Retail innovation can increase revenue, reduce plastic and serve consumers’ unmet needs.
Leading international retail solutions company Smollan and DYDX, a global product and service design practice, partnered to deliver an innovative solution for the informal market that could both change how FMCG products are sold and reduce the use of single-use plastics.
The combined informal market represents 35% of all retail sales in SA. This market, however, is notoriously difficult for brands, as the unstructured distribution channels mean very little effective data can be gathered. Furthermore, due to low levels of affordability, brands have resorted to smaller packaged units to reach this market, mostly single-use plastics. This has created a gap between affordability for customers and brands’ responsibility to the environment.
The Gcwalisa dispensers, created by Smollan and DYDX, allow customers to purchase food and home care products in values from as little as R1. Spaza owners can provide the amount requested by customers quickly, thanks to onboard computers with IoT sensors measuring volume while dispensing.
Goods are dispensed into reusable containers, allowing brands to deliver bulk into the informal channel and for the shop-owners to distribute in micro sizes without single-use plastics. This takes significant costs out of the channel and creates new opportunities for consumers to purchase their preferred brands, even at very low volumes.
The dispensers are connected IoT devices, providing brands with detailed sales data from each shop, giving data granularity and insight that could revolutionise distribution, understanding of buying patterns and price points.
Using a structured design thinking and innovation process, the joint team, headed by Rudi Nienaber, Innovation Executive at Smollan, supported by DYDX, created a new way to sell products through the informal channels. “Innovation requires asking different questions and lots of on-the-ground research and prototyping.” said Nienaber, “Our starting point was to turn products into services which led to a series of new ideas, of which Gcwalisa was the best one.”
“We know that people have real affordability challenges, and price is often linked to distribution constraints of minimum-sized packaging. We wanted to change how pricing worked, allowing people to purchase FMCG products like they do airtime.
Another key factor is a positive social impact. By eradicating single-use plastic and packaging, we not only save brands and consumers money but also benefit the environment, which is critical. With major brands looking to reduce plastic usage but not impact sales this approach makes perfect sense,” says Mike Smollan, Chief Growth & Innovation Officer at Smollan.
Revealed at Smollan’s Inspire Evolve event, the project already has interest from a number of brands. “Distribution into informal markets is not a “one size fits all” approach. While we can re-use the technology and approach, we are working with brands to understand both the unique dynamics of their market and the technical properties of their products to optimise the solution for them.” says Nevo Hadas, Managing Partner at DYDX.