Despite economic challenges, opportunities for retailers remain

We need to embrace 4IR as an opportunity, not a threat, says CEO Gwarega Mangozhe.

NOMPU SIZIBA: The Consumer Goods Council of South Africa, which represents players in the manufacture, retail, wholesale and distribution of goods, held its annual summit today [Wednesday, November 6] in Johannesburg. The theme of the summit was, Is South Africa at a tipping point? How to grow your business sustainably in an ever-changing environment. The keynote speaker at the event was Pick n Pay CEO Richard Brasher, who spoke about business as a force for good.

Well, to discuss the sector’s challenges and what the plans are in remaining resilient in a changing consumer and technological environment, I’m joined on the line by Gwarega Mangozhe, the CEO of the Consumer Goods Council of South Africa. Thanks very much for joining us, Gwarega. What was the general view on the operating environment in South Africa among the delegates at the summit?
GWAREGA MANGOZHE: The general consensus was that the economy is not growing. Growth remains stagnant, and it has been the situation for quite a number of years. And then of course it culminates in the situation that we find ourselves in from a joblessness point of view, because the levels of unemployment are on the rise.

But, more importantly, last week Moody’s changed the outlook on South Africa from stable to negative. So this doesn’t bode well for the future.

NOMPU SIZIBA: No, not at all. As I mentioned, Richard Brasher of Pick n Pay, who has done quite a good job in helping to improve the retailer’s fortunes, gave the keynote address. What was the crux of what he was saying?

GWAREGA MANGOZHE: The crux of what he was saying was that, despite the tough, challenging environment we find ourselves in, there are still opportunities for retailers and manufacturers which are members to tap into the cup of opportunities. It requires significant levels of resilience.

He would like to perceive the situation in South Africa from a half-glass-full point of view. So, there are opportunities. And one of the key things that he indicated is that, despite the challenges, in the last seven-odd years they’ve still been able to grow compound growth of almost 20% per year. So, it just goes to show you that you’d rather remain positive and do what you can in ensuring that your business becomes sustainable for the long haul.

NOMPU SIZIBA: We know that technology is key in terms of creating efficiencies across the retail sector, or any sector for that matter. But what were the key things being discussed in this regard?

GWAREGA MANGOZHE: I think a lot of people are afraid of the fourth industrial revolution, and they seem to think that will serve as a substitution for jobs. We actually need to embrace the fourth industrial revolution. It is here, it’s not going anywhere. And, more than anything else, if you use it as a force for good, it can help build your own business for the long haul.

One of the speakers, Dr John Purchase from Agbiz, indicated how technology and innovation are actually starting to drive greater outputs from an agricultural point of view when it comes to grain producers, beef producers and so forth.

So, yes, I know that there are concerns pertaining to the fourth industrial revolution, but this also presents an opportunity for people to be reskilled, and those are some of the themes that the wholesale and retail sector CEO was talking about. We cannot remain caught up in the situation we find ourselves in, where we seem to think that the fourth industrial revolution is actually a threat. We should embrace it as an opportunity.

NOMPU SIZIBA: One of the ways we’ve seen grocery retailers achieve efficiencies in other parts of the world is to have cash tills that shoppers themselves can use to pay for their goods, as opposed to having a human teller. Presumably the sector in South Africa would want to tread very carefully in the adoption of that technology, because of the implication it would have for jobs. What kind of conversations are being had around this type of technology and, when you talk about skills upgrade, presumably if this kind of technology was introduced, we would still see a situation where some people lost their jobs?

GWAREGA MANGOZHE: I know that some of the developed countries, such as the United States, have introduced cashless point of sales, or cashier-less point of sales. But what this will also present down the road – of course I don’t think this is something that we can look at for now, considering the levels of unemployment we find ourselves in – is that it will also serve as an opportunity for employees to be reskilled. Remember that cashiers are only one part of operations when it comes to retail stores. There are quite a number of other opportunities that will certainly crop up with the advent of the fourth industrial revolution and the adoption of technologies.

So, you’ll find that in the long haul, if there is proper reskilling and proper consultation, the impact when it comes to jobs is not going to be as big as people would like to believe it will be.

NOMPU SIZIBA: The retail sector is a very competitive landscape, and many players are increasing talk about the importance of being customer-centric. It’s one thing to shift goods, but the level of service has become quite key as the South African consumer has become more savvy and discerning. Was that something that was discussed?

GWAREGA MANGOZHE: Absolutely. I always tell those that I work with, as well as industry players, that the South African retail sector is world-class. It can hold its own against some of the major retailers globally. But certainly the level of competitiveness spurs members along to do even better, because the point you alluded to [is] around consumers being a lot more savvy; they’ve embraced technology.

And let us not forget the rise of social media. As a consequence you have a lot of social policemen out there and, if you do things that are not correct, that will have a profound impact on your business. But if you do things with the right objectives, with the right ethical considerations, customers will also back you up. Customers now have got increased levels of choice. So the fact of the matter is it forces our members to up their game like never before, and this will simply provide a better value offering and prospects for our consumers and customers out there.

NOMPU SIZIBA: So, sustainable development is something that all industries need to be cognisant of these days. We’ve heard stories about some companies moving away from using plastic, for example, and in the grocery retail space how to deal with surplus food and not waste it is also an issue, especially in a society where hunger is a real issue.

GWAREGA MANGOZHE: You’ve hit the nail on the head. The Minister of Environmental Affairs is driving quite strongly for a reduction in the use of single-use plastic bags because, as you know, this is problematic. So the issue is can’t we come up with more innovative ways and a more biodegradable solution? Consequently there is a colloquium that she set up which should happen in the latter part of November, where plastic bag manufacturers, your brand owners, as well as retailers, will get together, plus those that recycle these plastics, in coming up with more sustainable solutions. As you can imagine, the banning of single-use plastic bags is something that is actually on the horizon. So, this is being embraced.

When it comes to the matter of SBGs, extremely important – we can’t run away from it because any business out there must use this as adsource of strategic imperatives. You can’t run away from it. That was something that was dealt with very, very strongly from a Massmart point of view, as well as the speaker from Distell.

NOMPU SIZIBA: Super. Gwarega, we are going to leave it there. I’m sure a whole lot more was discussed, but thank you very much for giving us a flavour.

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