The last few years have not been easy for South African clothing retailers. A sluggish economy, increased competition from foreign chains, and the growing prominence of online retailers have chipped away at their dominance in the local apparel market.
Despite challenges on several fronts, brick & mortar chains like TFG (The Foschini Group) are proving they are ready to adapt to a world where consumers are showing increasing willingness to buy goods and services over the Internet.
TFG launched its online sales channel a year ago and so far results have been promising. “We are exceeding all expectations for online sales at TFG. This is in part due to the fact that people are becoming more familiar with our sites and that the South African consumer is growing more confident about shopping online,” notes Robyn Cooke, TFG’s head of eCommerce.
Buying goods and services online is becoming common practice for many South Africans but eCommerce still has some way to go when compared to more developed markets overseas. Though a recent study conducted by Ipsos, a global market research company, found that 22% of South Africa’s internet users have made purchases online, there were still some barriers.
Some consumers, for instance, are still not totally confident about security issues when it comes to transacting online. “One of the big barriers to entry in terms of the South African consumer is the fear of using their credit card online,” says Cooke.
Even so, Cooke says the group’s partnership with Naspers owned online payment gateway PayU, which provides a secure payment portal, is winning over customers. “PayU solves this problem as it is familiar, reliable and gives our users the sense of security they need. It’s easy, it’s safe, it works.”
PayU MEA CEO Mustapha Zaouini says that in the past year the company has observed an increase of transactions in the retail eCommerce sector. “In addition to the increased tansactions across our various clients, we are seeing a transition towards a fusion of brick-and-mortar and online strategies targeting improved customer engagement,” says Zaouini. A move that may signal a more holistic approach that can only benefit local online merchants and shoppers.
Given its record so far, customers making an online purchase through TFG should feel more secure. “TFG online fraud has come down significantly over the first year since launching our online stores,” Cooke says.
TFG might still be starting out as an eCommerce player, but it got a boost in this space when it recently paid R2.6-billion for a 85% holding in UK based retailer, Phase Eight. While Phase Eight has over 120 outlets, it also has a sizeable eCommerce platform which accounts for about 17% of its total revenue. Phase Eight’s prowess in the online retail space can already be seen in it contributing R90.7-million in eCommerce revenue for the year to end March.
Though Phase Eight will bring much needed online retail expertise, TFG’s own efforts have been advancing at a steady pace over the last year or so with a particular focus on mobile currerntly. “The development of our mobile sites is underway and will be launched within the next few months. Currently less than 5% of all online transactions in SA are completed on mobile devices so we have timed this enhancement for when we felt it most appropriate,” Cooke says.