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Mr Price to launch online shopping
Mr Price to launch online shopping

Mr Price to launch online shopping


Fin24 - May 25th 2012, 08:22

Johannesburg - In an aim to grow market share, fashion retailer Mr Price Group [JSE:MPC] will launch an online shopping platform later this year.

By global standards, the e-commerce platform in SA is small, but online retail sales have shown a steady increase over the last five years as the one-time timidness of South African shoppers takes a backseat and a growing number of time-poor and techno savvy consumers turn to the net for retail therapy and bargain hunting.

A recent study from MasterCard, revealed that online shopping had increased in SA and continued to show potential for growth.

The company's Worldwide Online Shopping Survey said that the number of South Africans shopping online had steadily increased over the past two years, with 58% of respondents in the survey of active internet users saying that they used the internet for shopping.

This was an increase from the 53% that said that they shopped online in 2010, and the 44% that gave the same answer in 2009.

According to Arthur Goldstuck, MD of World Wide Worx, once people are experienced Internet users and go online regularly, their propensity to shop online increases dramatically.

"The key is to convert that propensity into shopping behaviour," Goldstuck said.

He believes that from 2013 the participation curve will rise significantly and quickly, which will lead to growth in the number of online shoppers and online shopping options available.

On Wednesday, Durban-based Mr Price reported a 19% rise in diluted headline earnings per share to 464.5 cents for the year ended March, from 388.8 cents a year ago. The current financial year comprised 52 trading weeks, while the prior year included 53 trading weeks, the group noted.

Operating profit grew 21.7% to R1.5bn, and revenue rose 10% to R12.1bn.

The company's success stems from its fast-fashion model which tracks offshore trends from the likes of Topshop, Mango and H&M, and delivers fashion offerings timeously, at affordable prices.

Mr Price's return on equity increased from 46.0% to 47.2%.

Retail sales for the 52 weeks increased by 10.2%, while sales in like-for-like locations were up by 8.2%. On a 52 week on 52 week basis the sales increase was 12.6% and comparable sales were up by 10.3%.

Mr Price's Apparel chains increased sales and other revenue by 13.7% to R8.7bn with comparable sales up by 10.6% and retail selling price inflation of 4.6%.

In the forthcoming year, the company is targeting space growth of 5%, resulting from a mix of approximately 70 new stores being opened, the expansion of highly performing stores and the reduction in size of poorly performing stores.

Enlisting the help of UK design consultancy Dalziel and Pow, Mr Price late last year opened the first of its new generation stores featuring a new brand identity and concept.

Dalziel and Pow have worked with brands such as Next, Sony, Primark, Levi's, Topshop and Nokia.

Looking ahead, Mr Price's first corporate-owned store in Ghana is expected to open in June.

The company joins a growing list of local players manoeuvring into African territories, as the often-quoted one billion African consumers ripe for the picking become the next hot ticket.

Upmarket retailer Woolworths Holdings [JSE:WHL] is in the throes of a "big push" into Africa, with plans to add 16 stores this year taking the total number of African stores to 60 in the current financial year.

The first Mr Price Apparel test store was opened in Nigeria on March 29 and the group said early indications were positive.

Nigeria's potent potential has made it the bull's eye of foreign and local retail companies as the 'country de jour' in which to set up shop, despite obvious risks in the most populous country in Africa.

Nigeria's decision to lift a ban on imported textiles has unleashed a flurry of excitement among retailers and construction, spurred by the need for formal retail experience in key cities, is also driving the country's retail boom.

South Africa's Pepkor is in the midst of its R100m first phase expansion plan into Nigeria, in which it aims to open 50 outlets.

Even Spanish fashion retailer Mango has ambitious plans to have a presence in each of Nigeria's major cities.

The company opened its first outlet in Lagos in 2009 and has since expanded to the capital Abuja. 

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