24 of 2017


Newsletter No.24    30 June 2017

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Luxury retail feels the pinch

Conventional wisdom has had it that luxury retail – including clothes, shoes and accessories – is immune to movements in the economy, especially the downward kind. But the casualties at the top end of the retail sector point to a marked decline in that market and analysts warn that this could be a continuing trend.

Independent analyst Chris Gilmour said luxury and perceived luxury brands were operating in a competitive market. “I do believe the higher-end space – which includes perceived higher end in the form of H&M and Zara – is becoming crowded and perhaps explains why companies such as Mango and Nine West have shut shop.”

House of Busby, which owned the brands in SA, said earlier in 2017 that it would be closing standalone stores. This was done as part of a process to alter its portfolio to match domestic needs, Busby said.

“Edcon still has little franchises like TM Lewin and Tom Tailor, but it’s difficult to tell how well or badly they are doing. Stuttafords is the big one, though. For it to close, speaks volumes about the ability of customers to spend at the top end,” said Gilmour.

Stuttafords will officially shut shop on 1 August. The closure comes at the expense of its 280 creditors – who include large brands such as Estee Lauder, L’Oreal, Tommy Hilfiger, Polo and Levi Strauss.

CEO Robert Amoils said consumer spending declined drastically in December 2015 after “Nenegate”. He said: “We experienced a noticeable loss in consumer confidence; we had the rand devaluing at an astronomical rate and we saw 2016 start with a material and noticeable lack of demand from our customers. We lost, relative to our budget, in the first six months, R100m in projected turnover.”

Independent analyst Syd Vianello said everyone was suffering in the current market. “When things get tough in an economy, even people at the top end feel it. Perhaps not to the same extent as those in lower brackets, but ultimately everyone suffers.”

Vianello said the increase in tax for those in the upper end would also be felt, but that there was a six-month lag effect between when it was announced in March and when it would actually begin to show its effects. “Only the ultra, ultra rich won’t be affected. But at the core of this all is sentiment. Consumers in all brackets including the top end spend less when they are less confident about the future of the economy. This is an important factor that should not be overlooked. Everybody is taking strain,” he said.

Consumer confidence, a large driver of discretionary spend, declined to -10 in the fourth quarter of 2016 from -3 in the third quarter of 2016, according to the FNB-Bureau for Economic Research consumer confidence index. High food inflation has also limited consumers’ purchasing power along with stringent credit requirements.

Referring back to Stuttafords, Gilmour said another factor in its fall may have been its inability to fulfil customer needs. “It was very badly managed towards the end in my honest opinion. As the economy continues to languish, expect more casualties,” Gilmour said.

Nielsen says business prospects in SA are not promising. The economic growth outlook for 2017 remained subdued, the research group said.

Colleen Goko

South African designers showcase their wares in Paris

Forty-two South African designers are currently exhibiting their artisanal goods at the renowned BHV/Marais in Paris, a department store of the group of Galeries Lafayette that attracts over 60,000 visitors daily. The exhibition, which runs until 31 July 2017, showcases South Africa’s creative energy and its international design and cultural capitals: Johannesburg and Cape Town.

Championed by Artlogic, This is Cape Town and Le BHV/Marais, the showcase presents an opportunity to expose international audiences and buyers to a selection of artisanal South African brands across various design categories namely; fashion, furniture, accessories, beauty, homeware and decor.

Trade and export opportunity

A project of this proportion, lead by a prominent international retailer is the first of its kind in Paris. Brand South Africa, the Department of Small Business Development, the Department of Arts and Culture, South African Tourism and the Gauteng Growth and Development Agency in South Africa support the South African Exhibition in Paris.

“Taking our brands into a large international retailing environment moves us closer to our goal of ultimately securing permanent supply contracts between the brands and the store, as well as other buyers in Paris. These brands have been nurtured on home soil through the Sanlam Handmade Contemporary Fair and this trade and export opportunity is just one step in the pursuit of getting our high quality South African products, into homes and stores all across the globe.

“This project will craft a progressive narrative around the South African artisanal design market, which is growing and thriving with a new audacity and vigour,” explains Mandla Sibeko, director Artlogic.

Participating brands
1. A Love Supreme 2. Ashanti Design 3. Ardmore 4. Ash Ceramics 5. Ballo 6. Beach Cult 7. Bukusu Organics 8. Butter Jewellery 9. Butter Pudding 10. Crystal Birch 11. Dear Rae 12. Evolution 13. Granadilla Swim 14. Handmade by Me 15. Hamethop 16. Henriette Botha 17. Klomp Ceramics 18. MaXhosa by Laduma 19. Lalesso 20. Lisa Frazer 21. Mamiwata 22. Margot Molineux 23. Merwe and Salt 24. Mevrou & Co 25. Mia Melange 26. Pichulik 27. RialHeim 28. Sealand 29. Selfi 30. Simon & Mary 31. Skermunkil 32. Thalia Strates 33. Thula Sindi 34. Umbala 35. Vogel 36. Vorster 37. Wiid Design 38. Wild Olive 39. Wolf & Maiden 40. Wren Design 41. Yswara 42. Zana

“The main purpose of this first exhibition in Europe is to help and support South African designers in their international development. The European market is not the same as the South African market, therefore my role is to guide designers in understanding this new market that is available to them and accompany them throughout this journey,” adds Julie Hatchuel, director This is Cape Town.

Enterprise Mauritius leading delegation to Fashion SVP

Enterprise Mauritius is leading a delegation of local apparel manufacturers to participate for the second time at Fashion SVP during June 27-28 June 2017 in London. Thirteen manufacturers comprising four large enterprises and nine SMEs will showcase to UK buyers the latest collections of products including t-shirts, shirts, knitwear, denim, and jersey wear.

Fashion SVP is Europe’s unique sourcing event, with an international show presenting over 120 leading fashion producers from the UK and 21 overseas countries, as well as training seminars, trend focus features, product demonstrations, fashion clinics, a jobs’ forum and prime networking with the fashion industry.

The fair attracts buyers from large famous European retailers to smaller chains, clothing brands, wholesalers and boutique labels. In 2016, the fair attracted buyers from leading upmarket companies such as Debenhams, Monsoon, Marks & Spencer, House of Fraser, Boden, Jaeger, River Island, and Harrods, amongst others.

Local operators participating in Fashion SVP have benefitted from the expertise of Trendstop, a consultancy firm based in London whose expertise lies in forecasting latest trends and creating new designs for the UK market, to help in the realisation of new collections.

Given the dynamic nature of the fashion industry, Enterprise Mauritius has solicited assistance from Trendstop so that Mauritian operators can anticipate what is coming for the next season. Renowned retailers have already confirmed visits to the Mauritian stands to take cognizance of the products offered.

The textile and apparel industry has been a major contributor to Mauritian GDP. The UK remains an important market for Mauritian exports, accounting for over 15 per cent of total domestic exports. Over the years, textile and apparel has emerged as a flexible sector adapting to latest technologies to be competitive. Mauritius has been working with top UK retailers such as Arcadia Group, NEXT, Debenhams, Harrods, and River Island, among others.

To further encourage exportation, government has introduced the speed-to-market scheme which is being implemented by Enterprise Mauritius. The aim is to give a boost to textile and apparel exports to European countries and to enhance product delivery in terms of speed-to-market.

Did you know..

A ‘Grabatologist’ is a person who loves collecting ties.

The low-waist baggy pants originated in the prisons of Los Angeles, where inmates were not allowed to wear belts to hold their pants in place.

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