“As South African retail faces an increasingly tough economic climate, international brands persevere despite these challenges”
Decathlon, a French sporting goods retailer is the latest international brand set to increase its footprint on SA soil. With over 1,500 stores in 49 countries, it is the largest sporting goods retailer in the world. The fourth SA store opened its doors to the public at the East Point Shopping Centre in Boksburg, Gauteng over the Festive Season and already its making waves. RS components
Sash Padayachee of Taleo Retail Advisory explored why such brands seek expansion in SA. According to Sash, big brands such as Decathlon spend years researching and analysing new countries and added that SA offers attractive benefits such as cheaper property, labour and market diversity. He also added that the internationalisation of brands into SA creates employment opportunities and refreshes the competitive landscape. “From an economic outlook perspective, the foreign direct investment inflows provide much needed optimism noting that international players see potential upside in the mid to long term prospects in our country admittedly sometimes international expansion into the region is also a response their saturated domestic markets. It is also a catalyst to sustain improved quality, value, service and choice to our customers by responsive local retailers.”
“Furthermore, while earnings of international brands such as Burger King, Dunkin' Donuts and Starbucks indicate that they are not getting a foothold in SA, Decathlon is expanding into a growing product segment of sportswear, sneakers and sports equipment-one that is continuously growing in our market. Leroy Merlin, another French brand which is focusing on tools, hardware, building supplies and homeware is another brand that is steadily growing in SA. These brands are strategic in terms of expanding into SA and as such take full advantage of their placement in the market,” added Sash.
Andre Williams, Asset Manager at SA Corporate Real Estate Limited said that he was extremely excited to introduce the fourth Decathlon Mega store to the centres’ customers. “South Africa has a lot to offer in terms of retail and it is exciting to see successful foreign brands such as Decathlon opening its doors in SA. This adds healthy competition for known brands in the country as well as provide more choice for the consumer. With the opening of Decathlon, we want to showcase the brand to consumers as well as celebrate East Point’s offerings to Gauteng retail,” he said.
SA retailers are feeling the pressure. Recent stats from Statistics SA show that the retail and wholesale industries combined have been volatile since the 2009 global recession. The first half of 2019 saw more than 109 000 new jobs being created in the retail and wholesale industry alone but once the third quarter started, 21000 jobs were lost. Edcon managed to save most of the 1000 jobs that were on the line and now Massmart has indicated that 1440 jobs are affected by possible closures of DionWired and Masscash outlets. Massmart is currently consulting with its employees about the possible closure of 23 Dionwired stores and 11 outlets within its wholesaler division, Masscash.
Sash indicated that SA retail needs to re-strategize and focus on the ‘glaring problem’ which is market saturation. He also indicated that SA retail needs to start focusing on the omni-channel approach and look at setting up online options for the new-age consumer
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