Stocktake: Consumers face higher prices this December
Festive season retail sales are expected to recover this December; while Nigeria’s TradeDepot gets the funds to expand across Africa.Monday, 13 Dec 2021
Festive season retail sales are expected to recover this December; while Nigeria’s TradeDepot gets the funds to expand across Africa.
Consumers will face higher prices due to supply chain challenges
Digital sales are expected to top $1 trillion globally, but consumers, retailers, and suppliers are predicted to face rising costs and decreased inventory due to pressure on the global supply chain. The impact of the worldwide pandemic on digital shopping habits is expected to persist, reports Salesforce, the global leader in CRM, which has announced new consumer insights and predictions for the 2021 holiday shopping season. Though the rise in online commerce may not compare to last year’s historic 50% surge, total sales are expected to reach record rates for the upcoming holiday season. Despite this global rise, the market for retailers, suppliers and consumers has become more challenging. Manufacturing capacity, logistics costs and labour shortages have become pressure points in the industry which is likely to cause higher retail prices for merchandise. On top of that, product availability is likely to decrease replacing shipping delays as the season’s biggest spoiler. Nevertheless, the rise in prices and costs remains unlikely to deter consumers from spending this festive season, the first that resembles relative normality in two years. Salesforce forecasts:
- 7% year-over-year overall growth in global digital commerce for November and December (slowing down from 50% year-over-year growth in 2020).
- Total digital sales are expected to reach a record high of $1.2 trillion globally.
- Digital commerce growth will be driven by a 20% rise in consumer prices despite fewer global (-2%) holiday orders expected.
TradeDepot raises $110 Million to expand to retailers across Africa
TradeDepot, the leading B2B eCommerce and embedded finance platform in Africa, has raised $110 million in an equity and debt funding round to support the delivery of Buy-Now-Pay-Later services to 5 million SME retailers and drive further expansion of its merchant platform across the continent. The Series B equity round was led by the International Finance Corporation (IFC) – a member of the World Bank Group, with participation from Novastar, Sahel Capital, CDC Group, Endeavor Catalyst and existing investors, Partech and MSA Capital. The debt funding was led by Arcadia Funds. Africa’s SME retailers generate $1 trillion in sales annually and contribute $2.6 trillion to the continent’s nominal GDP, but a fragmented distribution network and lack of access to financing has led to inefficiencies in distribution and many missed opportunities across the value chain. Via its ShopTopUp platform, TradeDepot offers a broad range of consumer goods to SME retailers within its network and provides credit lines to enable these retailers to access inventory and pay in instalments as they sell on to their own customers.
The new funding will expedite the delivery of this service to more retailers, increasing penetration for consumer goods brands and driving prosperity in one of the continent’s most critical sectors. With active operations in 12 cities across Nigeria, Ghana and South Africa, TradeDepot leverages its data, technology and robust logistics operations to connect retailers with suppliers and unlock financing to fund inventory purchases for retailers, enabling increased sales, higher margins and other value-added services for all parties. TradeDepot has built a network of leading consumer goods brands and SME retailers across Africa; and created a proprietary risk scoring engine that uses retailers’ purchase history, previous repayment performance and other related data points to predict their creditworthiness. Speaking about the new funding, Onyekachi Izukanne, CEO and co-founder of TradeDepot said, “We remain super focused on making digital commerce and financing both accessible and affordable to neighbourhood retailers across key cities in Africa. We are delighted to be joined by an elite group of new investors and have IFC’s Wale Ayeni and Brian Odhambo of Novastar joining our Board of Directors, to support us on this journey to drive growth and prosperity across the continent.”
Pioneer Foods recalls Safari nuts and raisins products
Pioneer Foods is launching a recall of specific batches of the Peanuts & Raisins and Cashew nuts products, sold under its Safari brand in South Africa, Botswana and Namibia. Routine testing at the Safari production site in KwaZulu Natal, identified a batch of products which tested positive for low levels of salmonella typhimurium (“salmonella”). Based on safety protocols, production was immediately halted, the product was placed on hold and ringfenced. The production site was then deep-cleaned, and vector sampling completed. A limited number of cases of Safari 60g Peanuts & Raisins (Best Before: 27/10/2022) and Safari 100 g Raw Cashews (Best Before: 27/6/2022) were released to the trade inside South Africa, Botswana and Namibia, despite having been isolated and ringfenced for destruction. These are the only SKUs that have been affected. “This limited number of affected products should never have been released into trade, and whilst we have not received any health-related complaints from consumers to date, we have decided to proceed to proactively recall these specific products,” explains Tertius Carstens, CEO.
Santa Claus is coming to town
Christmas came early for Checkers Sixty60 when famous YouTuber Dan Mace decided to remake the catchy Christmas tune, Santa Claus is Coming to Town. Mace used the speedy Sixty60 motorbike drivers dressed up as Santa and the rumbling sounds of their motorbikes in his video, which is sure to go viral given who he is. This stunt also inspired other retail delivery services to get festive with their delivery daredevils and there will now be flocks of Santas flitting around town doing deliveries this December.
TFG acquires Quench to bolster group’s omni-channel ambitions
TFG, through its Labs division, has acquired digital shopping platform and last-mile delivery provider Quench. This latest acquisition forms part of TFGLabs’ ambition to become South Africa’s next ecommerce powerhouse by attracting not only the best in tech talent but e-commerce capabilities too. “With this acquisition we gain access to fast, reliable delivery across South Africa, whilst achieving superior delivery unit economics. With 75% of orders currently fulfilled from stores, Quench’s network of micro-carriers will become an essential enabler for our ‘ship-from-store’ strategy,” says Claude Hanan, co-head of TFGLabs. “All international market data shows that delivery price, reliability and speed is highly correlated to e-commerce penetration and purchase frequency.” The Quench acquisition will enhance the company’s existing capabilities across the fulfilment network through proprietary software and engineering, bringing a scientific approach to planning, least-cost routing and asset utilisation. Additionally, TFG plans to leverage the acquisition to tactically improve overall stock turn and store density.
V&A campaign aims for a ’31-Days of Summer’ celebration
After the rest of the world cancelled Christmas for Southern Africa, particularly the tourism sector which expected and planned for a better season than last year, many had to think fast and target the local market as well – which savvy destinations had planned to do in these uncertain times. The V&A Waterfront, for example, is offering 31 days packed full of fun experiences and prizes for visitors of all ages this December in celebration of its 31st birthday. The festive season began with the return of the multi-award winning Joy from Africa to the World, the Waterfront’s Festive Season showcase of the best of the country’s craft and design talent and environmental sustainability. The showcase features intricately woven baskets to a series of eight giant totems created by artists and crafters from local communities across the country, all using sustainably-sourced or recycled materials. The Victoria Wharf Shopping Centre also hosts the first of its kind and largest exhibition of 100 Beautiful Baskets. Young visitors will encounter a kaleidoscope of colourful characters in a special Summer Palace inside the Victoria Wharf shopping centre’s Centre Court. Entertainment will be provided by African hymns, marimbas, and face painting.
The chief executives of major US retailers including Target, Home Depot, Kroger, CVS Health, Autozone and Best Buy, this week urged the US Congress to take action to address the online sale of stolen, counterfeit and dangerous consumer products. The group called on Congress to crack down on anonymous online sales, citing the growing impact of organised retail crime.
Global supply chain headaches continue for manufacturers and retailers around the world, as this case illustrates: shrink-wrapped boxes of fresh California walnuts should be headed to Europe for holiday baking, and to Asia for New Year celebrations. Instead, newly cleaned and shelled nuts – about $10 million worth – are stuck at a processing plant near Sacramento, thousands of miles from their destinations.
*Additional sources: Reuters, Total Retail Report, Kantar.
This week in numbers
Social media has changed the way brands engage with consumers. Right now, 88% of Gen Z and Millennials turn to social for guidance on their purchasing decisions and eight out of 10 consumers purchased off the back of seeing it on a content creator’s platform, according to recent research, reports Nfinity Media.
QUOTE of the week:
“Love is linked to advocacy, because when people love a brand, they tend to recommend it to friends and family. While someone might consider choosing from a selection of retailers that would meet their needs, they’re more likely to actually buy from the one they most desire and love. In the brand world, passionate love leads to loyalty.” WPP/BAV Most Loved Retailers Global Edition, published on Retailing Africa this past week.
Main image credit: Checkers.
*Stocktake is a weekly roundup of current FMCG retailing and brand news, curated and edited by Retailing Africa Publisher & Editor, Louise Burgers. Keep the industry updated and send your announcements and news to: email@example.com.
– Receive the Retailing Africa newsletter every Wednesday • Subscribe here.