It’s that time of the year again, when retailers attract their biggest share of customers and increase in-store foot traffic as the festive season begins. As we have seen, this year is like no other, and there is no doubt that Black Friday and Cyber Monday will be too. Already we have seen the changes begin with the extension of special offers starting from the beginning of November leading up to Black Friday and inevitably Cyber Monday as well. This overlap of shopping holidays has given rise to the name “Black November”.
It is certain that the month of November 2020 will be a good one for shoppers and retailers alike, but who will walk away the happiest?
With R2.9 billion spent on Black Friday in 2018 and R6 billion in 20191; together with almost a third of millennials (30%) planning to spend more this holiday than they did last year2, it presents a great opportunity for companies that can capitalise.
This year, many customers have not done all their regular shopping in-store out of fear of contracting COVID-19.This has put pressure on retailers that have typically relied on foot traffic. As a result, there may be more competition online and retailers will need to find ways to attract customers to their websites and away from the larger well-established online stores like Takealot, which is one of the most popular online platforms among South Africans, or even Amazon. This is no easy feat, as these companies have a strong and trusted online presence, and others will have to offer extremely compelling deals if they wish to compete.
Previously, 67% of Black Friday shopping was done in-store with only 11% taking place purely online, with 37% of the online consumers reporting issues while shopping online on Black Friday.3 This year, there is expected to be a significant increase in online shopping with many new customers who are not as familiar nor comfortable with shopping online. They are being forced to go online in order not to miss out on the many bargains and online deals. But these ” ‘new’ customers will not tolerate websites that are not user-friendly and will likely respond negatively to the slightest inconvenience. This may also drive them to another store, even if the product costs more there.
With the expanded unemployment rate increasing to 41.3% in the third quarter of 20204, the increasing costs of utilities and the valued-added tax (VAT) increase to 15.0% in 2018, are all putting pressure on already strained budgets5. The average South African will have less money to spend on luxury goods and increasing need for discounts on items and the likelihood of staple items being the most sold items during the Black November 2020 period.
There is also a lack of trust in newly created online stores which has stemmed from the number of fraudulent online stores and scams that plague the internet. In order to avoid this, companies need to build trust in their customers through transparency, ensuring that their websites are user-friendly and that customers are reassured that their personal information is secure.
Customers now have time on their hands, whereas previously they had to run from one store to another to compare products and prices, as well as the fear of the product selling out. Customers now can have multiple tabs open on numerous devices to compare and take their time in deciding what the best option is for them.
It is no longer sufficient to just discount products - companies will have to give customers a meaningful experience and true value in their purchases.
As consumers do more of their shopping online this festive season (61% v 39% in stores), return policies,6 and delivery will also rise in importance (66% of consumers expect free delivery7).
With SA’s smartphone penetration reaching 91.2% in 2019, up from 81.7% in 20188, retailers need to ensure that all product information is available on all platforms; providing a seamless experience and avoiding frustrating or even potentially losing consumers. According to international reports,84% of companies that work to improve their customer experience reported an increase in revenue.9
At PwC, our perspective is that organisations that put the customer at the heart of what they do, will succeed in the ‘new now’. Using PwC’s ADAPT framework, we have identified what we see as the top five elements for organisations to achieve success.10 The framework identifies a set of urgent, interdependent, and accelerating challenges confronting the world, which organisations can use to help them be more relevant to their customers.
Top five customer experience aspects that can differentiate online retailers:
There is no telling what the outcome will be in the long run, but it is clear that retailers that adapt and innovate to set themselves apart are most likely to come out ahead and persevere through these unprecedented times.
Senior Manager, Media Relations, PwC South Africa
Tel: +27 (0) 11 797 4470