Boundaries between digital and physical shopping continue to crumble

The surge in South Africa’s online sales during the pandemic has plateaued, giving way to a fully omnichannel retail environment. South African consumers are increasingly viewing digital and physical shopping as intertwined, a trend that is set to persist and evolve through 2025.

Zak Haeri, managing director for NIQ in South Africa, notes that retailers must adapt to this interconnected retail space by offering seamless personalised promotions, tailored product recommendations, and messaging that resonates with consumers. Retailers who succeed will master using these insights not only for reactive campaigns but also to anticipate future trends and behaviours.

DATA-DRIVEN STRATEGIES LEAD THE WAY

NIQ’s Omnichannel Commerce data reveals that while online sales of consumer technology and durable goods have stabilised at significant levels in regions like the Middle East and Africa (19% market share), sales in newer categories such as groceries are gaining momentum.

RETAIL MEDIA NETWORKS (RMNs): RETAILERS AS ADVERTISERS

Retailers are increasingly embracing retail media networks (RMNs) as a lucrative revenue source amidst tight margins and intense competition. These networks convert retailers into B2B advertising giants by monetising in-store digital displays, eCommerce ads, and more. Major players like Amazon, Takealot, and Checkers are already capitalising on RMNs, reflecting a broader global trend. For instance, McKinsey projects RMNs to add $1.3tn to enterprise values in the U.S. by 2026, driven by profit margins as high as 70%. Amazon’s retail media revenue hit an astounding $46.9bn in 2023.

To maximise ROI on RMN investments, manufacturers and distributors must strategically allocate their budgets, looking for platforms that yield robust return-on-ad-spend as well as improved brand visibility.

MARKETPLACES CONTINUE TO EXPAND

Multi-brand platforms such as Amazon, Shein, Temu, and local giants like Takealot and Makro are flourishing as they monetise their eCommerce ecosystems. Through marketplace models, these platforms not only sell directly to customers but also earn through fees and commissions on third-party sales. In 2022, total consumer spending on the top 100 marketplaces globally reached $3.25tn, and an impressive two-thirds of global eCommerce occurs on marketplaces.

Strong growth is anticipated in South Africa’s marketplace segment, especially as Amazon gains traction and local trends align with international norms.

SOCIAL COMMERCE’S LONG-AWAITED BOOM

Predicted to grow from $0.62tn in 2021 to $7.03tn by 2030, social commerce is gaining momentum, with platforms like TikTok driving sales, particularly in health and beauty categories. Asia-Pacific leads the global social commerce market, but South African consumers are rapidly embracing social media not only for product discovery but also for direct purchases. By leveraging shoppable features and capitalising on impulse buys, brands can tap into this expanding channel to boost growth and stay competitive.

CHINESE PLATFORMS CHALLENGE THE MARKET DESPITE OBSTACLES

Chinese platforms such as Temu and Shein have disrupted South African retail by capturing significant market share thanks to aggressive pricing strategies. However, local retailers have raised concerns about these companies exploiting tax loopholes to circumvent VAT and import duties. The South African Revenue Service is intensifying its efforts to enforce stricter tax compliance, potentially slowing these platforms’ momentum. Despite this, the platforms are likely to adapt due to their existing loyal customer bases and persistent pricing advantages.

AI DRIVING RETAIL INNOVATION

Generative AI is transforming the retail sector by enabling rapid creation of customised assets such as videos and graphic content, tailored for specific customer segments. However, retailers face challenges in balancing AI-generated content with the need to maintain a human touch. NIQ research indicates that while AI’s efficiency and cost-effectiveness are undeniable, consumers find AI-generated advertisements more annoying or confusing than human-crafted ones. Moving forward, retailers will need to carefully guide AI processes — focusing on high-quality outputs that genuinely resonate with consumers and avoid alienating them.

CONCLUSION

In South Africa’s omnichannel retail space, the race to capture consumer attention is fiercer than ever. Success hinges on delivering a frictionless path-to-purchase across all touchpoints while meeting increasingly high consumer expectations. Ultimately, winning in this evolving retail landscape requires balancing technological innovation with the human touch, enabling retailers to meet customer demands across digital and physical channels alike.

For more information, Call: 011-208-3000 | Visit: https://nielseniq.com/

Article from DIY & INDUSTRIAL TRADE NEWS APRIL 2025