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

By Rob Starr, Content Manager, Big4.com

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.

Online users in South Africa tend to fall within the medium to high-income sector of the population. “This group appears to have a strong pent-up demand for online services,” says John Wilkinson, PwC Retail and Consumer Leader in South Africa.

However, Wilkinson says that South Africa’s online retail market is still relatively small and niche with a strong focus on consumer products such as books, music and DVDs. “This is unlike many of the developed markets, such as Asia and Australia, where there has been an explosive growth of online retailers.”

 

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