Fast Fashion Brands Pour Into South Africa And Face Credit Payment Crisis

"P" not long ago, the American fashion brand Forever 21 announced that it would open the first store in Africa, "a href=" //www.sjfzxm.com/news/index_c.asp "brand" /a "in the Canal Walk shopping center in Cape Town, South Africa.

The store, which has a total area of 1400 square meters, is expected to open its doors in the middle of this year.

As a representative of the "fast fashion" trend, Forever21 is undoubtedly hoping to win a pot of gold in the "Rainbow country" with the per capita consumption level rising rapidly.

However, the rising cost of living in South Africa is hitting consumers' desire to buy, and the recent tightening of credit by banks has greatly reduced the purchasing power of consumers.

Economists pointed out that in 2014, retail sales in South Africa will be under pressure and consumers will "think twice" in the face of the "fast fashion" clothing that buys non essential goods.

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< p > < strong > "fast fashion" brand flock to < /strong > /p >

< p > in recent years, Africa's economy has maintained rapid growth, and its consumption potential is also attracting attention.

Relevant projections show that by 2030, the annual purchasing power of the top 18 cities in the African continent will reach US $1 trillion and 300 billion.

As an important springboard for developing sub Saharan market, South Africa has attracted the attention of many international brands.

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< p > except for Forever 21, at present, the famous fast fashion brand Topshop and Zara have opened stores in South Africa, and their common feature is to launch a series of new products within two weeks to provide consumers with a wealth of product categories.

In addition, fashion giant H&M plans to open its first store in sub Saharan Africa in Johannesburg, South Africa in 2015.

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< p > even with a high degree of enthusiasm, to succeed in South Africa's "a href=" //www.sjfzxm.com/news/index_s.asp "market < /a", these aggressive global brands need to go beyond the high commercial barriers.

For example, the shortage of stores in key shopping malls, the pricing of products that take into account both the market and the profits.

And the most important point is that sales of these brands rely on credit support. If banks implement the credit crunch policy, the future sales situation is not optimistic.

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< p > < strong > credit crunch dragged down purchasing power < /strong > /p >

< p > South Africa is a typical consumer economy. Local people usually spend money before paying the bill.

Local consumption level is divided into high and low end, high-end consumer groups are basically buying houses, cars, tourism, food and clothing, etc., all of which can be consumed first, then paid monthly or deducted from personal income. The middle and low consumption level is basically consumed first, and deducted from personal income or South African national relief every month.

In the past two years, due to the slow growth of the number of jobs in South Africa and the stagnation of wage levels, the phenomenon of consumers' Arrears of repayment is serious.

According to the latest data from the national credit administration of South Africa, more than 45% of the 20 million 210 thousand credit consumers have bad credit records, and 37.59% of the unsecured accounts have stalling.

In 2013, the amount of non banking financial institutions owed by consumers increased by 70% over the same period last year.

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In order to reduce the risk of lending, commercial banks in South Africa began to tighten their money and raise the credit threshold, but to a considerable extent, this weakened the purchasing power of consumers and affected the development of retail trade. P

According to statistics, in November 2013, total retail sales in South Africa increased by 4.2% over the same period last year.

Among them, sales of textiles, clothing, footwear and leather goods increased by 9%.

Although recent statistics show that the retail market in South Africa is still growing moderately, people in the industry predict that consumers' spending on non essentials will be under great pressure this year.

"This is the second consecutive month, sales of clothing and other products show satisfactory growth trend.

But the future sales trend is still unknown, especially when the cost of living is rising and the credit threshold is raised.

Independent analyst Lan Cruickshanks said.

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< p > < strong > retailers want to raise cash sales < /strong > /p >

P, the latest sales data of Truworths, a South African fashion retailer, shows that slowing consumer spending has begun to drag down the growth of company performance.

In the first half of 2013~2014 fiscal year (April 2013 ~9), sales of the company amounted to 5 billion 900 million Rand, an increase of 7.1% over the same period last year.

Among them, sales of credit cards account for 71% of the company's total sales.

Over the same period, the price of clothing products increased by an average of 7%.

The management of the company said that in a difficult market environment, the rich experience of CO managing credit risk with banks helps to maintain sales growth. In the future, the company will continue this development policy to ensure the debtor's stable solvency.

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(P) during the peak season of holidays, retailers in Europe and the United States often launch a variety of credit free shopping schemes with no pay and no interest to stimulate consumption.

For example, consumers who spend more than 299 dollars can not pay or pay interest in 6 months, or consumers who purchase more than 499 dollars can apply for a bank's credit card and enjoy a 18 month interest free period.

In South Africa, such promotions are not uncommon.

However, after a large number of purchases through credit cards, some consumers are unable to pay their bills on time, and the vigilance of banks and retailers is increasing.

In addition to improving credit standards by banks themselves, retailers are also collusion with banks in the relatively low risk of credit.

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< p > at the beginning of this year, Preiss < a href= "//www.sjfzxm.com/business/" > group < /a > (Mr Price group) announced the sales situation of its family supplies department.

In October 2013 ~12, sales increased 14.8% and same store sales increased by 10.5%.

To ensure the growth of the proportion of cash payments, the group's joint bank discussed more cautious credit measures, including measures to reduce credit promotions, raise credit scores for minimum accounts, and lower credit lines.

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