Zara to make its African debut
Aug 16 2011
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Owned by Inditex, the world's biggest fashion retailer by sales, Zara has chosen to enter South Africa through the corporate store route - paying import duties at cost instead of opening through franchise outlets where it would need to pay cost and import fees. This means the brand long salivated over by South African shoppers abroad will be available at a reasonable price point.

The company, which was established in 1975 with one store in La Coruña, Spain, now operates 5154 shops in 78 countries.

Mel Urdang, director at Liberty Properties, said: "Zara brings a differentiation because it's Spanish and adds some of the European flair. Its offering is very different from what we've had in South Africa. Their use of different materials and manufacturers brings to the shopper an alternate choice."

Zara is just one of the 58 retailers that will be joining the tenants at Sandton City as part of its R-1.77-billion first-phase expansion and refurbishment. International brands from Europe, the UK and Australia will also be represented.

The 30000m² redevelopment is being undertaken by Liberty Properties on behalf of owner Liberty Group, which owns 75%, and Pareto, which owns 25%.

Sandton City's entire retail space, including the extension - which is being capped in an environmentally friendly climate envelope roof - will total 143690m² on completion of this phase, taking the complex, which includes the hotel and office component, to a massive 215000m².

"In terms of the economy, as a longer-term holder and investor in property, lead times are long and you may never get the timing 100% correct, but that there are cycles and when the cycle turns and the upturn happens we will be well placed in terms of what we've done," Urdang said.

Though South Africans are battling high levels of unemployment and household debt, the Reserve Bank on Thursday said it saw scope for increased consumer spending, which will help boost economic growth and offset lower demand for exports in the US and Europe.

Zara's core concept of selling medium-quality fashion at affordable prices will entice shoppers in an already cut-throat market, where local retailers vie for the best store location, price, product and quality.

Edcon, the owner of Edgars and Jet, has already warned that the arrival of international players such as Wal-Mart and Zara could increase competition in the retail market.

"Increased competition from our existing competitors or new entrants to the market could result in lower prices and margins, or a decrease in our market share," Edcon said.

Wal-Mart bought 51% of Massmart , owner of Game and Makro, for R16.50-billion earlier this year.

But according to Urdang, South Africa has "phenomenal" retailers who can stand their ground. "What Zara's entry does do, though, is up the game and give local players the extra nudge and push."

Edcon is not resting on its laurels. Its existing Edgars store at Sandton City will be enlarged to 12000m².

Source: www.timeslive.co.za, 15 August 2011

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