Falling sales, retailers need to devise new strategies
Predicting annual economic growth of less than 2%, one of the slowest rates of growth in the southern hemisphere, Paul Kent, MD of SureSwipe in Sandton, said it has a range of new strategies and products to help retailers and small business owners push up earnings.
"The downward slide is in line with our research, the only sectors that inched up were pet care and wholesalers, every other sector is moving down, including those that had so far held their own during this recession, namely hairdressers, liquor stores, butchers, and food and beverages.
"We've called on government to release some of the inhibitors to growth for small businesses, but we can't wait for the slow wheels of government to turn; the private sector has to become more aggressively involved in pushing growth up."
New swipe products to drive sales
The company is launching a range of products to help retailers bring traffic to their stores, they include pre-paid electricity to match its pre-paid airtime sales, which sees stores earn 7% from every sale, debit- and credit-card swipe machines and a loyalty programme, which partners with a successful new gift-card programme.
"The pre-paid electricity programme help consumers budget better and save electricity. We're very excited about it because that, with pre-paid air-time, definitely gets feet into the stores and encourages consumers to feel good about their savings and that ironically encourages more spending."
South Africa's miserable consumers are similar to those elsewhere. Research by CNN in the US shows that only 40% of retailers report good sales, "Entrepreneurs cite the economy (31%) and increasing costs of doing business (23%) as the issues weighing most heavily on their minds. Others mentioned regulations (16%) as their biggest concern."
"Their experience is a mirror of what is happening here," Kent said.
"The loyalty programme allows clients to customise it to their needs and to what works best for their customer base. A hairdresser or coffee shop may use the punch card program, which rewards customers. Every haircut or coffee bought earns a credit, and once a customer reaches a threshold, he or she earns a free haircut or coffee or any other free item. This keeps clients coming back. Merchants also run cash back programmes that incentivise clients."
SMME cash advance programme
The company's card machine swipe distributors, backed by Mercantile Bank and Retail Capital, recently launched its Cash Advance project for SMMEs, which Kent said, "has taken off like a rocket."
It allows clients with a monthly card-swipe value of more than R40,000 to access up to a million rand financing with:
- No personal guarantees or collateral required from the SMME (clients range from stores to doctor's consulting rooms)
- No fixed monthly instalments or payment schedules - payback is linked to business performance
- Transparent overall costs
- No restriction on use of funding
Economic downturn could last 8 years
Consumer confidence plunged to a nine-year low during the first quarter of this year‚ signalling that household spending‚ the economy's main engine‚ would be subdued‚ according to the Bureau for Economic Research. Kent said, "The economy won't lift without more fundamentals being put in place to encourage consumer and investor confidence. We believe that Nobel Prize winning economist, Joseph Stieglitz was correct when last year he predicted that this economic downturn has at least another eight more years. Business and government have to revise all their thinking, every operational model, and become far more innovative.
"It is important to start pushing hard against the limits of this recession. For the first time, a majority of people live in cities. Some of the biggest increases in urban population are in Africa, with 85% of the population expected to live in cities by 2025, according to the Rockefeller Foundation. Africa's youth population will double to 400 million by 2045 and the working age population will exceed China and India by 2050 - this creates challenges and opportunities.
"In an era where job creation doesn't meet the increased demand for jobs among young people, economic growth initiatives help improve societal well-being."
The company also helps retailers and service outlets in other ways, "We provide them with marketing and signage material in their stores, brochures and training. These new products and services tie in with our purpose and vision, to champion the growth of business in South Africa," concludes Kent.
