To give you an overview of the competitive marketplace, we’ll take a look at the various faces and configurations of selling to the consumer.
Keep in mind that all these enterprises began as a simple concept and grew to various proportions through popularity and perseverance. At this point in your exploration, anything is possible for you, too.
1. Shop retailing
The retail scene in South Africa is a dazzling array of independent shops, department stores, discount enterprises, corner cafes & national and regional chains, conventional supermarkets, and other large-scale enterprises that seem to dominate the retail sector.
Shop retailers operate fixed point-of-sale locations designed to attract a high volume of walk-in customers. In general, shops have extensive merchandise displays and use mass-media advertising to attract customers.
They typically sell merchandise to the public for personal or household consumption, but some also serve business and institutional clients.
These include establishments such as:
- Office supply stores
- Computer and software stores
- Building materials dealers
- Plumbing and electrical supply stores.
2. Specialty retailing
While power retailers like Pick n Pay or Checkers tend to sell “needs”, specialty retailers tend to sell “wants”. They focus more on neighbourhood convenience, the richness of the shopping experience, and inventory that meets the needs of their target customer on a personalised basis.
Small shops show surprising strength and resilience in the face of competition from large-scale retailers and e-commerce outlets. They offer the consumer a warmer atmosphere, and perhaps a broader and deeper selection of merchandise. Many shops can be owned and operated by one person with minimal assistance.
Compared to manufacturing operations, specialty retail outfits are relatively easy to start both financially and operationally. However, a number of failures are due to under-capitalisation, poor location and insufficient market analysis.
3. Non-store retailing
Home-based businesses are primarily engaged in the retail sale of products through television, electronic shopping, paper and electronic directories, door-to-door selling, in-home demonstrations, portable stalls, vending machines, and mail order.
With the exception of vending, these businesses do not ordinarily maintain stock for sale on the premises. There are many advantages to this type of retailing – one being that buying, maintenance and protection of a large stock is not necessary as you contract with others to handle these matters.
4. Mail order
From glossy wish books to basic brochures, catalogues are popular with those who live far from shopping areas, in rural areas, and those who simply hate to shop. With direct mail, sales materials can be sent to thousands of potential customers at one time to either make a sale or generate a sales lead.
Mail order enterprises include general merchandise businesses, companies that sell specialty goods of all kinds, such as CDs, DVDs, books and so on. You can work out of your home, a warehouse or a shop.
An up-to-date mailing list is the key to direct-mail profits with back-end fulfilment and relational database support. If you think this is the retail area for you, read our extensive how-to on mail order for more information.
5. The internet
The internet has changed the retail landscape, connecting companies, markets and individual consumers. When you look at the array of business opportunities in retailing, be sure to include the internet.
The South African online retail market for 2009 is estimated to be worth around R1.6 billion, says Arthur Goldstuck who heads World Wide Worx which conducts industry-relevant market research on trends in information technology, telecommunications and the strategic business.
“The retail internet industry is growing annually between 20 and 25 percent”, says Goldstuck. Each type of retailing has strengths and weaknesses, so you decide which approaches you want to use in your business. For more information visit world wide worx.
6. Vending machines
Automatic merchandising – or vending machine retailing – has been a proven business concept for more than a century. Vending Times, a trade magazine in the US, reports that snacks and soda sales in that country alone totalled more than $20 billion in 1999.
As with any other sales venture, having the right product in the right place at the right time is key. This business is highly appealing because of the low start-up cost, low working capital and low overhead. This is a cash business, with you collecting the money when you replenish supplies.