Insight from Around the World: South Africa
Paula Disberry, Group Director Merchandise Planning, Woolwoorths SA
Woolworths SA (no relation to the UK brand) operates 920 stores across Africa, the Middle East and Australia (where it operates under the Country Road brand) selling everything from food and homeware to clothes, gifts and financial services. It is coming under pressure from overseas retailers, such as Zara and Topshop , entering the womenswear market in South Africa so has set itself the aim of being the first retailer to deliver an omnichannel experience to its customers.
Online retailing is only now starting to really take off with online accounting for 0.5% of total retail sales in South Africa. Its growth has been restricted by poor penetration and the high cost of broadband. Ecommerce is expected to grow 40% year-on-year with mobile providing a future growth channel with penetration rates of over 100%.
The larger African continent also provides a longer-term aim with increasing political stability, GDP growth and an increase in the consumer market. Retailing in Africa has been very informal; the first formal mall in Nigeria opened up this year, for example.
Woolworths has had a presence in African countries for over 10 years and currently has stores in Botswana, Namibia, Lesotho, Swaziland, Ghana, Kenya, Tanzania, Uganda, Zambia and Mozambique. A further 16 stores have been or are due to open in existing markets and other countries including Nigeria, Mauritius and Angola taking the total number of stores to 60 in the current financial year.
Retail space will increase by 42% in the current financial year and by an estimated 145% over the next three years on the continent as expansion accelerates.
Joint ventures with local partners is the new business model for our expansion plans in other African countries. We have moved away from the franchise model we had in the past in some African countries. It’s not only a better profit model for Woolworths, but it’s also better for customers.
Entering new retail markets in African countries does require a big commitment though. Huge duties remain a barrier to entry, especially in apparel, and infrastructure can be poor. Africa is not for sissies.