JANINE van Zyl is a retail analyst at Old Mutual Investment Group South Africa.
SUMMIT TV: Monday was an interesting day for South Africa retailers, with Mr Price online going live with 18000 items on offer for tech-savvy customers, and Edcon saying it is bringing the Topshop and Topman brands to South Africa in conjunction with the House of Busby.
Mr Price has been one of the best growth stories in the retail sector. Will this online move entrench that position?
JANINE VAN ZYL: It probably will - we see Mr Price as the retailer for the youth, and this is another channel to get to those youths. Having looked at the website, it's really exciting and easy to navigate on smartphones and PCs.
STV: Does this translate into greater sales or would there be a similar sales pull at the end of the day?
JVZ: You're getting the same product so that doesn't change - but this does make it far easier if you're not able to get to a store or if the store near you doesn't have the item you want. It does translate into greater sales - in Australia, for example, we've seen about 5% of Country Road sales coming from the internet, where you don't have to pay rent to landlords, so sales are more profitable.
STV: Is this going to have a cost benefit that we will see coming through in the results? Will this be small starting out?
JVZ: As a start it will be small. We won't notice it, and we might see the cost of setting this up rather than the uptick in sales, but as soon as sales start ticking up from 5% to closer to 15%, as in the UK, with lower costs, then we will notice the difference.
STV: Is this going to get more market share for Mr Price?
JVZ: There is a bit of first-mover advantage - that's not to say once the others go online they won't get some of that back, but Mr Price will be entrenched. The reason why nobody has been able to do this is they don't know how to deliver, but Mr Price has obviously got around that and will deliver to your door.
STV: What are the risks and difficulties? Presumably they're not going to use the Post Office?
JVZ: There are three options: delivery to your house, delivery to your post office or delivery to the closest Mr Price store. The cost is not very steep - R35 for delivery, which I tried today.
STV: So they're hoping the Post Office plays ball?
JVZ: You can choose.
STV: Have they spanned the living standard measures (LSMs) from one to 10? We hear about well-heeled ladies shopping at Mr Price for accessories, and they seem to have the right mix? Will this entrench that position?
JVZ: I think it will. The LSMs 4-6 are not yet that tech savvy, but LSM 6 and 7 are coming on fast. Mr Price has always had a wide customer base, starting at the higher end and moving downwards. This will entrench it further.
STV: What did you make of the news of Edcon teaming up with Busby to bring Topshop from the UK to South Africa?
JVZ: It's always exciting for the consumer to see other brands here, but I'm a little sceptical about the model that was chosen. It's a little different from Zara, which has come out itself, which means it can afford to keep prices slightly lower. We've seen others coming out with the "middle man" business model, such as Mango, where prices were quite high, and GAP. The reason why prices were high is the extra cut. It's going to be interesting to see whether that will be the case with Topshop, which is lower priced in the UK. It's a fashion-savvy young brand, so young people will be happy to see it here.
STV: A recent article mentioned Edcon's "years of stagnation" and how it seems to be coming out of that. Analysts seem to believe Edcon has lost the most market share, having been crippled by debt and not being able to take risks?
JVZ: It has been crippled and lost a lot of market share. That probably will change in time because it is doing the right things. This is one small thing but it's also an indication that management is prepared to do things slightly differently. We look forward to Edcon getting everything in order.
STV: Could this be a prelude to a relisting?
JVZ: I wouldn't say Topshop would be a prelude to an Edcon relisting, but getting everything in order may be. Getting the systems in order and its stores up to date and the right product on the shelves would be required.