Tens of thousands of jobs lost. More than 100 people dead. Scores of businesses looted, burnt, and damaged, many of which will never reopen. Vital supply chains destroyed.

South Africa is reeling from its greatest crisis since the dawn of democracy almost three decades ago as a result of mass looting and rioting in multiple locations in KwaZulu Natal and Gauteng.

And as the country now begins to pick up the pieces and assess the damage, it continues to battle a vicious third wave of the Coronavirus pandemic, sky-high unemployment levels, as well as an ailing economy that has already had to contend with 18 months of Covid lockdowns.

Paul Behrmann, founder and CEO of part-payment fintech Payflex, says South Africa has been pummeled from all sides – both externally from the virus and internally from the civil unrest.

The retail sector has experienced challenges in the past. But it is nothing like the past few months. This is being further compounded by recent looting and violence.

“If the last few months have taught us anything, it’s that business as usual has been disrupted significantly, and in many cases, permanently. Both business and South Africans have learned hard lessons on how to navigate disruption, and although this is an exceptionally low point, focus is once again on digital channels, accommodating consumer shopping habits and behaviour which continue to evolve at a rapid pace out of necessity.”

Counting the cost

Over 200 malls have been looted or destroyed. Over 800 stores burnt or damaged. The loss to retailers runs into millions of rand, according to the Consumer Goods Council of SA, and millions of rands have been lost in precautionary and forced mall closures.

While Business Leadership South Africa estimates that damages amount to more than R5-billion and counting for the retail industry alone, with retailers big and small beginning to get a clearer picture of the damage to their operations in Gauteng and KwaZulu-Natal.

The unrest has exacerbated the unemployment crisis, with job losses expected to climb significantly as a result. PWC says an estimated 50 000 jobs are at risk. While the Daily Maverick predicts up to 200 000 jobs could be lost in KwaZulu-Natal alone.

Retail central to economic recovery

Trade which includes the retail sector accounts for 16% of South Africa’s gross domestic product, while together wholesale and retail account for 21% of employment, making it central to South Africa’s economic recovery.

Prior to the unrest, retail was finally showing green shoots of growth following the pandemic. Confidence had climbed to a six-year high of 54 in the second quarter of 2021, according to the latest retail trade report, published by the Bureau for Economic Research. Similarly, South Africa’s retail sales figures returned to growth in May, expanding by 15,8% year-on-year and growing by 1,5% on a monthly basis, according to Statistics South Africa.

Behrmann says, while the early signs of recovery are anticipated to be adversely impacted by the current devastation, e-commerce remains a vital channel for consumers to receive the goods they need and to get their day-to-day essentials.

Panic buying

Pictures of empty shelves and long queues have emerged on social media over the past few days. While this is largely due to stock shortages as a result of the looting, many South Africans are also panic buying due to fears over food security.

But, why do people do it? Experts use many cognitive biases to explain why panic shopping occurs.

According to research published in May of last year, four factors likely drive this include: the perception of a coming crisis and corresponding resource scarcity, fear of the unknown, coping behaviour triggered by control deprivation, and social-psychological factors including social network dynamics.

Behrmann adds that panic buying helps people feel more in control of a situation. He adds that a herd mentality also exacerbates this behaviour. In other words, seeing others panic buying prompts others to participate.

A Jeckyll & Hyde Scenario – SA’s two faces

Behrmann says while we have seen unprecedented violence and instability in recent days, we have also seen the incredible strength of the South African spirit as fellow South Africans show empathy for each other in solidarity against the devastation.

“Out of the ashes of this trying time, the true spirit of ubuntu has emerged where South Africans from all walks of life have come together to protect their communities, infrastructure, and start cleaning up and rebuilding.”

Where to from here?

Behrmann says while much uncertainty remains ahead for retail, e-commerce will help buoy the sector while they rebuild what was lost.

As ecommerce emerged as a lifeboat for the sunken retail sector during the first year of lockdown, doubling in value to R30-billion from 2018 to 2020, it is expected to provide a similar safety net for both retail and shoppers during this troubled time in South Africa.

He adds that the current situation is expected to amplify consumer behaviour trends towards digital channels. And those retailers that are able to provide consumers with the convenience of a seamless digital experience will set themselves apart.

“We are also seeing a seismic shift in the attitudes of South African consumers towards debt. Consumers are more cautious than ever of how they spend their money, actively avoiding payment channels that get them into further debt. As a result, we are seeing a significant uptick in the demand for flexible payment methods that enable customers to stretch their payments out over time, minus the interest and fees.”

This is echoed by a recent report which found South African Buy Now Pay Later is expected to grow by 52,5% on an annual basis to reach $268,7-million in 2021.

This is echoed by figures from TransUnion’s Consumer Pulse Study conducted in March this year showing 62% of consumers are still being impacted financially as a result of the pandemic, and 87% of those impacted are concerned about paying their bills over the next three months,

South Africans are grappling with a range of emotions as they try to process the tumultuous events of the past week. While consumers are dealing with the concern of supply shortages, the ravaged retail sector is having to reimagine the future once again.

“However, it is not all doom and gloom. The bottom line is that consumers have been buying and living differently for almost two years. Retailers therefore need to respond to the situation quickly, prepare to recover with empathy and care, and embrace digital channels in order to thrive in South Africa’s next normal, which has been redefined once more.

South African consumers will without question continue to embrace e-commerce and avoid physical stores for the immediate future, and by doing so, they will continue to accelerate the marked shift to digital. However, unlike the unprecedented time at the start of Covid, ecommerce stores will be more equipped to support consumer needs this time around,” concludes Behrmann.