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H&M discusses entry into South African market

It opened its 4,700m² flagship store at V&A Waterfront in Cape Town two weeks ago.

H&M opened its 4,700m² flagship store at V&A Waterfront in Cape Town two weeks ago.

“Many retailers have started in South Africa and then from there go out into the rest of Africa, and I don’t see why we can’t do the same. But first we need to establish the brand in South Africa.”

This is according to Pär Darj, South Africa’s country manager for Swedish fashion and lifestyle retailer Hennes & Mauritz (H&M).

It opened its 4,700m² flagship store at V&A Waterfront in Cape Town two weeks ago, and will open its second in Sandton City, Johannesburg this Saturday. Thereafter, Darj says the retail giant plans to open three more stores before May next year. This includes space in Midrand’s R3.5bn (US$253.7m) Mall of Africa, the largest single-phase shopping mall development in South Africa – set to open towards the end of April 2016.

H&M, which already has stores in Morocco and Egypt, joins a growing number of global fashion retailers who have recently expanded into the South Africa, with plans to use the market as a stepping stone into other sub-Saharan Africa countries. Australia’s Cotton On, US’s Gap, and the UK’s Topshop are just some who are reportedly using their South African entry as a means to access other African markets.

H&M has also signed deals with local factories in Ethiopia, Kenya, Tunisia and Egypt to outsource clothing production.

Weakening rand vs growing aspirations

According to Darj, one of the attractions of the South African market for H&M is the growing aspirations amongst consumers for fashionable garments.

However, the South African rand has weakened considerably against the US dollar over the past year, placing pressure on the local consumer.

“Currencies go up and down, but we are going to be in the country for the long-term, so we cannot sit around and just [worry] about where the currency is going to go for the next couple of years. We have to be in the market with the right price in rand and when it weakens and then strengthens again, we have to follow that and make sure we have the right price for the customer,” explains Darj.

How we made it in Africa recently visited H&M’s Cape Town store and approached the first six customers to ask them to share their thoughts on the retailer. Below are their comments.

“I saw the brand in Barcelona and just loved it, so was excited that it was coming out here. I have come down from Johannesburg to visit my daughter and decided to come have a look around the store too.” – Dee Bayvel, South African

“This is about my third time visiting the store. I like their homeware goodies a lot. The pricing is also good. I just hope it stays this way and they don’t whack up the prices in about a month or two. I hope these aren’t just opening specials. They are very competitive and market related.” – Renee Huxham, South African

“An H&M store has recently opened in Melbourne, so I do know the brand… It is a lot cheaper here, especially shopping on the dollar.” – Raury Adams, Australian

“The price range is okay. It is affordable. But when it comes to the sizes, I would just like [H&M] to add more clothes for larger sizes and even for pregnant women… But in general the shop is okay.” – Gavin Mocumi, South African

“It’s my first time here. I am quite surprised because I thought it was going to be expensive, but it is quite affordable and I like the quality… I didn’t really know about the brand. A friend of mine was overseas and said I should go try the make-up here.” – Natheema Davids, South African

“The store is really big. There are heaps of options and its pretty reasonably priced but it also ranges from really cheap things to relatively expensive things. So it sort of caters to everyone really.” – Rainbow Apostol, Australian

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