On 1st November 2015 I wrote the very first blog for this website titled “H&M to change the retail landscape in South Africa”.
Only a few days earlier on 17th October 2015 H&M open its first SA store in the V&A waterfront mall. ( you can read this blog again if you wish, just search the title).
I ended the article with the following words…………..”Remember this statement from above, H&M will change the retail landscape in South Africa over the next five years”.
We are not yet two years into the five year period and already H&M have made great headway in changing the retail landscape.
Why do I say this………..
1. Within a year of opening, the Waterfront H&M store is the third largest revenue generating store in the chain world wide.
2. Interm results issued on the 6th July 2017 show a 32% rise in sales in Rand terms in SA.
3. Swedish retailer H&M plan to open six more stores in SA before the end of 2017.
4. One of the six stores to open will be in the Stuttafords site in Canal Walk. This store will be on both floors covering 4,600 m2 indicating the confidence this company has in South Africa.
5. International brands such as Mango, Nine West and River Island are pulling out of SA closing all standalone stores.
6. Many sales generated by H&M are hurting Edgars, Mr Price, and other local retailers who are now being forced to consolidate and close many stores.
7. Edgars are fast loosing the number one position and are in a fight for survival while H&M continue to expand straight into Edgars space.
Recently the majority of local retailers have announced poor financial results while H&M are quietly taking away thier revenue day by day. Growing SA sales by 32% in six months. This is surely proof H&M are changing the retail landscape in South Africa.
All eyes are on the big five local retailers to see how they react and fight back. My money is on TFG who have already taken the decision to break out of thier own back yard and strengthen the company by buying very successful retail businesses in the UK, Europe and Australia. This gives the companies financial results a positive kick when profit from the overseas operations are included.
Woolworths would be my next choice, I am sure once they introduce foods into the Australian business and sort out the Australian head office issues, they will be on the comeback.
Truworths will take much longer to make improvements, with the top dog Michael Marks hanging onto the reins and no real change in the local operation this will be a long and windy road.
Mr Price has started to show a better performance all be it off a soft base. The sooner they admit Cotton On are after thier sales and deal with them head on the sooner they can implement a turnaround.
Edgars I believe have the most difficult path and only see a continued reduction in this business as H&M eats its lunch.
Two years into the five year period and already we have seen dramatic change. Let’s see what the next three years will bring…….
enjoy your shopping
