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Team Zakheni

Thelma Melk Head of Legal and Corporate Secretariat: Eskom Pension Fund. Genevieve Mannel Head of BI and EKM: TFG. Shelly Zevio Head of Finance: WW Africa. Bongi Phungwayo National Buyer: Game. Team Zakheni. Shaun Pillay Branch Manager: Boxer. Mpho Thagisa

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Team Zakheni

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  1. Thelma Melk Head of Legal and Corporate Secretariat: Eskom Pension Fund Genevieve Mannel Head of BI and EKM: TFG Shelly Zevio Head of Finance: WW Africa Bongi Phungwayo National Buyer: Game Team Zakheni Shaun Pillay Branch Manager: Boxer Mpho Thagisa National Liquor Buyer: Makro

  2. AGENDA Research topic: How Onlineand Bricks and Mortar Retail channels coexist, to optimise the sustainable performance of apparel retailers in South Africa. RESEARCH METHODOLOGIES OPTIONS RECOMMENDATION & CONCLUSION RESEARCH FINDINGS OBJECTIVES

  3. SIZE OF THE PRIZE Focus Areas Focussed on SA 6.7% Additional Sales Through Online 16.8% 13.9% 9.2% 13.5% Narrowed down to apparel 1.2% 8.8% 8.5% 6.6% Focus on small Retailers 850% ROI

  4. RESEARCH OBJECTIVES Our research goal is to evaluate how the Online and Bricks and Mortar Retail channels coexist to optimise the sustainable performance of apparel retailers in South Africa.

  5. RESEARCH METHODOLOGY 65 Customer surveys 2 Focus groups (5 each) Literature review (SWOT & PESTEL) 6 Retail Executives Interviewed Recommendation Assessment of options

  6. LR: SWOT and PESTEL – CURRENT ONLINE RETAILERS • Low GDP growth • High data costs • SA online market – 1.2% (6-16%) • Lack of infrastructure • Limited skill set in SA • Influx of international online retailers. • Increased customer loyalty • Mobilepenetration is growing • Additional marketing platform • Not limited by space, real estate or operating hours • Broader reach STRENGTH WEAKNESS THREAT PESTEL OPPORTUNITY

  7. LITERATURE REVIEW: SWOT and PESTEL - CUSTOMER • Retailers have created mobile friendly sites • Delivery challenges • Lack of customer trust • Not able to test product • Phishing • Unethical online retailers • Use of AI fit tools • Variety of payment options • Access to international brands Convenience and Self Service Customisation / Personalisation STRENGTH WEAKNESS THREAT PESTEL OPPORTUNITY

  8. SURVEYS Geography Customers in outlying areas are restricted by lack of infrastructure. 60% older customers use internet daily, < 40% shop online The higher the LSM, the higher the propensity to shop online.

  9. FOCUS GROUPS ROOT CAUSES Poor fit Poor availability and range Fraud Risk 1. Sizes are inconsistent 1. Low online penetration 2. Different body shapes 1. Bad past experience 3. Body shape and sizes not linked 2. Low online sales 2. Limited safe payment options 3. High upfront investment 3, Expensive to build platforms ONLINE SHOPPING OBSTACLES 1. Returns process tediuos 1. Goods not delivered on time 2. Customers not clear on returns process 2. Miss the courier delivery 3. Returns process not customer centric 3. Not home during the day Return process difficult Delivery issues

  10. INTERVIEWS WITH SME’S (subject matter experts) 5 3 1 TRENDS OPPORTUNITIES AND BENEFITS OPERATIONS Online growth in certain categories (apparel slow) Bricks and mortar growth remains strong Omnichannel running costs are high (2 models) Dark store can improve fulfilment and lower costs Trevor Voss (IT Omnichannel manager at WW) Simon Laver (Head of E-Commerce systems at TFG) Anton Hugo (PWC’s head of Retail trends) and Maurice de Villiers (Head of Real Estate at WW) ChristoffGreef (CFO of Yuppiechef) Simon Laver (Head of E-Commerce systems at TFG) Jason October (Head of online operations at WW) Omnichannel creates an opportunity to cross and up-sell Anton Hugo (PWC’s head of Retail trends) and Maurice de Villiers (Head of Real Estate at WW) Trevor Voss (IT Omnichannel manager at WW) Jason October (Head of online operations at WW) Opportunity lies in creating a single seamless customer experience Limited IT skills in SA Infrastructure remains a challenge 2 4 SET UP MARKETING

  11. SUMMARY OF FINDINGS Higher LSM = more online shopping Online shoppers spend x3 more Mobile growth = opportunity Online growth restricted by lack of infrastructure *Our recommendations focus on smaller Retailers Personalisation of customer through AI

  12. ASSESSMENT OF RECOMMENDATIONS Enhancing omnichannel experience Integrating an online website Improved availability • Dark store fulfilment • Market place sales (Spree, Zando) Better Fit • 3D body scanning • AI fit match tool • Basic (R500k) • Fully integrated (R1.5m) Convenient delivery • National delivery • Click and Collect (via Pargo) Reduced fraud risk • Cash on delivery • Mobile payment platforms Easier returns • Via courier • Back to store

  13. ACTION PLAN 1. Set-up of website 2. Selection of partners to enable logistics and fulfilment 3. Drive incremental sales and marketing Smses to existing customers Through market places like Spree or Zando In-store signage Market to existing customers Attract new customers

  14. FINANCIAL BUSINESS CASE Summary of costs and benefits 2 pickers (1 per store at R10,000 per month each) Delivery cost will be paid by customer Annual Shopify subscription of R14,000 per annum Marketing costs of R17,000 per annum 3% sales contribution once website is launched and additional 2% for National delivery and Click & collect AI Sizing tool cost of R5k and incremental sales of R210,000 per annum Incremental sales from implementing Omnichannel An additional R1m sales could be generated annually, in addition to the sales made from Bricks and Mortar stores 5 year profit and return on investment

  15. CONCLUSION Size of the prize Recommendation Critical success factors • Relevant range • Sufficient testing • User friendly website • Marketing • Logistics • Sufficient training • Online Inclusive KPI’s 850% IRR

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