Covid-19 has drastically changed the behavior of consumers globally and has fast tracked the need for digital transformation in retail. Small independent grocers, convenience stores as well as butchers now need to rethink their approach to customer experience, employees’ safety, supply chain and hygiene. Even though South Africa has been relatively slow in the adoption of e-commerce there has been a sudden acceleration in its development. The fact that large super market chains have online ordering and delivery capabilities makes it even more vital for small retailers to make the transition to online digital platforms. 

Small grocers could capitalise on numerous opportunities if they are digitalised. With the majority of consumers starting their search for products online, small grocers could reap the benefits of online platforms to reach out to potential consumers. This combined with effective search engine optimization means that grocers could possibly reach out to customers in their area who may not have been aware of their businesses and product ranges previously. Another advantage with selling online is the ability to collect data which could be analyzed to improve overall customer experience, both online and in store. The data and insights gained from customers’ buying patterns online equips retailers with insightful perspectives on customer preferences and purchasing trends. These insights can be used in turn to improve product ranges, manage stock levels better and so on.   

On average, large South Africa supermarket chains that sell online have lead times of two to seven days for deliveries. This inefficiency presents small grocers an opportunity to go head to head with larger supermarket chains by offering quicker deliveries, thereby plugging a gap in the market. With faster deliveries, grocers would be able to win over a stronger base of potential customers who are looking for fresh, good quality products on demand. The most promising trend for e-commerce in South Africa is its young urbanized population.

Covid-19 has made consumers conscious of social distancing norms and hygiene protocols followed in retail stores. Small grocers are at a disadvantage here as they tend to have smaller store sizes which make social distancing difficult. Moving to online sales and deliveries allows small grocers to continue to service customers who may be afraid to visit their stores. 

Despite the enormous opportunities which make e-commerce lucrative for small grocers, the transition to a digital marketplace has its own challenges. One of the main reasons for the slow development of e-commerce in South Africa is consumer concerns around payment protection or cyber security. That has been one of the factors which has historically led to consumers opting for in store purchases. However third party payment gateways like PayPal which play a vital role in addressing these insecurities globally have already started having an impact in the South African market – over one million South Africans now have PayPal accounts (Fitch Solutions, 2020). Furthermore, local secure payment platforms such as Payfast have also helped give South African consumers more comfort with online shopping and credit card transactions. 

Another challenge for small South Africa retailers is the shortage of affordable skilled manpower to manage digital systems. For the smooth operation of online sales, stock management systems that manage both – online and in store sales, automated orders and efficient delivery schedules are essential. The lack of proper inventory management systems means that small retailers are unable to manage their online product listings effectively. The inability to provide online buyers with updated inventory could lead to a loss in revenue or disrepute with customers. 

Drawing from post lockdown consumer behavior in China, the growth in online grocery sales is a huge opportunity for small independent grocers, convenience stores and butchers, even in the long run.  A Fitch report predicts that spending on essentials will continue to be dominant over the period 2020 – 2024. Small retailers can capitalize from this upward trend in demand only if transitions are made at the right time. For businesses like groceries, convenience stores and butchers the adversity created by Covid-19 could be the opportunity for innovation and growth. 

Darren Harder

Voice of Reason