Across Africa’s dynamic retail landscape, transformation is strategic necessity as customer is king and retailers must be adaptive to change in order to meet new demands, while being supported by the digital revolution and accelerated by global events such as the pandemic, explains Henry Myburgh at Vertiv Africa.
Technology in the retail space provides a competitive advantage for successful business. However, it requires a robust infrastructure platform to enable resilience against failure, cost efficiency in operation, efficacy in delivery and agility to adapt.
From Lagos to Nairobi, Cairo to Casablanca, the numerous trade outlets remain the biggest segment in most markets across the continent. As a result of structural and infrastructure challenges such as absence of modern malls, transportation bottlenecks, currency fluctuations and unreliable electricity supply, traditional retailers remain an integral part of the retail landscape.
South Africa remains an exception, with a large and developed modern retail sector that contributes more than 65% of the country’s consumer goods sales.
According to market intelligence and advisory centre, 6Wresearch, the African retail and wholesale market size is expected to see significant growth between 2022 and 2028. Boston Consulting Group, BCG states that African consumers on average continue to buy more than 70% of their food, beverages and personal care products from the continent’s more than 2.5 million small, independent shops.
It can be seen that digitalisation of traditional markets across Africa suggests strong business and growth opportunities. And, despite its popularity and resilience, traditional retail in Africa faces many challenges, including the expansion of modern retail, the rise of e-commerce, and changes in consumer behaviour. In response to such challenges, a growing portion of traditional shops are slowly adopting digital retail services.
According to BCG, in Kenya the proportion of retailers offering remote ordering rose from 27% in early 2019 to 39% in late 2021. As the informal retail sector adopts more technological solutions, technology can play a crucial role in digitalising traditional retailers with innovative solutions to resolve bottlenecks and accelerate transformation.
African retail in flux
The foundation of the retail sector is shifting as consumers continue to embrace digital platforms. The impact of the pandemic significantly speeded up this process, pushing retailers to adapt to online models to meet consumer demands far more quickly than had been previously planned.
However, this move is not just a reaction to events like the pandemic; it reflects a broader trend in consumer behaviour as people enjoy the speed and convenience of online shopping.
Success in the retail environment hinges on retailers’ ability to blend short-term responsiveness with a visionary outlook, ensuring that while continuing to meet today’s needs, they also keep adapting to the digital trends shaping the future of retail.
The ongoing evaluation of IT infrastructure takes place in a landscape characterised by intricacies and challenges. Across Africa, retailers face unique complications, in that they are required to deal with issues such as erratic power supplies and IT infrastructure levels that are often less developed than in other parts of the globe.
The achievement of consistency across diverse channels is central to the success of businesses in the sector. The line between online and offline experiences continues to blur, necessitating a seamless transition between virtual and physical interactions with brands.
In addition, the optimisation of systems, streamlined logistics and maintaining consistent stock levels all emerge as integral components of a positive and consistent customer experience.
In-country regulations
Compliance with local and international environmental regulations further amplifies the intricacies of retail processes. Retailers must navigate a complex landscape of rules and standards while striving to build an efficient and resilient infrastructure.
African companies are also required to assess the regulatory impact on their systems and processes, including distribution regulations and transport bands. For example, in some countries on the continent, companies are not permitted to distribute products directly to their outlet base if they do not have a manufacturing facility.
Ongoing success for retailers demands not only an acute understanding of the current regulatory landscape but also an ability to strategically position infrastructure in alignment with emerging environmental standards and the latest technology innovations.
This dual focus ensures compliance as well as a resilient and forward-looking foundation capable of withstanding all regulatory changes that might lie ahead.
Power shortages
According to The Associated Press, many of Africa’s cities have erratic supplies of electricity while large areas of the continent’s rural areas have no power at all. As reported in 2021, 43% of Africans, about 600 million people lacked access to electricity, with 590 million residing in sub-Saharan Africa, according to the International Energy Agency.
Energy experts warn that the electricity shortages that plague many of Africa’s countries are a serious drain on the continent’s economic growth.
South Africa’s power generation has become inadequate to the level that the continent’s most developed economy has been forced to cope, at various times, with rolling power blackouts of up to eight to 10 hours per day, implemented to prevent the South African electricity grid from a total collapse.
Load-shedding in South Africa affects retailers in many ways, such as lower foot traffic during load-shedding and also increased retailer operating costs as many businesses have had to spend millions monthly on diesel to power their generators during load-shedding. In addition, food retailers have been particularly affected by load-shedding, as unlike clothing or furniture retailers, they must keep fridges and freezers running during power cuts.
An uninterruptible power supply, UPS is not only needed in the case of a power failure, but it can also help a retail business to be more efficient with the monitoring and predictive maintenance it offers. Additionally, the type of UPS and battery backup you need depends greatly on the devices and applications it is supporting.
Building resilience
At the core of future-proofing retail infrastructure lies strategic, long-term planning. The evolving retail landscape demands not just adaptability to current challenges but a proactive stance towards emerging trends. Scalable solutions that flexibly accommodate future requirements, coupled with a comprehensive understanding of regional and global dynamics, are essential for resilience in the face of uncertainty and change.
Providers of critical infrastructure solutions play a pivotal role in empowering retailers for the digital age. Going beyond being solution providers, they must also be strategic partners committed to delivering the continuous availability, reliability and efficiency of essential elements in evolving retail settings.
Partners with a comprehensive approach, from innovation and design to manufacturing and ongoing support, will provide a seamless and efficient experience throughout the infrastructure life cycle.
Close collaboration with retailers to craft bespoke strategies that align with their unique requirements, such as the meticulous creation of comprehensive data profiles for each customer type, will make the critical difference. This empowers retailers to gain invaluable insights and make informed, data-driven decisions to propel their businesses forward.
Proactive journey
The retail landscape, characterised by perpetual change, demands a proactive approach from retailers. It is not enough to react to current challenges; retailers must envision and enact an infrastructure capable of navigating the uncertainties that lie ahead.
The journey towards implementing the right infrastructure is not a one-time event; it is an enduring commitment. It involves creating a resilient and adaptable IT infrastructure that can withstand disruptions while also leveraging emerging opportunities, harnessing the power of digital infrastructure partners.
Through this ongoing commitment, retailers can position themselves as trusted partners in the present retail ecosystem as well as architects shaping a brighter, more sustainable future for the entire industry. To survive and thrive, retailers must embrace a continuous journey of evolution by ensuring that their infrastructure responds to current needs, while also anticipating the transformative trends shaping the retail industry of tomorrow.
