Bright Out­look for South African Re­tail Sec­tor

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In June 2018, ap­parel emerged to be the best re­tail seg­ment in South Africa; if the same growth and pace is main­tained, the seg­ment is ex­pected to wit­ness a growth over the course of an­other 3 to 4 years. Over­all, the sales in the month of June as 8.4 per cent above av­er­age for this time of the year. Also, it is im­per­a­tive to note here that the sales, in­clud­ing the in­fla­tion ef­fects, too have seen a surge of 6.3 per cent Y-o-Y.

The diver­si­fi­ca­tion choices of con­sumers in South Africa’s re­tail sec­tor have not been duly com­ple­mented by the in­crease in do­mes­tic con­sump­tion. To put it sim­ple, while the shop­pers in the coun­try do love to select from a wide ar­ray of fab­rics and colours, they fi­nally end up buy­ing less, thereby re­sult­ing in low or some­times even poor or­der vol­umes.

Lately, shop­pers have shown their lik­ing for nat­u­ral fi­bres and fab­rics, and un­der­stand­ing this very well, some lo­cal re­tail­ers like Wool­worths have been tak­ing ini­tia­tives. Wool­worths, for in­stance, in­tro­duced Green La­bel and thus made clear its in­ten­tions of killing the im­pact of its prod­ucts on the en­vi­ron­ment. Ever since the com­pany has been mak­ing ap­par­els with sus­tain­able fi­bres like or­ganic cot­ton, bam­boo and oth­ers, its sales has seen an up­ward trend in the last few years.

De­spite pres­sure from in­ter­na­tional brands, some of the prom­i­nent lo­cal re­tail­ers who have made a mark for them­selves in South Africa are Tru­worths, Ed­con, Fos­chini and Mr Price. These re­tail­ers buy what­ever they can from do­mes­tic man­u­fac­tur­ers and then im­port to com­pen­sate for the short­fall in vol­umes – and some­times in places where the lo­cal in­dus­try is strug­gling. De­spite all strug­gles and chal­lenges in last few years, these re­tail­ers seemed to be com­ing back to their own in

2018; they are now ex­pand­ing to other coun­tries as well. While Wool­worths made a num­ber of ac­qui­si­tions in Aus­tralia re­cently, Mr Price too plans to open a new store in Poland by late 2018, be­sides re­vis­it­ing its plans of open­ing stores in Aus­tralia. The Fos­chini Group re­cently bought British wom­enswear brand Hobbs.

Some of the in­ter­na­tional fast-fash­ion brands who have made a mark in South Africa, and are still go­ing strong are Zara, H&M, Cot­ton On Group and Next. The avail­abil­ity of these in­ter­na­tional brands in SA of­fers fash­ion-for­ward con­sumers a bet­ter shop­ping ex­pe­ri­ence. Con­sumers can keep up with global trends, some­thing fash­ion re­tail­ers of South Africa have strug­gled to do – mainly be­cause they gen­er­ally or­der much ahead of sea­son. In last one year, nearly five to six in­ter­na­tional ap­parel brands, in­clud­ing Mad­den, Su­per Dry and G-Star, opened their out­lets in the coun­try and con­sumers love to shop there.

The fash­ion con­sumers in South Africa have been able to buy big brands, but in other com­pa­nies’ re­tail shops, and that too at prices that are al­most 40 to 50 per cent more than in their home mar­kets. Sur­veys have, quite a few times, high­lighted that hav­ing big fash­ion brands in their homes re­flected their eco­nomic sta­tus to travel all across the globe and shop the best of clothes and fash­ion ac­ces­sories.

Stud­ies have clearly shown that the con­sumer be­hav­iour in South Africa changed mainly dur­ing the time the in­dus­try was fac­ing se­vere eco­nomic cri­sis. It was then shop­pers started choos­ing value-for-money prod­ucts over for­eign branded ones. What was in­ter­est­ing to note was whether this change in con­sumer be­hav­iour was tem­po­rary or would it de­fine the con­sumer shop­ping for ever.

Again, ac­cord­ing to a sur­vey that was con­ducted in Dur­ban re­cently – fo­cus­ing ex­clu­sively on lo­cal re­tailer Mr Price – sev­eral shop­pers made it clear that they loved shop­ping at

De­spite all strug­gles and chal­lenges in last few years, South African re­tail­ers seemed to be com­ing back to their own in 2018; they are now ex­pand­ing to other coun­tries as well.

Mr Price as it of­fered value-for-money prod­ucts at good qual­ity. Now that is what ev­ery con­sumer wants.

South Africa has al­ways been a known mar­ket for large-sized ap­par­els and that is where it has scored over lots of Asian coun­tries. Asian coun­tries have never had enough ca­pac­ity to serve the mar­ket for those lar­ge­sized clothes. A close look at South African gar­ment or re­tail in­dus­try makes it dis­tinct that prod­ucts like ca­sual wo­ven tops and padded jack­ets have al­ways had a good mar­ket. Over the re­cent years, kidswear and also ba­bieswear have also been com­ing up at a de­cent pace in South Africa.

One must also men­tion here the im­mea­sur­able con­tri­bu­tion made by fairs to pro­mote the growth of re­tail sec­tor in the coun­try. The

South Africa’s In­ter­na­tional Ap­parel, Tex­tile, Footwear and Ma­chin­ery Fair – held each year in the city of Cape Town – has also gone a long way in of­fer­ing a huge plat­form for reach­ing re­tail­ers and brands. Over the past two decades, the event has be­come the ma­jor sourc­ing event of the African Con­ti­nent bring­ing to­gether in­ter­na­tional sup­pli­ers, ap­parel man­u­fac­tur­ers, ser­vice providers and buy­ers all un­der one roof. There is noth­ing big­ger than this event in South Africa. The sen­ti­ments have re­cov­ered very well from the lows of 2017, but it has still not reached a po­si­tion that South Africa would ide­ally want its re­tail sec­tor to be. If the growth con­sis­tency is main­tained at same pace, it will not be sur­pris­ing to see the South African re­tail sec­tor in its full glory in 2019.

South Africa has al­ways been a known mar­ket for large-sized ap­par­els and that is where it has scored over lots of Asian coun­tries.

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