Sir Philip Green’s decision to take Topshop and Topman into South Africa reflects growing interest in this market.

Topshop

Why are we talking about this now?

Arcadia revealed plans to open Topshop and Topman stores in South Africa last week. Sir Philip Green’s latest venture – a partnership with franchisee House of Busby – will launch in Johannesburg in November and the retailer expects South African consumers to respond well to its brands. The retailer will open concessions in department store Edgars, which is owned by the country’s largest non-food retailer Edcon.

What is the value of the South African market?

The South African economy has rallied well after a 2008 slump, and economic growth in 2012 is expected to be 2.6%, according to Planet Retail. Consumer spending is expected to be $219bn (£140bn) this year. South Africa also has a mature domestic retail base, including companies such as Woolworths and Shoprite. Some multinationals view expansion into South Africa as strategic, so that they are poised to move into the rest of Africa when the time is right.

Which international retailers are in the market?

Spanish chain Zara already has a presence in the country and Walmart’s acquisition of a 51% stake in Massmart last year was a significant moment for South African retail. Waitrose pondered a move into the market through a franchisee last year, although a partnership has not yet materialised. Speculation has been rife that Tesco is also exploring the market.

Why haven’t international retailers entered the market before now?

In the past, the country’s middle class had not grown fast enough to attract some of the biggest retail players. South African consumers also haven’t always been interested in UK and international brands, but this is changing. “It was a bit out of touch with the rest of the world until recently,” explains Planet Retail analyst Matthew Stych. “It wasn’t at the cutting edge of fashion, but that’s changing rapidly.”

How do retailers crack the South African market?

The relatively small size of the middle class means brands such as Topshop must pitch themselves as more aspirational than what they are perceived as in the UK, according to Stych. He says: “Companies such as Zara have gone in and located themselves in more higher-end malls than they would expect to in the UK.” It is also possible to target the less well off. Walmart is using its global supply chain to offer low prices.