A question that retailers are grappling with is where to focus their energy to drive sales: in brick-and-mortar stores or by investing in their online presence.

By Hymie Marnewick, MD of XLink and Celine Thungaveloo, head of sales at XLink

The simple answer is that the division between traditional retail and e-commerce needs to be reassessed.


Changing consumer demands

With the catchphrase of the moment being “digital transformation”, it may be surprising to read that traditional retail still brought in a trillion-rand sum last year. However, the sector did see a decline of a little over 4% from 2019. Conversely, South Africa’s online retail sector grew by an astonishing 66% in 2020, more than doubling its share of total retail spend since 2018. This unprecedented growth can largely be attributed to physical store closures in pandemic lockdowns, bolstered by increased online access – South Africa gained 1,1-million more internet users in 2020 alone.

Many would be quick in jumping to the conclusion that physical stores should be phased out in favour of e-commerce to meet the needs of our increasingly digitised society. However, this logic is flawed, because global surveys reveal that 74% of today’s consumers use multiple channels – both online and offline – when shopping. “The division between traditional and digital commerce should no longer exist, because we’ve entered an accelerated omnichannel era, where retailers are expected to deliver services through a complementary mix of online and in-store channels,” says Marnewick. “Crucially, these services must be delivered in an integrated, interconnected way.”


Creating a strong integrated ecosystem

“Retailers who rise to the challenge, embracing an omnichannel approach with smart integration to offer consumers flexibility and choice, are reaping the rewards,” says Celine Thungaveloo, Head of Sales at XLink. In fact, IMD estimates that retailers not meeting this consumer demand will lose out on 10% to 30% of sales. What’s required in today’s environment is a proactive phygital mindset geared toward enhancing customer experiences through a seamless interaction between online and physical retail spaces and supply chains.

Accelerating digital enablement is the way to build this strong, connected ecosystem that touches on every part of the business, from a brand’s marketing and delivery decisions to inventory control and more. “What we need is a connected retail ecosystem, and this is what the platform economy enables, something that XLink champions as it drives digital acceleration across Africa,” adds Thungaveloo.


Embracing platform-based innovation

Personalisation, immersion, and optimisation for the customer; better business and consumer insights for the retailer. This is what a connected retail ecosystem delivers, where a mixture of technologies speak to one another, from in-store sensors to web interfaces, monitoring software, value-chain apps and more. In this set-up, a single, secure network platform connects all other tech tools and platfoms that a retailer might employ to better manage inventory, drive bespoke promotions, or expand point of sale solutions to cover all payment options, for example.

What exactly do these tech platforms enable? McKinsey divides retail-specific tech platforms into three categories. The first category is the customer-journey platform, such as those that enable click-and-collect purchases; the second is a group of business-capability platforms that enable the customer journey, such as store- and warehouse-inventory management; the third is the business’s Core IT platforms, such as the cloud.

For customer-journey platforms, developments are addressing growing consumer demands, such as the recent need for low-touch retail, which is tech-driven, but offers the in-store experience. One such example is XLink’s self-service checkout solution, which is an aggregation platform for digital payment options widely used by consumers today. “Introducing in-store tech like this will allow retailers to uplift traditional staff roles from repetitive manual tasks to customer-experience focused duties as well,” notes Marnewick.

How would a business-capability platform like inventory management be useful in a retailer’s omnichannel approach? Just as physical storefronts need to be complemented by e-commerce channels, your traditional supply chain will benefit from investment in digital capabilities, too. “At XLink, we created our RFID-based Digital Inventory Management solution to reduce time and budget dedicated to monitoring and managing stock for in-store and online purchases, while increasing real-time stock-count accuracy,” explains Thungaveloo.

With a platform like this taking care of stock monitoring, retailers are in a better position to scale operations and expand reach, too. Furthermore, insights the tech provides about potentially excessive stock holdings are invaluable – more stock increases liability and risk, as many local businesses discovered during the unrest earlier this year. As a result, many retailers are using inventory management platforms to enable just-in-time delivery structures, which minimises the need for large stock holdings.

“Over the 17 years that XLink has been in business, we’ve witnessed the growing urgency behind digital enablement. This urgency a direct response to customer behaviour, with today’s phygital-seeking consumers seeking increasingly streamlined service delivery at every touch point in their retail journey,” says Marnewick. The new consumer trend in omnichannel interaction is one retailers should enable; after all, meeting customer demand is at the core of any retailer’s purpose.