Meanwhile, The Foschini Group (TFG) has deployed Bash to unify its retail portfolio (apparel, homeware and sportswear) into a lifestyle companion. Bash is a personalised curator of fashion, styling advice, credit offerings and rewards benefits, drawing on TFG’s expertise to enhance customer retention.

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E-commerce leader, Takealot has transcended pure retail by integrating its proprietary fleet and the Mr D food platform, resulting in an unparalleled logistics business. It is now expanding its suite of solutions to include a marketplace and fulfilment product to support other merchants’ e-commerce offerings.

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Weaver Fintech, having put financial services at the core of its business, leveraged its Homechoice retail legacy to build a two-sided marketplace. It now serves consumers with integrated retail and financial services (PayJustNow® Buy now, pay later (BNPL) and FinChoice credit), while expanding the e-commerce reach of over 3,300 merchants.

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Starved of organic growth due to macroeconomic headwinds and high interest rates, retailers are aggressively encroaching on adjacent territories. Financial services, once exclusive to banks, are a lucrative expansion, with retailers eyeing BNPL, cryptocurrencies, embedded micro-loans and insurance to boost wallet share and lifetime value.

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Accelerants and AI
The revolution is not happening in a vacuum. 

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It’s propelled by South Africa’s high smartphone penetration (surging past 90% of adults), which has turned every pocket into a storefront.

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The real accelerants are infrastructural leaps. Delivery ecosystems have matured dramatically, especially in groceries, where same-day or even same-hour fulfilment is standard. Checkers Sixty60 boasts sub-60 minute delivery in urban hubs, far exceeding the capability and reliability of a decade ago. Fintech advancements complement this: Peach Payments and PayU enable diverse, convenient payment options (including payments spread over time), while embedded insurance via platforms like Pineapple or Naked streamlines coverage.

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Loyalty programmes have levelled up from punch-card relics to sophisticated engines of stickiness. Retailers have established branded Mobile Virtual Network Operators (MVNOs), adding products that offer airtime as a new loyalty currency. Integrated across apps, they offer tiered rewards, cashback, and personalised perks. TFG’s Rewards programme syncs with Bash, offering cross-category bonuses. This sophistication is a moat against discounters and pure-play e-tailers (like Shein and Temu), turning browsers into evangelists.

The emergence of Artificial Intelligence (AI) supercharges this by allowing retailers to build bespoke credit scoring solutions from transaction data, automatically match customers with financial products, manage large support volumes, and monitor for fraud.

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Risks and collaborative imperatives
The evolution is intriguing due to incumbents attacking from divergent flanks, each informed by their DNA. Shoprite’s edge is its grocery fortress: over 2,800 stores and private labels fund Sixty60, which mines data from frequent, low-value interactions to predict needs. TFG thrives on its diversified stable (Foschini, @Home and Sportscene), using Bash to curate “shop the look” experiences that blend online discovery with in-store try-ons. Takealot, the digital native, leads with scale and convenience: its 2024 marketplace, GMV, topped R50bn, bolstered by a fleet handling 10 million parcels annually, positioning it as a logistics backbone.

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Yet, this ambition carries risks and opportunities for adjacent sectors.

Retailers’ finance foray poses a credible threat to banks, given their massive, overlapping customer bases. Shoprite alone serves 25 million shoppers monthly; imagine those distribution touchpoints laced with instant credit or savings tools, with zero incremental acquisition cost. Banks, with entrenched legacy infrastructure, must contend with “shoppertainment” apps that erode transactional primacy. 

Retailers, however, tread warily. 

Unfamiliar with the labyrinth of financial sector regulations, and coupled with a cautious Reserve Bank, retailers risk missteps in compliance-heavy domains like lending or insurance. Fintech players, such as Weaver Fintech and Shop2Shop, are also providing services that may soon face heavier regulation.

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We’re witnessing a proliferation of cross-sector pacts, blending retail’s reach with finance’s rigor. FNB’s eBucks partners with Pick n Pay (PnP) and Spar to amplify rewards (eBucks users spend 30% more). Shoprite’s tie-up with Absa embeds banking services (account openings, remittances) directly into its app, leveraging Absa’s regulatory expertise. Takealot collaborates with PnP on hyperlocal deliveries, merging e-commerce with physical store pickups. The latest is Dis-Chem’s partnership with Capitec to link financial rewards with health behaviour (Better Rewards).

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These alliances are strategic imperatives. Retailers gain finance credibility and scale without building from scratch; banks tap granular consumer data. For dealmakers, it’s a greenfield for advisory: structuring collaborations demands navigating commercial objectives, revenue/profit shares, administrative hurdles (like POPIA compliance), and anticipating antitrust scrutiny from the Competition Commission.

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M&A and the future
Beyond partnerships, the revolution demands portfolio recalibration. 

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Retailers are divesting non-core assets to fund complementary bets: fintech stacks, AI-driven personalisation, and last-mile tech. Omnichannel mastery is non-negotiable: e-commerce must sync with bricks-and-mortar, as seen in TFG’s “buy online, pick up in-store” surge, which boosted conversion by 25% last year. Investments in drone deliveries (piloted by Takealot) and blockchain signal a future where efficiency trumps volume.

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This convergence will likely drive cross-sectoral M&A activity. Scale begets scale: expect consolidation among mid-tier players, with leaders like Shoprite eyeing tuck-in acquisitions for fintechs or logistics startups. 

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Portfolio refinement will drive additions and divestitures (e.g., Pepkor’s acquisition of Retailability’s Legit and other brands). Collaborations will proliferate, blending retail with telco spectrum (Vodacom/Mr D Food) or insurtech innovators.

As macroeconomic clouds linger, those who master these ecosystems will own the wallet. 

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The question is not if more deals will flow, but who will orchestrate them.  

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Lowther is Lead Transactor and Adams is Head of Tech, Media & Telecom M&A | RMB