South Africa’s current economic crisis, which finds its origins in the national lockdown, has directly contributed to deteriorating market conditions for SMMEs. The Small Enterprise Development Agency (SEDA) reports that SMMEs are in the eye of the storm. A survey conducted in April 2020 by a consortium of SMME focused organizations called #CombatCovid, found that more than 50% of small retail businesses would not be able to survive the losses caused by a sharp decline in turnover due to the prolonged lockdown. Approximately 33% of the businesses saw a decline of 75% – 100% in their turnover during this period. As per the survey, over 57% of these small businesses were looking at a change in their operating model to face tough market conditions.  

While we see a downward trend in in-store sales for SMMEs, we see a surge in online sales in general. However, most small business owners do not have the infrastructure, or technical expertise, to generate online sales. As a result, they are missing a massive opportunity for business growth. Not only would ecommerce generate new sales, it would also contribute to a reduction in operational costs and it would make it easier for consumers to support independent grocers. With approximately 87%1 of shoppers starting their searches for products on digital marketplaces, it provides grocers a larger platform to get their products to consumers. By having an online presence, grocers not only ensure potential consumers find their products, but will also be able to break through geographical barriers by selling to consumers across different localities.   

An online presence also equips sellers to collect data which could be leveraged to optimise stock holdinginfluence marketing promotions and to provide an improved customer experienceGiving consumers a user-friendly portal could effectively help them save time in placing orders for frequently used items. 

Unlike the large retail supermarket chains in South Africa, small retail grocers face challenges in procuring favorable contracts on lease or rentals which adds to the mounting strain on the business. With most business owners being forced to reduce overheads to combat the effects of this pandemic, going online would lead to a reduced requirement of manpower and physical space. If grocers are supported by online marketplaces to manage and list inventory online, provided with logistic support for deliveries receive advice on competitive prices and market demand, these grocers could stand a fighting chance at competing with the current oligopoly that is corporate South Africa.  

The current situation of the pandemic has crippled an already struggling sector of the market. Making quick changes to their business models is the only way to ensure survival and sustained growth for small business grocers. 

Darren Harder

Voice of Reason