Digital retail growing exponentially in Africa


Michael Zahariev, co-founder of Luxity, shares his views on how the fashion retail space can re-position itself for an unpredictable future through integrating the traditional and digitised shopping experiences

Africa boasts a large internet market. Spearheaded by Nigeria, South Africa, Rwanda, Mauritius and Kenya. Mobile saturation on the continent is expected to double over the next decade. Opening the door to new business models heavily reliant on the internet economy.

Online shopping in the sub-Saharan region has become popular over the last decade. A trend ushered in by wide spread access to new technologies. Simply transacting on one’s phone or laptop is enticing. Easy and convenient, this phenomenon is gradually integrating into the traditional buy and sell business practice.

The Covid-19 outbreak in the first quarter of 2020 rattled the business models of various fashion retailers. An industry largely characterised by physical stores bundled with on-the-ground operational structures dependent on walk-in customers. The outbreak pushed some businesses towards market consolidation and scale. While squeezing others to the point of extinction.

The retail market (in general) around the continent encountered a dual impact as a result. Essential goods and services providers experienced a boom in business. Through both their brick and mortar stations and their online infrastructure.

Fashion retail experienced a mixed bag of fortunes. The big players thrived (either through take-overs or alternative means). The smaller players disbanded. The gradual lifting of restrictions propelled online merchants to being the first to reap a consistent trail of rewards.

Creating a seamless experience

Michael Zahariev believes that customers are excited about the options presented by access to new technologies. He emphasizes that diversifying platforms of trading is key.

The merging of the online and physical store is extremely important when servicing a market that is transitioning from a decades long mall culture to a tech conscious click and buy generation. The omnichannel store is a store that combines it’s digital presence with an in-store facility as a modern way of enterprising.

Luxity is South Africa’s largest source of pre-owned and authenticated luxury items. Through the omnichannel approach, the company has seen double digit growth even through the pandemic and lockdown.

“Shoppers are now tech savvy. They can tell the difference between a high end digital experience, as easily as they can single out their in-store high-end service level experience,” says Zahariev.

“Return customers prefer to shop online while new customers prefer to establish their first purchase in store. You need a combination of both in order to have a viable business,” he adds.

The shopping experience not only involves the sale of items. It now revolves around what shoppers encounter while carrying out the transaction. Customers want a smooth exchange on any platform they prefer to use. Modern customers are lured by curated experiences both in-store and online.

The omnichannel model (a combination of a digital and in-store facility) is likely to persuade shoppers to draw parallels between the brick and mortar and online experience.

Digital adoption is a challenge

According to research, the total number of transactions conducted online is still far below 10% of the overall purchasing activity in the retail sector. This speaks to the challenges faced by e-commerce on the continent, despite it’s accessibility.

Zahariev has identified numerous factors that contribute to the slow adoption of online facilities in fashion retail. He identified the lack of trust in the security of these transactions as a major barrier.

The availability of transacting technologies is widespread in the sub-Saharan region. Reliable online banking facilities, secure web servers and easy flowing logistics are some of the factors contributing to the pace and rate adoption.

“An omnichannel strategy makes it easier to manage the customer’s in-store experience while also leveraging the scalability of digital offerings,” says the Luxity co-founder.

“Retailers can use real time customer data to tailor their experience both on the digital and in the physical store. This ensures that they have a seamless experience with every encounter the customers have with the store.”

The omnichannel model will scale with time

Numerous retailers in the sub-Saharan market are struggling to create a synergy between their online and physical platforms. This can be attributed to investing in formulas on the merit of their past efficiency.

Secondly, the synergy is stifled by implementing concepts copied from markets that function on different dynamics, socio-economic structures and behavioural patterns.

Despite the fashion retail sector experiencing a downturn due to the pandemic, stores with pristine online infrastructure experienced a boom in sales. This can be linked to the behavioural change imposed by the lockdowns implemented across the board.

The sub-Saharan market at large still perceives the brick and mortar stores as low risk. Largely due to the psychological attachment that is tied into the the traditional shopping experience.

With over 2000 malls in South Africa alone, the omnichannel model is perfect for introducing traditional shoppers to a new way of shopping.

“It is vital for African entrepreneurs to focus on solving local problems using local insights and solutions. Its important to keep searching for ways to retain customers. One way we have achieved this is through offering tailored payment options that are aligned with the unique attributes of the market we are serving. ” says the Luxity co-founder.

“Online shoppers want to feel comfortable and secure while transacting on the internet. At the same time, the digital platform’s inherent value is to lure customers into the physical store for a much deeper engagement and a curated experience with the items on sale.”