Kuseni Dlamini, the Non-Executive Director of Massmart + Walmart, on retail tech and trends in Africa.
What is the future of retail in Africa?
The African retail market is very robust and dynamic with a massive opportunity for growth. We have seen the rise of urbanization and industrialization in African economies, with the diversification of these economies, moving away from your traditional industries such as mining and agriculture, to other services such as ICT, so that the retail sector may thrive.
Consumer spending is projected to reach $860 billion by 2020 and increase to approximately a trillion by 2025. So you could say it is doing well… as people’s disposable income increases. That sets the basis for the retail industry to grow. The penetration of formal retail in Africa is still very low, in some markets such as Nigeria, the [informal] retail industry still accounts for 80% [of the economy], so there lies a huge opportunity for retailers such as Massmart to come in and establish their shops, playing a role in the formalization and modernization of the retail industry. Even though the informal sector of the retail industry is still an opportunity, we are still the largest wholesaler in Africa that has informal traders, kiosks and spaza shops that are still our customers. They come to us for their stock to sell to their customers. It is a win-win partnership we have with them across Africa.
Are robots now being incorporated in the retail industry?
The digitalization of the retail industry is a way to better serve our customers. Consumers are increasingly time-poor, they are constantly looking for convenience, they want retailers to innovate and offer them the best service in the most convenient way to their lifestyles, so that requires us to constantly be innovative as we are moving into the online space.
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Our online sales across our four divisions – Game, Builders Warehouse, DionWired and Makro – increased by 47%. That is the direction retail is headed globally. It is moving towards the omni-channel space, where it won’t just be bricks and mortar alone. We also don’t believe that it will move to the other extreme, where it would just be online [service].
How does African retail compare to the world?
The retail industry in South Africa has always actively tried to be plugged-in to global retail best practices. Even before Massmart became part of Walmart, we have always benched-marked our business practices and offerings against the best retailer in the world. So there is a high level of sophistication in the South African retail industry. Our retail market is not in isolation, they are aware of what is happening in other countries such as Europe and Asia in terms of new thinking and new practices, we are at the cutting-edge. Though we are not far behind, there are opportunities to scale up and drive innovation, be proactive to customers’ changing needs and expectations. Customers are demanding high quality and retailers need to be responsive to that.
What is the future of Massmart in Africa?
In the next three years, Massmart is looking at increasing its trading space by 35.6% and we believe that will position us to take advantage of the opportunities available from medium to long term. We also believe that partnering with local suppliers is vital to our success. We have a supplier development fund with which we are supporting 33 businesses and those businesses have helped us distribute imports as they have also enabled our suppliers to also export their goods to parts of the country. We also invest in black-owned as well as women businesses that can become part of our supply chain at a local and regional level to a global level.
How do you develop upcoming retailers?
It is important for us because they are our retailers, if they succeed in their businesses, it means that they will continue to buy from us and sell to their customers. We need to build an inclusive economy in South Africa. We need small and medium enterprises to have a space in the economy. It can’t just be the dominance of the big retailers.
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