The IBC Global Forum 2018 began with David Nourse, general manager of Laundresse International Pty Ltd., the holding company for Koola World and International Carpets. With more than 22 years of experience in the home and textile industry in South Africa and in both buying and selling segments, he has an in-depth knowledge of the South African market.
Nourse outlined recent political change with a new president and the tough economic period of a technical recession. Ideally positioned as the “gateway” to Africa, he sees opportunities for companies to enter this market. He also explained that ecommerce is growing.
South Africa Market Demographics (2017 data)
- 57 million people, average age 27 years old.
- Official unemployment is 26.7%, middle class is being eroded, and 55% of South Africans live below the poverty line, with 17 million supported by social grants.
- High inflation
- Utilities, housing and transport capture about 50% of the typical household budget.
South Africa is composed of nine provinces and 45% of the total population lives two provinces: KwaZuluNatal (19.6%) and Gauteng (25%). About 40% of economic activity is in Gauteng, which includes Johannesburg and Pretoria. The Western Cape, with Cape Town, provides 30% of sales.
Market Demographics
South African holiday sales are not centered on Christmas and Easter and focus on outdoor parties. Climate and long transit times mean selling for holiday sales is difficult.
Retail Overview
Mass Mart/Walmart as well as several chains maintain 200 stores. Pick and Pay, a grocery store with mass merchandise, operates 643 stores. Specialty stores and independent stores are a big market. Customers like the personal attention and merchants have a deep knowledge of their products. Department stores no longer exist.
Ecommerce
Internet access is growing rapidly, and often public buildings offer free WiFi. He noted specialty homewares site Yuppiechef and Takealot, which is a general website one-stop shop for all product categories.
Trade Fairs, Associations and Publications
- Trade fairs – SARCDA fair twice annually for wholesales/distributors to introduce new products. Not open to the public.
- No official trade publication, but trade shows publish magazines.
- Small wholesale community.
- Competitive market for distributor to capture new brands.
Price Sensitivity and Government Activity
South Africa’s Rand currency is volatile and has lost value against the USD, resulting in challenges for transactions to cover shipment prices. With the large inflow of Chinese imports, the government has clamped down on undeclared goods and is enforcing strict regulations on electrical appliances for local compliance. These developments can level the playing field for marketers. The country’s distant location results in expensive distribution costs and long transit times from US and Europe. On the plus side, the banking system has advanced and the government is enacting tough labor laws. It is easy to start a business and get registered and good margins are available.
Koola World Overview
Based in Johannesburg, Koola World was founded in 2001 and is one of five companies under the Cooper & Cooper holding group. Nourse outlined the responsibilities of the small staff—about a dozen—brand manager, sales reps, independent agents, web and telesales assistants handle wholesale, retail, online and specialty sales channels. They serve all markets: from chain stores to country market stands, game preserve lodges and bed and breakfast suppliers. Their main office and warehouse is in Johannesburg and they operate a showroom in Cape Town.
Consumers with sophisticated tastes travel internationally and are brand conscious. Europeans have been proactive in introducing their products in South Africa. Koola World represents brands that include Alessi, Ritzenhoff, Wilton, Lodge and Lekue.
South Africa is a base for entering the African market. Neighboring countries of Nabibia and Botswana have large German populations. Botswana is a strong partner, with a stable government, natural resources, fine education system and minimal corruption. Trade operates with favorable terms, frictionless deliveries to Botswana from South Africa.
Taking questions from the audience, Nourse remarked that social media marketing is growing, yet the most effective marketing happens in stores. He advised marketers to use brick & mortar stores for brand building. He commented on South Africa’ fine banking system, addressed currency conversions, duty terms and transport times.
