Company News • 11.11.2011
South Africa: Can the independent electrical specialist channel survive in such a fierce marketplace?
Today, the market for consumer electronics, major domestic appliances (MDA) and small domestic appliances (SDA) in South Africa is rather unique.
In European markets, consumers purchase MDA and SDA products through electronic specialists, technical superstores and online stores which specialise in the sale of these items. In South Africa, only around 20% of retail sales are through these channels.
Furniture specialists and mass merchants dominate the market
The South African consumer durable market is a credit and price driven one which is dominated by two major channels; the furniture specialists and the mass merchants. Together, they account for almost 80% of the overall MDA and SDA retail sales.
Both channels offer credit facilities and are extremely price aggressive – this is a problem for the electronic specialist channel as independent outlets offer premium products and service without credit facilities.
Furthermore, retail giants are putting pressure on these stores as they have incredibly high purchasing power which allows them to buy in ever greater quantities. Therefore, they receive increased discounts from suppliers on their bulk purchases.
Independent electronic specialists must evolve
Independent electronic specialists have attempted to maintain their market share by offering a range of products that cater for more upmarket consumers and by stocking exclusive items. They also provide personalised and professional service to consumers and have well trained staff with better technical knowledge of the products being sold.
Additionally, in order to prosper, electronic specialists must evolve into agile businesses that are able to spot trends early. They need to capitalise and focus marketing efforts on early developments and move on to new opportunities when new products enter the mass channels. In doing this they must continue to effectively manage objectives in the supply chain, be aware of innovations and how they relate to the decision making process and invest into the retail brand itself.
channels: efficient consumer response (ECR)
