Apparel and Footwear Specialist Retailers in South Africa – Mar 2016
TRENDS
Many international retail companies are progressively looking to countries with emerging economies in order to offset the slow growth they are recording in countries with more developed economies. As South Africa has one of the most established retail markets in Sub-Saharan Africa, many international apparel and footwear specialist retailers brands entered the country during the review period. In addition, in terms of building a captive consumer base for their products, many of these retailers are also using South Africa as a launch-pad for expansion throughout the region. The current adverse economic environment in South Africa is also favourable for international retailers, especially when it comes to importing products into the country due to the falling exchange value of the South African rand. Retailers such as River Island, H&M, Zara, Gap, Cotton On and Forever 21 all opened stores in the country during the review period. Only a few of these international retailers have established stand-alone stores on their own, however, instead entering into partnerships with locally established retailers in the form of retail concessions to strengthen their distribution channels. A good example is partnership between Edcon’s Edgars retail chain and brands such as Tom Tailor, Dune, Forever New, Topshop, Lipsy and Mango.
COMPETITIVE LANDSCAPE
Despite increasing competition in the channel due to the constant entry of international players, local companies continue to dominate apparel and footwear specialist retailers in South Africa. Pepkor Retail Pty Ltd maintained the leading position in the channel in 2015 with an 18% value share. Driven by the strong demand for the Pep and Ackermans brands, Pepkor’s’ position in the channel is based on its expansive distribution network, with outlets spread out across the country. Pepkor continues to target low-income and middle-income consumers with its low price strategy. In a strategic move, Pepkor became a member of the Steinhoff International Group in 2015. The company has also diversified its product portfolio by expanding into financial services such as providing money transfers, unsecured micro loans, funeral policies and other financial products.