Owned by Inditex‚ the world's biggest fashion retailer by sales‚ Zara was established in 1975 with one store in La Coruña‚ Spain‚ and now operates 1‚763 shops in 86 countries.
The company joins a slew of international retailers setting up shop in emerging markets.
The store is set to open in late 2013 at the Growthpoint Properties-owned centre.
"We're excited to welcome Zara to Walmer Park‚ where the leading international brand will greatly complement and enhance the retail mix‚ ensuring our centre's position as the leading fashion destination in Port Elizabeth and indeed the Eastern Cape‚" said Leonie Scheepers‚ Growthpoint's portfolio manager at Walmer Park Shopping Centre.
Walmer Park Shopping Centre is part of Growthpoint's portfolio of 47 retail centres located throughout SA.
According to Adrian Bertschinger‚ MD for retail and consumer services at Accenture SA‚ the country is by far the biggest consumer economy in Africa and international retailers wanting a safer expansion strategy are inclined to use the country as a launch pad into the rest of Africa.
Africa‚ whose top 18 cities could have a combined spending power of $1.3-trillion‚ presents a compelling investment case for retailers as home market growth slows.
Companies including Walmart‚ Arcadia Group's Topshop and Gap have already made a play for Africa‚ through SA. It is believed that H&M will open a store in 2015 in the Mall of Africa in Johannesburg.
This is the second Zara store in SA associated with Growthpoint‚ which owns 50% of Cape Town's V&A Waterfront‚ the home of Zara's Western Cape regional flagship store.
Compared with the six-month industry average‚ the Spanish retailer needs only two weeks to develop a new product and get it into stores.
Zara launches over 10‚000 new designs each year.
Local retailers are not resting on their laurels amid new competition - The Foschini Group‚ Truworths and Woolworths are streamlining sourcing and speed to market efficiencies.
In its annual report released in June‚ Edcon said the retail market in SA was highly competitive‚ particularly with respect to product selection and quality‚ store location and design‚ price‚ customer service‚ credit availability and advertising.
"We compete at the national and local levels with a wide variety of retailers. For example‚ in the Edgars division we compete directly with Woolworths‚ Truworths and Foschini. In the discount division we compete with Mr Price‚ Ackermans and PEP. Increased competition from our existing competitors or new entrants to the market could result in lower prices and margins or a decrease in our market share‚ any of which could have a material adverse effect on our financial condition and results of operations. In addition‚ international competitors have entered our market‚ creating increased competition‚ as in the case of Cotton On‚ Walmart and Zara‚" it said.
Edcon is in the process of reviving its Edgars chain‚ which has lost market share over the last few years. The company‚ which has improved sourcing and beefed-up its merchandising teams‚ is rolling out new formats such as Edgars Shoe Gallery. It is also adding new brands like Dune and Tom Tailor - an extension of the group's shop-in-shop and mono-branded stores concept aimed at increasing footfall. In 2012‚ in partnership with House of Busby‚ Edcon was given the rights for Topshop and Topman in SA.
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