US fashion brand Forever 21 to open first store in Africa

South Africa has attracted a slew of international brands‚ many of which see it as a stepping stone to other sub-Saharan markets.

The fast-growing economies of Africa present a compelling investment case. By 2030‚ the continent's top 18 cities could have combined spending power of US$1.3-trillion.

The 1‚400m² Forever 21 store will open mid-year.

"We are pleased to welcome another leading international brand to our portfolio‚" Hyprop CEO Pieter Prinsloo said on Friday, 31 January 2014.

Headquartered in Los Angeles‚ Forever 21 is primarily a youth brand renowned for selling international runway trends at affordable prices. It has stores across the US and an international footprint in 10 Latin American countries‚ 19 Asian countries and five European countries.

The group's fast-fashion rivals Topshop and Zara‚ who are famed for getting products based on the latest catwalk trends into stores in as short a period as two weeks‚ have already set up shop in South Africa.

"We are excited to enter the South African market and have plans for some exceptional stores for this market‚" said Jatin Malhotra‚ director of real estate and business development at Forever 21.

Competitive interest

In its first foray into sub-Saharan Africa‚ Swedish "cheap 'n chic" fashion giant H&M last year said it would open its first store in Johannesburg in 2015.

H&M is famous for its collaborations with designers such as Karl Lagerfeld‚ Jimmy Choo and Versace‚ and these have caused frenzies that have seen merchandise selling out within minutes.

H&M spokeswoman Camilla Emilsson-Falk told BDlive that the group was "looking at a couple of cities in South Africa".

Gap‚ bebe‚ Thomas Pink and Superdry have also opened in South Africa.

Australian player Cotton On Group‚ which is expanding the presence of its brands in South Africa‚ is targeting up to 500 stores across the country in the next five years.

Hype aside‚ a dose of reality is needed as the barriers to trading successfully in South Africa are quite high. Aggressive expansion of these global brands will be capped by the shortage of prime location spots in key malls‚ and much also depends on their price points.

The brands are often mass marketed in terms of fashion and quality‚ yet when the firms bring merchandise to South Africa‚ it tends to be quite expensive. They also do not have the credit offering that a number of retailers in South Africa are able to extend.

According to Truworths CEO Michael Mark‚ the fashion retailer regards global competition in the same manner it does local competitors.

"International retailers who open stores in South Africa do not necessarily understand trends better than we do and they face their own difficulties in trading in South Africa‚" he said. "While the group will never become complacent to the threat of local or international competition‚ we believe that if the right fashion is available in our stores‚ it will continue to attract customers‚ regardless of the level of competitor activity."

Locals up their game

Local retailers are not resting on their laurels in the face of increased competition - the Foschini Group‚ Truworths and Edcon are streamlining sourcing and speed-to-market efficiency.

Meanwhile‚ Woolworths will bring the Witchery and Mimco fashion brands to South Africa in March.

Along with new brands in its arsenal‚ Woolworths' enhanced procurement strategy and better relationships with its suppliers has allowed it to shorten lead times.

The upmarket player‚ which wants to be a leading fashion retailer in the southern hemisphere‚ hopes to emulate the success of its other Australian labels‚ Country Road and Trenery.

"We've reduced the length of time it takes from design through to store delivery‚" Woolworths CEO Ian Moir said.

"Competition is a good thing. If you don't have competition you get lazy and lose sight of what you need to do. We've had a very competitive environment - the Foschini Group and Truworths do a good job - it's not as if we haven't had competition earlier. (International retailers) will be good for the South African market place‚ it will raise the bar in terms of fashionability‚" Moir said.