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Former Vodashop owner says online platforms are killing stores

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Vodacom and Telkom have seen growth in both their online and in-store sales. However, former Vodashop owner Bennie Roux believes there is no future for brick-and-mortar cellphone shops.

While both operators found online sales had surged due to the Covid-19 pandemic, Telkom noted that regarding sales, its physical stores still outperform its online platforms.

A Vodacom spokesperson told MyBroadband that although the Covid-19 pandemic had caused a change in customer behaviour, it had seen its physical and online channels grow significantly.

“The pandemic has accelerated shifts in customer behaviour, and this will continue to shape our business model and footprint across channels as we adapt to the changing needs of customers and future retail trends,” they said.

“With that said, both our retail and online channels have seen significant growth in recent times.”

The spokesperson said Vodacom had also seen strong growth in fibre-to-the-home sales, which it attributes to consumers increasingly using digital channels to transact.

“This strong growth has largely been driven through the significant shifts we are making into building ecommerce and m-commerce platforms that enable multi-product selling across our digital ecosystem,” they added.

Vodacom said it introduced its first-of-a-kind Vodacom World brick-and-mortar stores in Midrand, Fourways Mall, and most recently in Mall of Africa, making the best of both worlds.

“This retail model aims to introduce customers to stores that are digital-first and energy efficient while driving a seamless retail ‘Phygital’ experience, bringing the best of both worlds, brick-and-mortar as well as digital into the future retail,” they said.

Telkom said it still sells more devices and services via its physical stores than online.

“We have seen phenomenal growth in online smartphone purchases primarily influenced largely by covid-19 restrictions and lockdowns on retail during 2020,” Telkom said.

“We also increased our distribution footprint by adding Takealot and other online platforms, giving customers new channels to access Telkom products.”

“While online has increased, Telkom still sells more devices and services via our stores as many South Africans still prefer to deal with customer service representatives in-store,” it added.

Former Vodashop owner Bennie Roux told MyBroadband that he sees no future for brick-and-mortar cellphone shops in South Africa.

“I was a 50% owner of a Vodashop in Pretoria. We actually got out in May, and I think we were lucky to get out of it and get some money for our business,” he said.

Roux explained that the Covid-19 pandemic had caused a shift to online, including various aspects of cellular phone sales and contracts.

“I don’t see a future for normal shops to survive in this environment,” he said.

He also said aspects like transferring data between an old and new device had simplified, meaning fewer people visit stores for such processes.

“In the old days, you would still go to the shop because you wanted your old data copied across to your new phone,” Roux said.

“Phones are just so easy now. When you switch on the new phone, it tells you to hold it close to the old one, and 15 minutes later, everything is across. There is definitely no need to go into a shop.”

He also said they were paying excessively high rent for the Vodashop site.

“We paid just over R100,000 a month for our little store, and the new business coming in was just not worth it.”

In June, a senior industry source told MyBroadband that disproportionately high rental costs and low profit margins were causing cellular shops to disappear from malls.

They said landlords often charge mobile retailers up to four times more than stores of similar sizes.

Compounding the problem are high turnover clauses that allow malls to take a percentage of a store’s revenue.

“The malls insist on 7% to 8% turnover. However, the net margin on prepaid airtime is only 4%, excluding credit card fees,” MyBroadband’s source stated.

“There is no margin on handsets for contracts and upgrades, and any cash sales of mobile devices typically only have 6% to 8% turnover,” they said.

“The landlords are double-dipping by charging 300% or more for space and then layering a turnover clause on top of that.”

 

Source: Mybroadband.co.za

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