No-frill fast-fashion retailer Mr Price is testing smaller format stores in a bid to get closer to where its shoppers live. The new stores are built in containers, and resemble Shoprite’s USave ekasi container shops which were launched in townships around South Africa three years ago.
The Usave eKasi container shops.
Formal retailers have in recent years become increasingly eager to tap into the flourishing township economy, and have sought to entrench their presence in these neighbourhoods.
Another example is Pick n Pay, which launched a new franchise model where it partners with local spaza owners. As part of the franchise agreement, the retailer upgrades the entrepreneurs’ spaza shops which are then managed under the Pick n Pay brand.
Matthew Warriner, Mr Price’s head of investor relations and corporate communications, says the group’s new micro store concept aims to bring fashion closer to the community.
“Our customers have been asking us to become even more accessible… and this one-store test is to provide customers with a convenient shopping option, saving them from the time and cost of travelling to shop at Mr Price,” he said.
The first of the container stores was launched in Illovo in KwaZulu-Natal.
(Mr Price)
The store stocks a combination of ladies, mens and kids merchandise and has the same fashion assortment found at its other stores of a similar size.
Inside the new Mr Price container shop (Mr Price)
“The response and support from the local community has blown us away, we are really pleased with the results to date, albeit very early in the (testing phase),” he said. All employees have been recruited from the local community and Mr Price rents the space from a private individual who owns the land.
Warriner said following the Covid-19 pandemic and lockdown consumers are increasingly opting to shop closer to home, instead of at large regional malls.
“Our micro, small and medium sized stores have performed well and this store concept is being tested to align with our customers preferences,” Warriner said.
Alec Abraham, equity analyst at Sasfin Wealth, welcomed Mr Price’s new venture.
With the growth of online shopping having a more pronounced impact on the retail industry, retailers the world over will be compelled to rethink real estate strategies, he told Business Insider.
“Most of our retailers have reported that their online store is now their biggest single store.” Abraham says retailers increasingly have to reconsider the cost of maintaining a large network of stores.
“It’s probably better for the retailers to try different strategies than to apply what works internationally in South Africa without trying a more cost effective way of reaching the population,” he said.
He added that retailers – which were hit hard by the lockdown and pandemic – are currently more likely to abandon plans to open more stores, opting instead for smaller stores or shuttering underperforming stores.
Theoretically, if Mr Price’s moves aggressively into the township market, this could steal market share from Pep and others in the increasingly competitive value retail segment.
But Abraham believes that Mr Price is a fashion brand, and it doesn’t necessarily compete directly with Pep, which is a “utility brand”, that offers more functional clothing.
Ntando Thukwana , Business Insider SA
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