Zara dresses for success as local rivals languish
Spanish brand’s formula raises fashion bar in SA
ZARA, flagship of the world’s largest apparel retailer, Inditex, will open its third store in Johannesburg by the end of the year, bringing to seven the number of stores the Spanish company has opened in South Africa over the past four years.
The brand has proved a gamechanger in the South African retail market with its policy of delivering merchandise to its stores twice a week.
“Zara is at the forefront of fast fashion and responding to ‘inseason’ demand in the market,” said Daniel Isaacs, retail analyst at 36ONE Asset Management.
“If they see some items are better than others, they can respond quickly and keep the stock turnover at a very high level, whereas the local guys are used to buying for the season beforehand.”
The weakness in this strategy was evident in the trading statement released this week by fashion and homeware retailer Mr Price, which said sales had been hurt by poor fashion calls and the late onset of winter, along with low levels of consumer confidence.
Zara’s zero-advertising policy and its efficient delivery of merchandise is maintained across all the countries in which the Inditex group has a presence. However, it tailors its clothing to climatic conditions in its markets.
Isaacs said international diversification was “a big theme” at the moment, and South African retailers were looking for exposure outside Africa.
Mr Price announced this week that it would open “test” stores in Melbourne and Sydney.
“Woolworths did it, Foschini did it, Spar did it . . . a lot of them see the South African environment as becoming more mature and more difficult from a strained consumer point of view,” said Isaacs.
But local retailers had improved their seasonal responses over the past few years as competition from international retailers increased.
The influx of international retailers into South Africa “is a good thing for local retailers because they need to step up their game . . . they can’t repeat the same thing again and again”, said Suhail Surtee, director at brand management company Surtee Group.
South Africa offered easy access and growth opportunities despite the slow economic market — and it had the facilities and infrastructure needed for new international players to come in, he said.
Expansion into Africa may not be as aggressive as into Europe and the Far East, but “without a doubt we are going to see international retailers coming into South Africa”.
Competition from them should be the least of local retailers’ concerns, according to Isaacs. “They should be a lot more concerned about the local economic situation and job losses; pressure on the economy is a much bigger problem for them.”