The pandemic dividend has paid out. South Africa’s total growth in online retail for 2022 was 35%, bringing the value of the country’s online retail space to R55-billion. This followed 40% growth in 2021, which took the total to R42.3-billion.
“One can call this the pandemic dividend,” said World Wide Worx managing director Arthur Goldstuck, principal analyst on the research project. “The 2020 boom in home deliveries has continued for the past two years, as retailers compete aggressively in every area of online shopping.”
Top performers included Checkers Sixty60, which grew turnover by 150% from July 2021 to July 2022; Mr Price, which reported online retail sales up 48.2% for the year to April 2022; and Pick n Pay, which noted in its annual results for the year to the end of February 2022 that online sales had seen annual compound growth of 72.5% over the previous two years.
“Since physical shopping was limited during the hard lockdown, it was during this time that we first saw a rise in consumers resorting to online shopping,” said Gabriel Swanepoel, country manager of Mastercard South Africa. “Due to this, consumers got comfortable, but with comfort of use we are seeing emerging consumer needs and expectations that go beyond being able to shop online.”
The result is that growth in online retail comes not from increasing demand, but from consumers shifting existing purchase behaviour from physical shops to online stores and apps.
“Based on our observation, consumers are expecting online retailers to offer fast delivery with apps such as Uber Eats and Superbalist, that offer same day delivery,” added Swanepoel. “Additionally, there seems to be an expectation from the highest levels of security before shopping at a particular online retailer.
“Lastly, we are seeing consumers wanting an omnichannel shopping experience, that allows customers to pick up where they left off on one channel and continue the experience on another.
“Consequently, consumer attitudes seem to have changed, and we anticipate that with those changes we will see the evolution of online shopping and some interesting innovations from the retailers, thus responding to these changes.”
The World Wide Worx findings are compiled from accumulated figures and projections from listed companies, interviews with unlisted online retailers, and data on card transactions.
A key question the study addresses is what percentage online retail makes up of total retail in South Africa.
For 2021, the online total of R42.3-billion made up 4% of the R1.166-trillion retail total, marking healthy growth from the 2.8% recorded in 2020. In 2022, with total retail expected to reach R1.16-trillion, online retail will make up 4.7% of the total.
“Total online retail comfortably surpassed our previous forecast of R52-billion for 2022,” said Goldstuck. However, it will fall just below the 5% mark, a milestone that had previously been anticipated for the end of 2022. We are confident it will be reached in 2023.”
