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H&M: One retailer's death is another's breath

Jul 07 2017 19:44
Nellie Brand-Jonker

Johannesburg - International retailer H&M has sustained its stellar growth into the South African market. Sales of the retailer increased by 62% in the first half of the year, as it opened several new stores in the country.

The retail group is set to open a store in the Canal Walk shopping centre in Cape Town later this year. It will be one of H&M’s mega stores and will replace Stuttafords, which recently had to close its doors after developing financial problems.

It is ironic that Stuttaford's problems have evolved in part because of the arrival in South Africa of international retailers such as H&M.

Since it arrived on the scene at the end of 2015, the international retailer has been eating into domestic retailers' market share.

READ: Mr Price shares surge despite first earnings slump in 16 yrs

H&M reported sales of R755m in the six-month period to end-May this year - an increase of more than half over last year’s corresponding sales of R464m.

Because retail space is limited in South Africa's popular malls, a retail group has to practically close down to create the necessary space for another.

The Canal Walk store will be H&M's fourth flagship store in South Africa. Flagship stores are extra large stores that take up two floors.

The store will consist of over 4 600 m² floor space and will open on November 18, just in time for the festive season. This could be further bad news for struggling clothing stores in the busy shopping centre. The three months to end-December is the most important time of the year for retail groups.

Growing competition in major shopping malls such as Canal Walk may dampen sales for existing retail stores such as Foschini, Truworths, Mr Price and Cotton On.

Despite the slump in the economy, H&M still sees great potential in the country, according to Pär Darj, head of H&M in South Africa.

The retailer has already opened eleven stores in South Africa since October 2015.

Four more H&M stores will open before the end of the year:

  • Cavendish Square in Cape Town, September 16
  • Table Bay Mall in Cape Town, September 28
  • Highveld Mall in Witbank, October 28
  • Boardwalk Inkwazi Shopping Centre in Richards Bay, November 11

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h&m  |  retail  |  clothing


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