Clothing retailers see more online growth

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Online shopping keeps ticking up as more retailers see growth in their e-commerce platform sales.
Online shopping keeps ticking up as more retailers see growth in their e-commerce platform sales.

In 2018, SA's traditional clothing retailers saw more sales through their e-commerce platforms, as online shopping trends continue to tick up slowly.

The Mr Price group last week released retail sales figures for the nine months ended 29 December. South African retail sales grew 1.1% to R6.2 billion for the period and while store sales were up just 0.7%, online sales grew by 38.7%.

"The MRP Apparel online channel achieved sales growth of 35.4%, MRP Home 54.9% and MRP Sport 40.5%. Non-South African corporate-owned store sales increased by 13.1% to R505.8 million," the listed group said.

Woolworths did not give a number for its online clothing sales for the 26 weeks ended 23 December, but did give online stats for some of its brands. Country Road Group's online sales grew by 20% over the period, representing 17.7% of sales. David Jones also saw online sales grow by 46.1%, and it now makes up 7.7% of total sales.

When the group reported its annual results for the year ended 24 June 2018, however, Woolworths Fashion, Beauty and Home (FBH) saw its online channel grow sales by 77%. Woolworths SA saw growth in online sales of 33.8%, David Jones' online sales grew 21.4% and the Country Road Group's online sales were up by 20.8%.

The Foschini Group (TFG) in May 2018 took its fashion store, Foschini, online. TFG CIO Brent Curry told ITWeb that TFG's online sales growth for the final quarter of 2018 was over 35%.

The group's overall turnover for the nine months to 29 December increased by 22.7%, with turnover growth of 9.5% in TFG Africa, 42% growth in TFG London (in British pounds) and 78.7% in TFG Australia (in Australian dollars). The group says this was underpinned by strong Black Friday and December trade across all the business segments.

TFG said "the impact of Black Friday, in pulling forward what would have traditionally been December sales, is becoming more pronounced, especially in certain merchandise categories such as cosmetics and jewellery".

Last November's Black Friday also saw successful sales for online fashion retailer, Superbalist, which generated R40 million in revenue, making the sales day its biggest trading day to date.

Superbalist told ITWeb this represented 115% year-on-year growth, while traffic to the site on Black Friday grew by 80% compared to last year, with 35 000 customers buying 180 000 items.

Retailer Truworths in 2018 implemented its e-commerce platform, but has not yet given specific stats for its online sales. Overall retail sales for Truworths Africa increased by 2.4% to R7.6 billion compared to the prior period's R7.4 billion.

However, the group's UK-based Office segment continued to show strong online performance, with online retail sales growing at 7.2% and comprising approximately 33% of retail sales.

Bricks vs clicks

Locally, online retail still only makes up less than 2% of total retail, according to the Online Retail in South Africa 2019 study, conducted by World Wide Worx, and released at the end of last year.

World Wide Worx MD Arthur Goldstuck predicted that online retail in SA was due to pass the R14 billion mark in 2018 as e-commerce begins to go mainstream.

"Online retail is projected to reach 1.4% of total retail in South Africa, based on an estimated R1 trillion to be spent via traditional channels in 2018. The 2% mark is likely to be reached by 2022," Goldstuck said.

The forecasts by World Wide Worx for the next three years, from 2018 to 2020, show online retail sales more than doubling from 2016, to almost R20 billion, a year sooner than originally forecast in 2016.

Goldstuck said apparel remains the fastest growing sector, but is also the sector with the highest turnover of businesses.

"Apparel illustrates the perils of a low barrier to entry: the survival rate of online stores in this sector is probably directly proportionate to the ease of setting up an online apparel store," he added.

When comparing traditional retailers with online only players, Goldstuck told ITWeb that physical stores are relatively healthy when compared to the UK and US markets, where store closures are vastly outnumbering openings.

"Here we are still seeing expansion, although Edcon's financial difficulties will probably see a massive cutback this year. Part of their problem is that they did not embrace the online shopping trend when it was obvious it was coming. Because it was coming off a low base, they probably saw it as 'small fry' compared to store sales.

"The strategic error was not understanding that e-commerce is an investment in the future. Now that future is here, and those who did invest are beginning to reap the rewards," he said.

"However, continued investment is still needed, so that when the trend becomes a tsunami, it does not sweep businesses away. The most successful players tend to be those who are focused purely online, such as YuppieChef and Takealot. However, the likes of The Foschini Group, Woolworths and Mr P Online have shown that bricks and clicks can be a highly successful model," Goldstuck added.

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