An inherent understanding of how to adjust operations and product mixes to regional and local tastes will outweigh operational efficiencies from international retailers
With international retail chains eyeing the African market, South African retailers will need to beef up supply chain efficiencies at scale but could easily outdo competitors with their built-in understanding of apportioning their offering to meet regional or local needs.
So says Sathiyanarayanan Vijayaraghavan, head of ThoughtWorks’ global retail practice. “In most cases, retailers in developed economies are ahead of their South African peers in the use of technology to drive greater customer loyalty, efficiencies in the supply chain and align demand forecasting/merchandising to customer needs.
“But retailers in developed economies have, for many years, not had to deal with highly localised demands, where individual stores must offer different products from those in sister stores in the next town – or in the next country.
“By contrast, South African retailers know exactly how to be profitable in fragmented markets and could use that knowledge to very good effect in expanding their footprint into the rest of the continent.”
However, Vijayaraghavan believes that South African retailers could be using mobility more – though not in the same way as those in developed economies.
“In Europe and the United States, for example, retailers’ mobile offering is focused on smartphones, using very sophisticated apps and 4G connectivity. That’s not feasible in most of South Africa and in the rest of Africa where affordability restricts the acquisition of smartphones and infrastructure cannot yet accommodate 4G.
“However, most Africans have a cell phone of one sort or another and it is perfectly possible to create an interesting shopping experience for them on those kinds of devices. It would just take a little thought to come up with an attractive approach.”
Vijayaraghavan speaks from fifteen years’ of ThoughtWorks experience of helping retailers differentiate themselves – and improve customer experience – through innovation directly related to consumer behaviour. Thoughtworks operates across the world and across all retail segments, focusing on driving innovation in the front and back end of retailing.
“We don’t help retailers do better what all retailers do,” he says. “We help them do what other retailers can’t or won’t do – specifically in relation to interaction with consumers.”
As a case in point, one of America’s largest electronics retailers wanted to cope more effectively with high spikes in seasonal demand. ThoughtWorks helped it avoid spending millions of dollars on building a new data centre by creating, in two months, only the features needed for people to look at items offered on special holiday deals, place an order, and pick up the item at the store at a time that suited them. The system was rolled out across America in three months.The retailer pays for usage of the system only.
Another ThoughtWorks system, built at one-fifth of the cost of more conventional systems and implemented in one-tenth of the usual time, enables an international retailer to optimise its pricing on the fly in relation to changes in consumer demand and market fluctuations. The retailer has filed two patents based on the engagement.
For an Italian retailer with 150 hyper and supermarket stores across the country, ThoughtWorks built a system that allows the retailer to have different product portfolios and pricing in different stores to suit consumer preferences.
“The point in retailing is not simply to provide generic solutions to consumer-specific issues,” Vijayaraghavan says. “For one thing, there is no generic retailer. For another, each type of economy requires a different approach.
“But, whatever the overall trends in an economy, the retailer must find a way of differentiating his offering while still operating under typical constraints. That means fresh retail thinking supported by extremely agile mechanisms of delivering innovation.”