Dilith Jayaweera, Chairman, George Steuart Group: Interview

Interview: Dilith Jayaweera

How would you characterise the challenges that are currently facing the retail sector?

DILITH JAYAWEERA: Recently, the retail sector in Sri Lanka has been dealing with a lack of consistency in government policies and regulations, and haphazard changes are making strategic planning difficult. The problem is exacerbated by a fluctuating exchange rate which creates parity issues that negatively impact the sector. We are currently witnessing a movement away from conventional trade channels toward more modern trade. This situation is creating its own disruptions, which are arising from geographic and infrastructure limitations, in particular, the lack of suitable transportation facilities.

The rising costs of living have led consumers to seek alternative options to organised retailers. There is a growing tendency for people to venture to the source at the ground level. For example, Sri Lankans are now buying their fish directly from a fishmonger at Lellama fish market or buying their produce from a regular pola (greengrocer). However, this trend has the potential to create fiscal challenges for the government because of the difficulties in bringing informal retailers into the tax system. 

The government needs to encourage the transition of shopping patterns from conventional to a more modern mode of consumption; the lack of such a push has contributed to the current problematic situation. Sri Lankans, by and large, still prefer to touch, feel and buy a retail product. This is a cultural behaviour prevalent in our society.

What are the main factors preventing wider e-commerce penetration?

JAYAWEERA: The digital era has arrived and has had a significant influence on daily life; however, the lack of digital infrastructure or advanced portals has diminished the efficacy and spread of this medium into everyday commerce. The increasing costs of accessing the internet have further reduced accessibility to digital media across age groups, most especially among young users.

In order to promote a large-scale transition to e-commerce, wider penetration needs to be encouraged by both the state and the private sector. However, given the minimal levels of private sector participation in research and development in the digital sphere, it is unlikely that such a change could be anticipated in the near future. 

What affects has digital marketing had on consumer behaviour in the country?

JAYAWEERA: Digital marketing, per se, has not created a significant and visible change in general consumer behaviour. However, there is a nascent trend and communications agencies and e-marketing outfits are springing up. Digital communication is now seen as a more cost-effective mode of communication for marketing niche products and services.

As a medium, digital marketing is still in its infancy but there is significant potential for this type of marketing to grow in stature, substance and impact. I believe that it is only a matter of time until purpose-built outfits are created to provide this service. For the most part, digital marketing has impacted urban consumers’ purchases for durables; however, this does not translate to a similar affected on fast-moving consumer goods. Even among the highest socio-economic classes, the real effect of local e-commerce portals is negligible.

However, it is noteworthy to observe that Sri Lanka’s digital literacy and its access to virtual platforms is on the rise and has significantly penetrated the urban market, especially when Sri Lanka is compared to other countries in the region. The ultimate growth and development will directly parallel the level of investment mobile operators make to promote e-commerce services far and wide in the country.