In South Africa, the growth prospects of consumer industries—which include consumer goods manufacturers, physical and online retail, and wholesale—are down. This is thanks to slow economic growth and a low rise in disposable income. Adoption of digital technologies can help turn this around. Accenture's (NYSE: ACN) research indicates that digital can unlock R411 billion in value for this sector, consumers and society by 2026!
At present, South Africa's consumer industries face a number of challenges. Import, material and utility costs are rising, public infrastructure is deteriorating and the workforce lacks the digital skills needed to meet changing consumer demands for personalisation and multichannel engagement. This is prompting a focus on value chain optimisation, maximising resources, eliminating process inefficiencies, product customisation and reskilling.
Digital technologies can help address many of the challenges. But which technologies can deliver the most value?
The Accenture & WEF research
Recent Accenture research, leveraging the value-at-stake framework developed with the World Economic forum (WEF), measures the impact of digital technology on government, business and society, and quantifies the value these technologies can create. Additional Accenture analysis identifies which key digital initiatives in South Africa's consumer industry can unlock the most value.
The six initiatives we identified are: e-commerce, data as an asset, smart supply chain, physical store transformation, digital fulfilment chain and digitised support functions.
- data as an asset
- smart supply chain
- physical store transformation
- digital fulfilment chain
- digitised support functions
The consumer context
Why and how can these digitally-driven themes deliver value?
Against a backdrop of declining disposable income, rising unemployment and increasing prices, South African consumers' preferences are changing—they are shopping around for the best deals and value-for-money products. A low-skilled workforce, deteriorating physical infrastructure as well as volatile and unpredictable fuel prices have resulted in supply chain inefficiencies and cost pressures for both retailers and wholesalers. Raw material costs are also rising and profit margins are lower. Both retailers and wholesalers are struggling to pass these costs on to consumers who are already under pressure.
Investing in digital technologies to address these challenges and leverage new opportunities that will arise from the use of these technologies can boost consumer organisations' ability to compete and thrive, and ultimately stimulate economic growth.
Where's the value?
The biggest value impact from adoption of the six initiatives will be to the consumer industry itself, but consumers and society stand to benefit significantly too.
- Almost half of the R411 billion will be unlocked by digitising the fulfilment chain (receiving, packaging and shipping orders for goods) and e-commerce.
- About 45 percent of the total value will accrue to consumers and society in the form of cost savings, time savings and productivity gains.
However, it will take a collaborative effort from all stakeholders—government, business, industry and civil society—to drive change.
Our research, detailed in this paper, provides a digital roadmap for the consumer industry, indicating where the greatest pockets of value are, how they can be unlocked and the role each stakeholder can play. We hope that this paper will stimulate discussion and provide a framework to help South Africa unlock hidden value faster.