South Africa’s Mr Price Joins Australia’s Retail Invasion

Avatar
Written by Dana Sanchez

Retailers such as Target, Kmart and BIG W are likely to feel the heat from South African value retailer Mr Price, which plans to open its first Australian stores in October, Financial Review reports.

Mr Price decided to open brick-and-mortar stores in Australia after enjoying strong online sales there over the last few years. Despite its relatively small population, Australia is now one of Mr Price’s top five markets. Online sales give overseas retailers immediate scale and help them understand the local market, according to FinancialReview.

Mr Price faces heightened competition as global retailers enter South Africa and peers such as Woolworths look to add scale through apparel buyouts, BusinessDayLive reported in 2014.

Mr Price CEO Stuart Bird said the performance of new channels and markets was “very encouraging” and provided “early support for our intentions of taking our proven business concepts to new territories, rather than looking for acquisitive growth.”

Australia’s population is on track to hit 24 million this year, ABC reports. The country has about 150,000 South Africans living and working there, according to RainbowNation.

With more than 1062 stores, Mr Price sells mainly private label apparel, footwear, sleepwear, home wares and sporting goods.

Mr Price is expediting plans to open shops in Australia and now plans to open its first two stores under the mrp brand in October.

It made this announcement less than two weeks after U.S.-based TJ Maxx — largest U.S. off-price apparel and home wares retailer — bought Gazal Corp’s 35-store Trade Secret business for $80 million US, according to Financial Review.

Like its up-market South African rival, Woolworths — which paid $2.1 billion for upscale Australian department store chain David Jones in 2014 — Mr Price believes it is in a better position than northern hemisphere retailers to supply seasonally-relevant clothing and footwear, according to FinancialReview.

“As a business based in the southern hemisphere, we’re able to offer Australians a relevant, seasonal trend-led assortment,” Bird said.

Analysts say Mr Price and TJ Maxx will take business away from discount department stores such as Kmart, Target and BIG W, Harris Scarfe and Best & Less as well as value-based retailers including Reject Shop, Fantastic Furniture, Cotton On Group and Specialty Fashion Group’s Rivers chain.

TJX’s acquisition of Trade Secrets gives the U.S. retailer a significant foothold in the discount apparel and home wares sector dominated by outlets such as DFO and chains such as Kmart, Target, BIG W and The Reject Shop, FinancialReview reports. TJX plans to open as many as 10 stores a year in Australia in the next 10 years for a total of more than 100 stores. Trade Secrets sells national and international brands at big discounts.

Mr Price started its online offering in 2012 and now ships to more than 130 countries, according to BusinessDayLive in a 2014 report. The company at the time said it was planning to open stores in Nigeria and Ghana, and was looking at Angola.