Alarm bells for R209 billion industry in South Africa 

South Africa’s apparel and footwear industry is the largest in Africa, with a value of R208.6 billion ($11 billion) in 2023. However, due to the high cost of living, South Africans are expected to cut spending on non-essential goods, threatening the industry’s future growth. 

This was revealed by Euromonitor International research, which said the industry’s strong growth is linked to its developing retail infrastructure and chain stores. 

Nigeria’s footwear and apparel industry also recorded strong growth of 5% last year, just below South Africa’s 6%. 

The West African country’s retail landscape relies on informal markets, accounting for over 80% of sales. 

“Despite being a small market by global standards, Africa occupies a growing percentage of the global apparel and footwear market,” Consultant at Euromonitor International Rubab Abdoolla said.  

According to Euromonitor research, Africa contributed R454 billion ($24 billion) to global textile and apparel exports in 2023.

“Retail value sales growth in key markets like South Africa and Nigeria was over 5% last year. This robust growth signifies burgeoning regional demand, driven by diverse clothing options and evolving fashion trends.”

However, the South African industry will face significant headwinds in the near future, with 20% of South African respondents saying they will reduce spending on clothing and footwear in the next few years. 

With high inflation and economic woes like high unemployment and declining disposable incomes, consumers are prioritising essential spending. 

Equally, the pandemic has made consumers realise the importance of self-care, and spending has shifted away from goods to services.

“While overall spending on clothing and footwear is expected to decline, it is not being completely phased out from consumers’ budgets,” Abdoolla said. 

“Rather, there is a shift towards downgrading to more affordable options like value brands or good quality second-hand garments.”

Retailers have chosen to absorb rising raw material costs to maintain consumer appeal, resulting in lower profit margins. 

“Affluent and digitally connected consumers are broadening their shopping horizons by purchasing clothing from overseas. In South Africa, Shein’s rise in popularity can be attributed to its competitive prices and attractive offers, such as free shipping.”

Research from Euromonitor shows that 5% of South Africa’s apparel and footwear sales occurred online last year compared to 2% in 2019. The rapid growth of Chinese fast-fashion giant Shein has driven this. 

Shein has grown rapidly worldwide, including in South Africa. The Chinese retailer generates more than double the revenue of all JSE-listed clothing retailers and is valued at ten times their combined market capitalisation. 

Its app has become the most downloaded overall and in the shopping category on the Google Play Store while also ranking third overall on the Apple App Store. 

Shein’s success is attributed to its competitive pricing, ability to ship directly to South Africa, and affordable deals that enable customers to purchase multiple items without exceeding a certain budget. 

Despite longer delivery times, Shein’s cost-effectiveness has resonated with South African shoppers.

“Despite this, informal trade remains dominant in Africa. Cheap imports flood open markets, offering competitive prices for lower- and middle-income consumers,” Abdoolla said.