Lockdown economics: which SA online stores have made a mint
In just a few months, shoppers have turned to online purchases, proving that Covid-19 is having a dramatic impact on retail
The Covid-19 pandemic has disrupted consumers’ lives and battered their finances. Yet since lockdown level 5 began, smartphones and PCs have emerged as the new heart of the home, prompting a different kind of consumer behaviour.
Research house Growth from Knowledge (GfK), which piloted a consumer survey in 30 countries, including SA, says the majority of consumers now expect the crisis to continue for more than 18 months. And this will have consequences for how they purchase goods.
Online interviews for the survey were conducted during each week of the various stages of lockdown (stages 5, 4a, 4b and 3).
Unsurprisingly, online sales are up. Almost a fifth of respondents made purchases in level 5, which grew to 26% during level 4, and by level 3 it was up to 30%.
Rachel Thompson, insights director at GfK SA, says consumers were forced to experiment with online shopping because of the pandemic and now feel that it is a viable option, even when fears subside.
But the financial impact of the pandemic means consumers are seeking better value: 44% say they will be reducing purchases to save money even after the pandemic, says Thompson. "One of the main barriers to online is the cost of delivery — 66% of consumers expect free delivery, and they also want delivery to be fast."
"Click & collect is small but it is gaining momentum during lockdown because it alleviates concerns about speed and cost of delivery. It also helps where consumers live in townships or remote areas and normal overnight delivery options are not available," adds Thompson.
The surprise success of the lockdown has been Shoprite group’s Checkers Sixty60 app. The retailer says lockdown has altered customer behaviour, which has worked in its favour.
The app, which only launched last November, deserves credit for scaling up its service at a rapid pace.
Shoprite says in-store visits are less frequent (a 7.4% drop), but basket sizes are larger (their value is up by 18.4%) and online shopping using Sixty60 is up. The company says it plans to invest more in new offerings as online commerce purchasing behaviour starts to become more prevalent.
Covid-19 has presented the group with opportunities, including a broader e-commerce base. The result is that Sixty60 is launching in new areas on an almost weekly basis.
A spokesperson tells the FM that for a time during lockdown, Sixty60 switched to same-day delivery, when high demand meant it was unable to meet its promise of a delivery within 60 minutes. "Additional capacity has been added now and Sixty60 is back to its 60-minute service, making it the fastest delivery service of any supermarket in the country."
By June, the service was operating from 87 stores, up from just 10 before the lockdown.
Its popular lockdown purchases include sanitary products (including toilet paper), baby products, dry pasta, UHT milk, tinned foods, immune boosters and vitamins. Baking goods such as cake flour, yeast and eggs are also more popular.
Shoprite wants to keep up with demand and is scaling up its delivery capacity. It recently teamed up with Mr D Food to deliver medication to its Medirite pharmacy customers.
Meanwhile, Woolworths has also faced unprecedented demand for online shopping since the lockdown began, says head of online & mobile Liz Hillock. This has extended from food products to fashion, beauty and home. "We’re seeing triple-digit growth."
While the company says it always had a strong online platform, Covid-19 is accelerating digital transformation. "We launched Click & Collect for foods in just three weeks; we’re now live in over 63 stores across the country and it’s performing very well," she says.
It also expanded delivery slots to cope with the demand, with further plans in progress. And it has partnered with other delivery services. "We’re listed on Quench, OneCart and Zulzi so customers can get their shopping via those channels on the same day," she adds.
Hillock says South Africans favour a mall culture, so growth in online shopping has been relatively slow.
"We’re seeing that change rapidly. Our online penetration to total sales has grown exponentially, and over a short period of time." Shopping habits have changed and Hillock says they are likely to remain forever altered.
The Woolworths app has 1-million users, says Hillock, evidence that its mobile focus has paid off.
The lockdown has affected its sales in other ways. Different levels of the lockdown have dictated purchasing trends. Hillock says after the wine regulations changed, it had an influx of wine orders. The same happened with rotisserie chicken.
"It’s not just an increase in fresh food; we’ve also seen an increase in lines like cinnamon and curry powders, for example, because more customers are cooking from scratch than before."
The GfK survey also shows that entertainment has changed. Activities such as watching videos online have increased by 57%, video chat by 59%, music streaming by 40% and playing video games by 35%.
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