By Sumay Dippenaar
Small and medium retailers stand to benefit from a growing trend among South African consumers to support local brands and stores. This trend is unfolding at two layers – a preference for goods and products that are locally manufactured and proudly South African and growing enthusiasm to support stores owned and run within the community.
A range of factors have converged over the past five years to drive a surge in “localism” which, in turn, creates opportunities for innovative retailers to differentiate themselves.
The Covid-19 pandemic was an inflection point for the localism trend. It highlighted the fragility of global supply chains, in turn encouraging major retail chains to increase their support for local manufacturers. This has helped to revive sectors such as textiles and clothing manufacturing.
At the same time, consumers rediscovered their own neighbourhoods when movement was restricted under lockdowns. They supported small businesses in the community that were struggling to maintain profitability. These behaviours have continued beyond the pandemic, with high inflation and rand volatility giving consumers more reasons to shop local.
Movements such as Proudly South African have highlighted how supporting local brands helps to spur job creation and keep money circulating within the community. Locally sourced goods are also better for the environment because they reduce emissions from long-haul transportation.
Consumer research from PwC shows that a significant portion of South African consumers are willing to pay a premium for locally produced goods. Nearly half (44%) of consumers are ready to spend up to 10% more for locally sourced products, reflecting a growing preference for supporting local industries.
NIQ South Africa data, meanwhile, highlights how consumer shopping behaviour is changing. Many South Africans are opting to travel to stores in the most convenient locations, preferably those closest to home, to save on fuel costs –showing that the cost of living also supports the trend towards localism.
Some of the strategies retailers can embrace to benefit from the trends towards localism include:
- partnering with local farmers, artisans and producers to offer a selection of locally sourced products
- creating a dedicated local aisle to showcase South African brands or even products sourced from within the community or region
- organising minimarkets, craft fairs, or product launch events featuring local SMEs
- partnering with other local businesses to create joint promotions, such as discount packages or co-hosted events, to reach a broader audience.
Taking advantage of some of these retail opportunities will require quick access to funding. Fintechs like Capital Connect can offer opportunity capital of up to R5 million with funds in the retailer’s bank account in just 24 hours.
This gives them access to hassle-free short-term business funding for purposes such as doing bulk buys at discounted rates, renovating their stores, investing in additional profit centres (APCs) or diversifying their product and service offerings to boost profits.
Sumay Dippenaar is the head of marketing of Capital Connect.