Why the future of retail needs entrepreneurs, not just algorithms

Retail has become increasingly sophisticated in understanding consumer behaviour. We have more data than ever about what people buy, when they buy it and how they respond to pricing and promotions. Technology has also transformed supply chains, making it possible to manage increasingly complex product ranges across large store networks.

But there is danger in confusing the ability to measure customers with the ability to understand them.

After working closely with Build it retailers for many years, I have seen the commercial value of the knowledge that comes from being part of a community. Our retailers know the contractors working in their areas, the types of homes being built, what customers are asking for and where demand is changing.

This is particularly important in hardware retail, where the needs of urban, rural, township and farming communities can differ significantly. A product range that works in one market may not work in another. Build it retailers have the freedom to respond to these differences and make decisions based on what they see and hear in their stores. This is where the value of the voluntary trading model is often underestimated.

The conventional argument is that smaller retailers cannot compete with large chains because they lack the same buying power, technology and infrastructure. There is some truth in this. An independent business cannot replicate the resources of a large organisation on its own. But an entrepreneur should not have to surrender their independence to access those capabilities.

Build it’s voluntary trading model is designed to provide both. Our retailers remain independent business owners while gaining access to procurement, training, operational support, marketing services, technology and the strength of an established brand. They are expected to uphold agreed standards relating to the brand and store environment but retain the freedom to make decisions that reflect the needs of their own markets, supported by the scale of the wider network.

This could mean changing a product range in response to customer demand or introducing a service to meet an unmet local need. For example, the owner of Build it Howick has added a coffee shop and restaurant offering to the store, as well as a garden centre. He also runs pensioner discount days and pet days and offers a knife and garden-tool sharpening service.

These initiatives demonstrate something important about the independent model. Our retailers are not simply implementing a strategy developed elsewhere; they are actively shaping their businesses around the communities they serve. Build it Retail Members also share what they learn within the wider Build it Retailer network.

As retailers grow, some expand from a single store into multi-store businesses and become increasingly self-sufficient. Yet many remain closely involved in Build it committees and conventions, sharing their experience and contributing to the ongoing development of the brand for the benefit of the entire network.

This contribution extends to research and development. Together with Build it and its National Guild, retailers test new products, services and approaches in their own markets, with some ideas proving valuable enough to be explored more widely. This creates a constant flow of insight from independent entrepreneurs who understand their customers and communities. Retailers learn from the network, but the network also benefits from what individual retailers discover.

Over time, the value of this exchange only increases. Their success, experience, capabilities and proven ideas help strengthen the wider business.
There is also a broader economic case for the Build it model. Independent retailers form part of a much larger local business ecosystem. They serve contractors, plumbers, electricians and other tradespeople whose businesses support jobs and generate further economic activity. In some communities, retailers also work with local brick manufacturers, delivery operators and other small suppliers and businesses.

Their role is particularly important in South Africa, where Small, Medium and Micro Enterprises (SMMEs) are a major source of employment. According to the latest planning data from the Department of Small Business Development, SMMEs account for 71.6% of total employment in the country.

Independent retailers are more than points of sale. They are employers, customers of other small businesses and important contributors to their local economies.

As the retail environment becomes more competitive and consumers continue to demand greater value, retailers will need to become increasingly disciplined in how they use data, manage costs and respond to changing demand. Large retail chains will retain the advantages that come with scale, making it essential for Build it retailers to have access to comparable tools, capabilities and commercial muscle.

At Build it, we are strengthening our data and analytics capabilities to help retailers identify sales trends, understand product demand and make better commercial decisions. The purpose of this technology is not to replace entrepreneurial judgement, but to strengthen it.

Independent retailers also have an advantage that a centralised model cannot easily reproduce: an owner who is accountable for the business, engaged with customers and close enough to the community to recognise and act on new opportunities. At Build it, we value this strength.

The future of independent retail lies in combining this entrepreneurial independence with the capabilities and scale of the wider Build it network. It means enabling retailers to remain close to their customers, test new ideas and contribute to their local economies, while giving them the resources they need to compete effectively.

Retail will become more automated and data-driven. But the entrepreneur who understands the customer, acts on what they see and continually evolves the business will remain at its centre.

By Hawie Du Preez, Managing Director, Build it