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PwC: SA’s retailers need to align their business models

By Rob Starr, Content Manager,

An increase in online shopping is driving structural changes in the retail sector, according to a recent report issued by PwC. During 2011, the number of online users in South Africa expanded by 25% to reach 8.5 million, or about 17% of the market. There is potential for this to top 10 million by the end of 2012 if this growth rate is sustained, according to PwC’s ‘Retail and Consumer Products Outlook 2012’.

Retailers are increasingly revisiting their business models with some entering the online arena. More recently, Edcon’s CNA division and Mr Price have entered the online retail market. Just last week Apple announced the arrival of the Apple iTunes store in the country, which is estimated to give South African music fans purchasing access to a library of about 20-million local and international hits. Food retail giants Pick ‘n Pay and Woolworths also have home-shopping websites which are aimed at the higher end of the market. Although online retail is still a small part of these businesses, it is seen as an important channel for the long-term future.

A recent survey conducted by Mastercard found that 58% of local active Internet users now shop online, up from 53% in 2010. Furthermore, the arrival of the online payment system Paypal in 2010 has helped to encourage growth within the e-commerce market. With an increasingly competitive Internet service provider market, along with more compelling mobile and smartphone-based access options, South Africa is starting to see a significant increase in the number of online users.

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