Battle of the brands as popular clothing stores shut down in SA

Cape Town - All standalone Mango clothing stores and Nine West shoe stores have closed down, while other international groups such as River Island are busy shutting down as well.

Many retailers that operate in South Africa have reviewed their strategies amidst the trying operating conditions, greater competition from international giants such as H&M, and new online shops that are eating into their market share.

Nine West and Mango’s licences are both held by The House of Busby.

The House of Busby CEO Mark Sardi said the company decided to close down the two brands after considering their financial performance.

“We constantly review the performance of our brands, based on how relevant the products still are, and based on the partnership model with the international brands, as well as economic factors, we then decide whether we should invest or divest.”

Fans of the famous brands should not feel too aggrieved as they would still be able to purchase the brands in Edgars stores. But in Nine West’s case, this will only apply to its handbags.

At the end of March, The House of Busby owned seven Mango stores and eight Nine West stores.

Sardi said Mango and Nine West’s sales contributed less than 5% to The House of Busby’s turnover. “The closing down of the shops has not had a real impact on the group’s profitability.”

Edcon’s decision

Edcon in May announced that it made a strategic decision to stop stocking certain international brands in its Edgars shops.

Edgars is a department store, which means other brands are awarded shelf space within its stores.

Brands that will be discontinued include Express, Geox, Lucky Brand, One Green Elephant, Tom Tailor, River Island and Vero Moda.

This is part of Edcon’s reversal strategy after years of struggle. The international brands' profit margins are not as big as the group’s own brands.

Sardi said it was normal practice for a small retailer such as Busby to reevaluate its brand portfolio. This empowers the group to investigate new opportunities and focus on growth.

He said this helped the group to consider a change in consumers’ preferences in reviewing its brands portfolio. It also aided the group in improving its profitability over time.

According to Sardi, there have been no job losses and all employees had been redeployed to its other shops, which includes Aldo.

Asked if more shops would be closing down, the chief executive said they constantly reviewed their performance. Brands’ performance in the different shopping centres and the shop sizes are all checked to ensure that capital is optimally utilised.

Some of the Nine West shops have been rebranded into Steve Madden shops.

Mvula Seroto, an investment analyst of Catalyst Fund Managers, says many retailers in South Africa - especially clothing retailers - are feeling the pressure from the dismal economy as well as hefty competition from international groups like H&M and Cotton On, which recently opened in South Africa.

According to Seroto, Edcon also began to review its stores, while Stuttafords will close the last if its stores by August.

Another brand that entered the South African market in the last two years, the UK’s River Island, will also close its doors in the next two months. Some of the shops have already closed down and the other shops will shut before the end of September.

River Island had six standalone shops. Its shops within Edgars will close at the end of August.

Seroto says the shops closing down would cause a headache for the big shopping malls. "It will probably temporarily affect their income, while they search for new tenants."

In Stuttaford’s case, its massive shop in Cape Town’s Canal Walk is ready to be occupied by H&M once they move out.

* This  story was first published in Afrikaans on Netwerk24. To read more business news in Afrikaans, click here.

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