over the year, "with a stronger range and a substantial improvement in product availability". The team says it is particularly pleased with the growth in demand from its business-to-business (B2B) customers.

"The online business in the Western Cape has benefited from the dedicated picking warehouse established at the Brackenfell Hypermarket last year, and the group will look to invest in a similar solution in the Gauteng region, towards the end of this year," the group says.

In the 2015 financial year, Pick n Pay also delivered strong double digit e-commerce growth and added 40 000 new online customers.

The Foschini Group says it is investing in its omni-channel roll-out and will launch online sales for Foschini cosmetics, @home furniture as well as the Markham and Fabiani brands this year. This after its sports division brands ?Totalsports, Duesouth and Sportscene ? launched online selling in the past financial year, which the company says "proved to be successful with results ahead of expectation".

Massmart says it continues to expand and improve its e-commerce offerings. These are primarily from its DionWired, Makro and Masscash Wholesale stores. Massmart's results for the 52 weeks ended 27 December 2015 show online sales now represent about 2% of total sales in those categories that form part of the online offering.

"Makro's customer card data indicates online shoppers continue to visit and shop our stores. We are delighted with the response to our new B2B online commercial customer offering launched in November 2015," it says.

Massmart says a Massbuild online project "to serve the contractor and professional market" is also in the advanced stages.

Woolworths says food sales comprise the majority of its local online revenue, although stronger growth in clothing and general merchandise is now being experienced. In the 52 weeks to 28 June 2015, Woolworths' Country Road brand's online sales contributed close to 10% of total sales, up from 8% the year before.

Woolworths says it continues to invest in innovative digital development focused on digital accessibility and personalisation.

Steady growth

Online retail remains a small market but continues to grow at a high rate in SA, having maintained a growth rate of above 20% since the turn of the century. This is according to World Wide Worx's "Online Retail in South Africa 2016" report.

The research found online retail grew 26% last year and was worth around R7.5 billion. The market is expected to grow 20% in 2016, taking the total to above R9 billion.

The researchers say that for the first time since the dawn of e-commerce in SA, online retail will reach 1% of overall retail during 2016, which is expected to remain below R900 billion.

World Wide Worx MD Arthur Goldstuck says while 1% represents a very small proportion of overall retail, it is also a psychological barrier for investment in e-commerce initiatives by physical retailers.

"The number also masks the extent to which a number of major retailers have exceeded the 1% online mark by a substantial margin, compared to the vast majority that are not yet close to this mark, if they have an e-commerce presence at all."

Forecasts by World Wide Worx for the next five years show online retail sales almost exactly doubling from 2016 to 2020.

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