Shoprite is gunning for the more than R100 billion South African apparel retail market, aiming its new Uniq clothing chain for the women’s, men’s and children’s wear sector with medium to high-end pricing ranges.
South Africa's largest retailer opened the first Uniq apparel retail store in Cape Town on Thursday.
It touted select items such as T-shirts priced at R149, joggers priced at R299 and R799 puffer jackets as it gears up to roll out seven additional Uniq stores in the next few weeks.
Shoprite is entering an apparel retail market that already has Pick n Pay's clothing division, Mr Price and Foschini among other players.
According to Statista, the South African apparel market will record about R108bn in revenue this year. However, a weaker rand, unemployment that remains under pressure and high inflation are seen as likely drawbacks, say market analysts.
"Revenue in the apparel market amounts to $5.82bn (R104bn) in 2023. The market is expected to grow annually by 5.03% (between) 2023-2027,“ notes Statista.
It appears that Shoprite is gunning for the lucrative premium apparel market segments that include women's wear.
Statista said “the largest segment is the women's apparel market”, with nearly half the revenue for the sector.
Analysts say Shoprite was entering the apparel retail market less affected by ongoing power blackouts afflicting the South African business and economic sectors.
This was mainly because apparel retailers “only have to keep lights on" whereas food retailers have to pay for cold storage, chillers, fridges” and cold chain.
Shares in Shoprite traded 1.2% weaker on the JSE on Thursday at R221.6.
Ashburton Investments portfolio manager Wayne McCurrie said in January of Mr Price’s performance: “Excluding acquisitions, the turnover growth was pedestrian and unit sales were quite sharply negative. At least there was some pricing power. Apparel always gives a poor result now and again.”
There have been acquisition activity too in the South African clothing retail sector, with Mr Price buying Studio88, a high-end athletic apparel company.
Shoprite is hoping that its “premium basics” range of apparel will give it an edge in the segment.
Entering the clothing market also brings it abreast of main rival Pick n Pay, which opened it's 300th apparel store last year and has been focusing on local sourcing of its clothing stock.
“Uniq has sourced materials specifically engineered for comfort and convenience. Uniq is the first clothing retailer in South Africa to offer self-service checkout,” Shoprite said.
Analysts have been upbeat about the growth prospects of the South African apparel market. Fitch Solutions analysts say the local clothing and footwear industry “will show strong growth in the medium term, aided by real disposable income growth and a young, urban consumer” base.
This is despite the “slow economic growth forecast for the South African economy over the 2022 to 2026 period”, amid growth projections of around 1%.
Widespread “accessibility of international brands and access to credit facilities outside of commercial banks” will likely boost consumer options and prop up spending on clothing and footwear.
BUSINESS REPORT