2016 will be a good year for South Africa's franchisers, says Standard Bank
Setting the pace for 2016, will be increased activity within the franchise sector, particularly the fast food franchises, as international brands which announced their entry into the market this year look to establish operations around the country in the New Year.
One only has to look at major shopping centres to see that competition in the quick service restaurant subsector is gearing up. There is a concerted effort by new entrants to establish outlets close to those of existing competitors.
For consumers this is great news. Their product choice will expand as competition increases. There is no doubt that 2016 will be a year in which consumers will be spoilt for choice in a market where competitors will be doing all they can to offer quality products and services, whilst keeping prices in check as much as they can.
As those who have already entered the marketplace fight for increased market share, so other international brands who have announced that they will be entering South Africa will be measuring up their expansion opportunities.
American franchisors in particular will become household names in South Africa. In 2016, we can look forward to the entry of brands selling food that varies from donuts to coffee, burgers and pizza. Many of which are already household names in the USA.
Discover the Top 10 South African Franchises in the June Issue of African Business Review here.
The fact that they may be new to South Africans will not deter franchisors moving aggressively to establish presence in local business centres. Within the next 12 months, many will be well established and patronised by locals.
The most positive aspect of this international investment in our country will be the economic multiplier effects that will result. New franchises featuring new products will attract a new breed of businesspeople to the franchising sector.
Instead of hesitating to acquire outlets in subsectors that already may have many traders; franchisees will be attracted to introducing new, novel concepts to buyers. In the process, they will broaden offerings to consumers and also create new job opportunities.
Most significantly, in a market that is increasingly offering 24/7 service, effective operations will rely on creating more jobs than would be in the case of traditional ‘nine to five’ operations.
Sustained business interest in South Africa could be expected to continue despite present pressures on the local retail sector. Leading brands would consider the opportunities for using operations in South Africa as a base for penetration of African markets. Locally, they would rely on the fact that historically, retail growth over the last decade has averaged between three and five percent - attractive when international growth rates are considered.
Africa also offers access to a youthful market. This translates into long-term opportunities, something that is to be considered when many major markets across the globe, and particularly in Europe, have aging populations.
Entering the market now also makes sense when the ruling rand/dollar rate is considered.
South Africa is great value for people bringing dollars into the country. Franchising is an activity that requires a long-term view. Bringing in a new brand and establishing it while forex rates are so strongly in your favour makes sense. Pay-off lies in the brand being well accepted and part of the national scene when times get better. Investing now means having a head start and being rewarded for being an ‘early initiator’ rather than a ‘late adopter’.
Find out who the Top 10 African employers were in the May Issue of African Business Review here.
International franchisors are also aware that South Africans are extremely brand and quality conscious. Outside of the franchising arena, in the broader market place, some international clothing retailers entered into the country in the past and the expectation is that they would continue to do so in years to come. Indicators of the success that can be achieved can be gauged from major Australian and Spanish clothing operations that, within a few months of entering South Africa, were achieving healthy sales from flagships stores located in high-end shopping malls across the country.
The possible exception in growth prospects is in some rural areas that, prior to the economic downturn, were hubs for regional growth. The decline in the overall prices of commodities has impacted negatively on the financial health of many rural communities where mining formed the backbone of local economies. As retrenchments and closures have increased, so opportunities for franchise operations have decreased.
There is no doubt that the franchising sector will be presented with a number of challenges in 2016. Chief of these will be pressures on disposable household income. These pressures will be compensated for to an extent by the need for franchises-particularly those in the food sector- to remain competitive.
Written by Ethel Nyembe, Head of Small Enterprise at Standard Bank.
SAS: Improving the British Army’s decision making with data
SAS’ long-standing relationship with the British Army is built on mutual respect and grounded by a reciprocal understanding of each others’ capabilities, strengths, and weaknesses. Roderick Crawford, VP and Country GM for SAS UKI, states that the company’s thorough grasp of the defence sector makes it an ideal partner for the Army as it undergoes its own digital transformation.
“Major General Jon Cole told us that he wanted to enable better, faster decision-making in order to improve operational efficiency,” he explains. Therefore, SAS’ task was to help the British Army realise the “significant potential” of data through the use of artificial intelligence (AI) to automate tasks and conduct complex analysis.
In 2020, the Army invested in the SAS ‘Viya platform’ as an overture to embarking on its new digital roadmap. The goal was to deliver a new way of working that enabled agility, flexibility, faster deployment, and reduced risk and cost: “SAS put a commercial framework in place to free the Army of limits in terms of their access to our tech capabilities.”
Doing so was important not just in terms of facilitating faster innovation but also, in Crawford’s words, to “connect the unconnected.” This means structuring data in a simultaneously secure and accessible manner for all skill levels, from analysts to data engineers and military commanders. The result is that analytics and decision-making that drives innovation and increases collaboration.
Crawford also highlights the importance of the SAS platform’s open nature, “General Cole was very clear that the Army wanted a way to work with other data and analytics tools such as Python. We allow them to do that, but with improved governance and faster delivery capabilities.”
SAS realises that collaboration is at the heart of a strong partnership and has been closely developing a long-term roadmap with the Army. “Although we're separate organisations, we come together to work effectively as one,” says Crawford. “Companies usually find it very easy to partner with SAS because we're a very open, honest, and people-based business by nature.”
With digital technology itself changing with great regularity, it’s safe to imagine that SAS’ own relationship with the Army will become even closer and more diverse. As SAS assists it in enhancing its operational readiness and providing its commanders with a secure view of key data points, Crawford is certain that the company will have a continually valuable role to play.
“As warfare moves into what we might call ‘the grey-zone’, the need to understand, decide, and act on complex information streams and diverse sources has never been more important. AI, computer vision and natural language processing are technologies that we hope to exploit over the next three to five years in conjunction with the Army.”
Fundamentally, data analytics is a tool for gaining valuable insights and expediting the delivery of outcomes. The goal of the two parties’ partnership, concludes Crawford, will be to reach the point where both access to data and decision-making can be performed qualitatively and in real-time.
“SAS is absolutely delighted to have this relationship with the British Army, and across the MOD. It’s a great privilege to be part of the armed forces covenant.”