Recognise the retail investor

South Africa is on the brink of a massive shift in investor demographics. Retail investors literally have the potential to change the way listed companies do business – for the better! 

“The most valuable asset that any company can own won’t appear on its balance sheet,” says Purple Group CEO Charles Savage. 

That asset, he says, is loyalty.

 “The more engaged your customers and staff are with your brand, the more loyal they will be. And the more loyal they are, the more successful your business will be."

Charles says share ownership is a powerful driver of engagement. Now that all South Africans can buy shares in listed companies through EasyEquities for as little as R5, there is no excuse NOT to become an investor.

“In the history of the world, no one has ever washed a rented car.”

Lawrence Summers, Former Director of the National Economic Council

A study done by Bain & Company of customers who owned stock showed that they:

• Increased spend, referrals, and store visits
• Held on to the stock an average of five years (66% held the stock three to seven years and over 25% held the stock more than seven years)
• Are twice as likely to buy more shares than sell shares when a stock goes down.

In the below example of consumer-owners vs. non-consumers owners of shares, the benefits are clear.

Purple Group recently launched a loyalty programme that rewards customers and staff with shares rather than cash-back or discounts.

“When it comes to staff, share ownership provides a sense of belonging and has many other benefits that the company can leverage from. Rewarding staff through shares instead of other traditional rewards, like days off, cash or traditional vouchers, can be a lot more powerful in driving behaviour – and it is mutually beneficial for staff and the company.”

Similarly, there are benefits in rewarding customers for their loyalty by giving them shares instead of cash-backs or discounts.

“Imagine getting Woolies shares every time you go shopping at Woolies,” he says. “You come in to get your groceries, and you leave with an appreciating asset. Why would you shop anywhere else?

“Now that EasyEquities has democratised share ownership in South Africa, there is no reason why listed companies shouldn’t partner with us to drive loyalty through share ownership in their brands. Woolies should be partnering with us. Shoprite should be partnering with us. MTN, Vodacom, Multichoice, Famous Brands, Dis-Chem … the list is endless.”

But it’s not just about ownership. There’s also an element of education involved.

“EasyEquities provides all the necessary education relating to our platform as well as an introduction to share investment. This is particularly useful for new or potential investors, who are often overwhelmed by the process or not sure what stocks to invest in.”

Charles says that although any time is a good time, the best time for a company to consider a loyalty partnership with EasyEquities is before listing.

“The recent Dis-Chem listing is a case in point,” he says. “We had 2000 clients who wanted to participate in the private placement. This was a really exciting listing – the first big retail listing in a long time. These 2000 investors are not only EasyEquities clients, but Dis-Chem customers as well. Sadly we received no share allocation, but we have still seen more than 1 200 investors buying shares in Dis-Chem through EasyEquities, representing a nominal investment of over R5,5-million.”

The commonly-held perception that retail customers would have sold off for a quick profit are not supported by EasyEquities’ experience with retail investors.

“Our investors hold on to shares in the brands they love,” says Charles. “They’re investors, not traders. They’re in it for the long run, which means they’re able to add value to a listed company’s brands well into the future.”