Abstract
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Executive summary
Unfavourable macroeconomic conditions induce slow growth
The clothing and footwear market in South Africa experienced a marked overall
slow-down of growth over the review period, in both volume and value terms, on
account of unfavourable macroeconomic variables such as high interest rates
and inflation, which eroded consumers' disposable incomes. The implementation
of the National Credit Act also impacted on consumers' access to credit and
negated the overall growth in retail sales.
Import quotas fail to achieve desired objectives
The imposition of import quotas on Chinese clothing and textiles had a
generally negative impact on the supply chain, which led to restrictions on
supplies and a lack of variety, which adversely affected the sector' s
performance. While the initiative was designed to support local clothing
manufacturers' production capacities and protect jobs, its implementation fell
short and failed to achieve the expected objectives. Interruptions in supply
as local manufacturers failed to match demand led to a decline in market
performance.
Financially independent female consumers begin to make a difference
Women' s tops and women' s shirts and blouses displayed strong growth over the
review period, and this impressive performance may be attributable to the
introduction of new designs and styles and to the developing trend towards
financial independence among female consumers. The growth in the market for
female consumers has been complemented by an increase in the level of
advertising and trade promotions by retailers targeted at them.
Established formal retailers continue to dominate
The overall market for clothing and footwear can be described as mature, and
it is highly concentrated, as demonstrated by the dominant positions of
established retailers such as the Edcon Group, Foschini, Pepkor and Truworths.
The review period has also witnessed a gradual movement of market share away
from the informal sector to the established retailers, where the Edcon Group
and Pepkor dominate. The rise in the number of shopping malls consolidated the
migration of market share towards the established brands, who are the
preferred tenants at these development complexes.
Prospects look bright as trading conditions are set to improve
Improved market performance in the forecast period will depend on the expected
changes in macroeconomic conditions. Interest rates are likely to decline
while the rate of inflation is expected to fall. This will lead to a rise in
consumers' disposable incomes, and in their discretionary spending, at a time
when the ending of import quotas on Chinese clothing and textiles will lead to
a flooding of the market with cheap merchandise, although continued
restrictions on access to consumer credit on account of the National Credit
Act may slow down the anticipated growth.
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