Johannesburg, 31 Mar 2008
Rising interest rates and the credit crunch would seem to be taking their toll on the retail sector. Despite this, retail remains a crucial means of distribution for the IT sector - giving it a direct means of speaking to its end-users.
Craig Brunsden, chief marketing officer, Axiz, believes that despite the new set of challenges consumers are experiencing, the fundamentals driving retail haven't really changed.
While the retail sector definitely isn't as bullish as it used to be, it should remain a definite focus for anyone looking to sell IT products. Consumers haven't and won't stop spending - something we continue to see in the realm of IT where consumer adoption is predominantly driven by product trends.
IT products thus remain in the driving seat when it comes to adoption: if your product speaks to your consumer, being designed and marketed with them specifically in mind, then you will still be able to reach them in spite of the credit crunch.
Converging technology remains a perfect example of this. The mobile phone industry has demonstrated that consumers will find a way to afford the latest converged devices based on the value these add to their lives. While buying behaviour may have changed slightly in that some of the more expensive devices may now be out of their reach, we're seeing consumers adapt their budget accordingly - either saving to pay for the item they want, or seeking out slightly cheaper alternatives.
From a vendor's point of view, retail will remain vital for a number of reasons. The most important of these being that it gives vendors the ideal platform to market and talk directly to their consumers. In this way they can ensure their intended message reaches their target audience. Retail thus offers vendors an opportunity that their business-to-business channel doesn't afford them. In this direct communication they can not only market, but also educate their end-user about the features and benefits of their products - something that consumers can test for themselves against the competitors. A retailer thus gives a vendor the incredible opportunity to create a customer for life based on its product's features, price and ultimate offering. Customers can usually test and compare the product in the shop setting, and really get "up close and personal" with a vendor's brand.
Retail also provides vendors with geographical coverage that most resellers could never reach. Stores in neighbourhood malls, for example, are places resellers wouldn't traditionally target yet cannot be ignored - especially with retail currently accounting for 15% - 20% of the total sales in the IT product market. With SMEs making far more use of retailers, this decentralised channel looks to give vendors direct access to this rapidly growing market segment.
Distributors like Axiz are also paying that much more attention to the resurgence of the owner-managed stores we're seeing in the retail sector. In our local context, these owner-managed shops remain a very important means of connecting with consumers - especially in the IT space, where consumers often need to be "convinced" regarding their purchase. The personal service these smaller stores offer therefore provides the perfect backdrop for IT products and devices.
Retail thus needs to be seen as an alternative as opposed to competing channel by distributors and resellers. While one could argue that it does affect them by virtue of the fact that the vendor goes direct to the retail outlet, there is more than enough market out there for all of us. It's about harnessing the unique potential of each different channel - and using this to your brand's advantage.
No matter how you look at retail, Tito's decision over the next couple of months would seem irrelevant: IT products are set to stay. Make full use of the direct coverage and communication it affords you in terms of your consumers - listen to your users and adapt your products accordingly. In this way you'll continue to captivate your captive audience.
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