International brands appeal to SA

Marco Cicoria

Generally, during a recession, brands will look for a new market. South Africa however, is one of the most price sensitive markets in the world and brands need to position themselves cleverly within this pricing structure, taking careful heed of the impact of exchange rates and import costs on retail prices. Ideally, they want to position themselves in a similar category to where they are globally and cannot take the risk of out-pricing themselves in a new market.

We have seen a revival in brand purchasing with big brands performing well. In South Africa, these brands are targeting consumers that are not spoilt for choice. Because there has been a 10-year price war in the South African market with retailers driving to offer every day, affordable brands, there has been little focus on the high-end consumer. The reality is that there are still affluent shoppers in the mid to premium fashion brand tiers. These shoppers generally travel extensively, can relate to international brands and are willing to pay a premium for quality merchandise.

The secret to taking a brand successfully into any new country is having the correct local knowledge and market intelligence available. He says the South African retail market is unique because of its retail structure. The 'suburban retail centres model' - successful in SA - is very different to the 'high street market model' evident in most European and British cities. Only through understanding the unique attributes that our malls offer, can brands penetrate this market. This is where a local partner can help with brand positioning, retailer negotiations, pricing, import duties, partnering with financial institutions, marketing and the like.

Just how the introduction of new international brands into the SA market will affect local brands is yet to be seen but there is a market for both. We don't believe the introduction of these brands will affect local markets as much as we may think. Ted Baker for example is a quality, luxury brand but sold at an affordable price when compared to other premium brands. It has been highly successful in the UK because of this philosophy. It will be positioned differently to most local brands and even the existing international premium brands already in South Africa.

The SA retail market and consumers are hungry for exciting international brands. We are in the midst of a consumer revival and now is the time for international brands to start testing the South African waters. It is a lucrative market if approached in the right way.