Retailers must help cash-strapped consumers
by Jonathan Hurvitz. South African retail brands should support consumers in this time of economic turmoil. It falls to retailers to adjust their value propositions to create a market that the average consumer can currently afford.
by Jonathan Hurvitz. When much of the world went into lockdown, remote working became necessary. Many people can’t do their jobs from home, however. And those who can, depending on the industry they are in, may still be facing salary cuts or job losses due to industries struggling to recover after level 5 of lockdown and, in most instances, a total shutdown.
The South African Chamber of Commerce has estimated that, in a worst-case scenario, the country’s unemployment rate could reach 50%, having already reached a shocking 30.1% in the first quarter of 2020, prior to the impact of the virus.
South Africa, and indeed the world, is looking at a far different landscape now than at the start of the new year, when plans were being made for a healthier lifestyle, clearing debt or setting out to accomplish a list of life and career goals. Instead, we are faced with a significant economic downturn resulting in business closures and a huge number of people struggling with loss of income as a result.
In the first quarter, ratings agency Moody’s downgraded South Africa to ‘junk’ status and the country entered a technical recession. These were already trying times before we knew how devastating the impact of COVID-19 would be.
It’s already clear that the economic impact will be felt for a long time. Retailers face the fight ahead to gain consumer interest in a market of cash-strapped citizens. It’s understandable that many are focusing on immediate needs. But we must not forget to think of the future.
South African retail brands should support consumers in this time of economic turmoil. It falls to retailers to adjust their value propositions to create a market that the average consumer can currently afford. They must also consider that offering consumers some relief now, during these difficult times, can ensure the longevity of businesses and drive consumer loyalty in the long-term.
Consumers will be trying to negotiate costs down wherever possible, whether it’s rent, cellphone contracts, insurance, or anything else where they might be able to reduce the burden. Even those who are lucky enough to remain employed, can certainly no longer rely on salary increases or bonuses. Across the board, belts will tighten. Finance experts are advising people to practice caution and hold on to whatever they can. With consumers cutting back, they’ll need to see value to consider using some of their significantly tighter budgets.
With this in mind, retailers should be coming up with innovative solutions to create deals, packages and payment plans. By creating tangible value, retailers can help consumers stretch their hard-earned money further and get the economy back on track.
Jonathan Hurvitz is the CEO of online retailer Teljoy, a 51-year-old retail business that offers rent-to-own, flexible contract options for consumers. Hurvitz is also a registered Chartered Accountant in South Africa.
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