Online retail growing in SA

2013-01-28 14:35
Arthur Gillis, CEO of the Protea Hospitality Group, says companies must focus on e-commerce. (Protea)

Arthur Gillis, CEO of the Protea Hospitality Group, says companies must focus on e-commerce. (Protea)

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Cape Town - Online channels are growing at a faster rate than any other distribution channel and companies who wish to remain competitive must move to access a growing online customer base, an industry player has asserted.

Changing customer behaviour has created a demand for companies to take their businesses online, but data costs remain a concern, said Arthur Gillis, CEO of the Protea Hospitality Group.

The company has spent R15m on the redevelopment of its real estate.

He spoke to News24 about the changing patterns and how companies could respond.

News24: What is the growth comparison between online and 'offline' bookings?

Arthur Gillis: In terms of hospitality distribution channels there's no question that online sales, whether through your or Online Travel Agents such as Expedia, is growing at a much faster rate than any other distribution channels.

This is a trend that is not exclusive to hospitality, though. One look at what’s happening to High Street retailers in the UK at the moment - with HMV and Blockbuster just the latest casualties - and it's abundantly clear that companies wishing to succeed in a retail space need to have a strong online presence.

Pervasive 24-hour online access through computers, tablets or smart phones is changing the world and how people interact with it.

It's changing consumer behaviour in such a profound way that companies are having to completely rewrite the rules of engagement. What the marketing textbooks said a decade ago has to a large extent been overtaken by the rate at which technology is evolving. We’re in a consumer-driven environment and we have to adapt to engage with them the way they want.

News24: How are data costs impacting on consumers' willingness to enter the e-commerce space?

Gillis: Data costs are a very real concern particularly in the African context, because technology infrastructure is still in a developmental phase and can be costly.

There's no use whatsoever spending substantial sums creating a website with all the bells and whistles, that doesn't also include a data-light mobi version.

Africa has an incredibly high mobile penetration - in many places it's the only form of electronic communication - so mobi makes sense if you want to reach a wider market, and might in fact become a make or break decider for potential customers who are not yet especially brand loyal. 

News24: Will service/product costs decline as consumers spend more money online?

Gillis: In the hospitality context no, because the product we sell is very different to receiving a package from an anonymous warehouse.

The cost of general goods might well decline because with online retail there are no costs associated with a terrestrial shopfront, but that's not the case with hotels, because to retain market share the product has to be top notch, as does the service. Both of those create higher ongoing input costs, but having sound financial planning, strong brand identity and solid management in place as we do certainly helps to mitigate that.

News24: Is spending R15m a justifiable investment at this time, given the economic realities?

Gillis: The answer is categorically yes. If we want to keep customers engaged with our brand and grow revenue in future, we have to ensure the brand remains relevant within this space and keep them engaged by providing the information they need in the format they want, in the place they choose to seek and accept it.

That space is the internet and the time to get your GUEST engagement right, is right now.  Not spending money at this stage to create online real estate to take one’s business into the next decade would be the mistake. 

You have to find a way to break through the online brand clutter and that means your needs to deliver on the needs of your customers by ensuring a user friendly online experience, a seamless and real time booking tool and strong use of digital assets namely, optimised content, incredible photography and inspiring videos in order to stand out.

You also need a social technology plan that integrates with your, which in turn should be part of your overall online marketing strategy. None of these components should work independently of each other.

News24: What adaptations should companies make to ensure that consumers make the change to e-commerce?

Gillis: That goes back to the very basics of brand development, and the fundamental premise that consumer loyalty is based on trust in the brand and a belief that their hard-earned money is being well spent if it's spent with you.

Protea Hotels is the largest hospitality company in Africa and next year is our 30th birthday. The money we're investing right now will just make the experience that much richer and simpler for them going forward.

News24: In your experience, what device has been the most popular e-commerce platform?

Gillis: There's no question that mobi will remain king in Africa for the conceivable future.

Read more on:    e-commerce  |  mobile

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