It now feels like the most normal thing in the world to take out a smartphone when needing to buy groceries. Consumers have several on-demand platforms to choose from, all linked up to rewards programmes and ready to offer personalised deals and quick delivery times.
In practice, consumers receive their goods in probably the same amount of time that it would have taken them to get into a car, go to the store and return home. There’s a good chance that the delivery fee is lower than the direct cost of travelling to the store and back. And considering the value of time, it becomes a no-brainer to have groceries delivered to their home.
Consider the gravity of this cultural phenomenon: Checkers was named South Africa’s strongest brand in the Brand Finance 2025 South Africa Top 100 Report. Here is a grocery retailer beating all the traditionally “cool” industries for the top spot. There’s surely no way that this would have happened without the army of Sixty60 scooters on the road.
South Africans have clearly come a long way from the early days of online grocery shopping. Frustrating and inefficient web-based platforms with wide delivery slots have been banished to the history books, replaced by mobile apps that offer better interfaces and delivery tracking with quick turnarounds.
Instead of online shopping being suitable only for weekly and monthly shops, with top-ups still needed in store, you can now do everything online. This is why online shopping adoption rates are climbing in South Africa.
With various reports estimating that at least 80% of global retail sales still take place in physical stores, it remains technically possible to make money by focusing exclusively on in-store sales. But it requires a highly differentiated offering, along with execution to the highest standards. There are very few retailers that have built destination shopping formats to the level required to survive in this world without digital channels.
For investors, this means that any analysis of a retail business must include an assessment of their omnichannel prowess — or lack thereof.
In (most) retail boardrooms, the conversation has moved on from debating online versus in-store shopping. There is a clear understanding that it is now an omnichannel environment that means giving customers a choice of where to shop. When new stores are being designed and opened, they are being thought of as fulfilment engines for orders, not just physical locations to attract foot count. Any retailers that aren’t thinking this way are wildly behind the times.
Both locally and abroad, omnichannel retail is becoming the battleground that will determine the winners and losers of the next few years.
But what are the ingredients for a successful omnichannel strategy, specifically (but not exclusively) in the grocery sector?
Data: the ticket to the game
If a company has a great store footprint, but not a set of well-organised data, what it boils down to is a legacy retail group with a weak attempt at online sales.
Consumers simply don’t have patience for poor online user experiences, as the switching cost of trying out a competitor is practically zero. Once a customer is gone, they are usually gone forever. Retailers cannot afford to have a half-baked online strategy that tries to make the most of poor underlying data.
This means data is the first key ingredient for a successful omnichannel strategy. But don’t make the mistake of thinking that all retailers have excellent data systems — the fact that SAP implementations send a shiver down the spines of investors tells you that data isn’t easy to get right.
First and foremost, the data needs to exist. Then, it needs to be trusted. Only after that can it be used to aid decision-making activities, giving management visibility across the business. But even this isn’t enough any more, as data needs to be ready for more than just great management accounting reports.
In today’s world, data needs to be ingestible by machine learning and AI applications. If this were simple, every retailer would be executing successful omnichannel strategies
Shoprite was famously advertising roles for data scientists long before most observers saw anything of the kind at most other retailers. The benefit of that approach is visible today
If agentic commerce really takes off, putting us in a world where AI agents are researching and completing purchases on behalf of customers, retailers who aren’t ready to feed data to agents in the right format will find themselves losing market share.
And even without next-generation concepts such as agentic commerce, we know that consumers respond well to the enhancements made possible by having high-quality data.
For example, personalised offers and loyalty programmes are now must-haves, not just nice-to-haves. Retailers are expected to form a reasonable view on customers and make recommendations accordingly, improving the in-app experience and driving higher sales. Through mechanisms such as loyalty cards, retailers are able to fill in the gaps when understanding their customers, as they can capture both in-store and online activity.
Inventory visibility and availability, supported by accurate demand forecasting, are vital for consistent fulfilment of orders in a timeous fashion. This means that a lack of data on on-shelf inventory makes it nigh impossible to compete in an omnichannel world.
These are just some of the reasons retailers who fell behind in the data wars are still taking the risk of implementing major systems upgrades and suffering the inevitable disruptions they bring. It’s a matter of choosing between near-term pain and long-term extinction.
Data is everything, whether in customer, inventory or other key datasets.
Shoprite was famously advertising roles for data scientists long before most observers saw anything of the kind at most other retailers. The benefit of that approach is visible today.
Customer proximity: the true power of omnichannel
Conversely, if there is strong data and a weak store footprint, there is the risk of falling well behind in the omnichannel race.
Being close to customers is of critical importance, particularly for time-sensitive deliveries and products that need to be kept cold (or warm, for that matter).
Categories such as general merchandise can get away with slower delivery times, which is why Takealot can compete with a distribution network built around a handful of distribution centres rather than a wide network of stores.
The apparel players tend to be somewhere in the middle, particularly as customers still enjoy seeing an example of the product in stores before committing to a specific size or colour. This is something The Foschini Group (TFG) has done a great job of addressing in their Bash platform.
But in grocery, consumers want to know that their food is coming from a location nearby. In addition to the obvious benefit of freshness there’s the risk of falling short of promised delivery turnaround times if the customer is too far from the store.
This leads to the conclusion that one of the best ways to grow an omnichannel grocery business is to increase the size of the physical footprint. By moving closer to customers and offering them a convenient digital shopping channel, stronger grocery retailers will shut out the weaker players over time. This is a cautionary tale for any turnarounds that involve shrinking into prosperity. That “prosperity” may prove to be a false economy in years to come.
While this may sound like good news for landlords and property developers, the challenge is that modern stores are smaller by design and will attract less foot count than in years gone by.
One of the best ways to grow an omnichannel grocery business is to increase the size of the physical footprint
Could the concept of an anchor tenant change over time as a greater proportion of grocery retail moves online? In a decade from now, will consumers still encounter centres with large grocery stores at one end and valuable line shops capturing the resultant foot traffic? Or will it become more important to attract a strong selection of clothing stores and restaurants, with grocery as a tertiary focus area?
This may sound crazy, but these are the types of disruptions that themes like omnichannel can cause.
The omnichannel economics are getting better
This brings us to the third major ingredient: an incentive for retailers that goes beyond just winning market share through digital revenue.
Unprofitable revenue growth isn’t helpful, with the early days of online shopping having been little more than a frustrating source of margin dilution for retailers. Those days are gone, as evidenced internationally by the likes of Walmart and their success in achieving strong returns from omnichannel sales.
If a company is providing the digital channel that attracts customers, they also own a valuable piece of digital real estate. This creates an opportunity for revenue generation in retail media networks, which means attracting advertising revenue from fast-moving consumer goods players who want to reach customers during highly intentional online behaviour.
Or, in English rather than typical retail speak: people on shopping apps are there because they want to buy something. Hence, it’s clever to advertise to them. This is a great revenue opportunity for retailers, especially as it doesn’t come with an associated inventory cost.
With retailers able to drive stronger margins in omnichannel strategies, they have incentives to keep investing in this space. This means better data, smarter store networks and more initiatives to drive additional sources of revenue.
The omnichannel flywheel is spinning. Retailers who fall too far behind in this game are at risk of disappearing into obscurity.
