Retailer has cottoned on to SA

Australian retailer Cotton On Group says South Africa is its fastest-growing market of the 17 countries in which the company operates.

South Africa has attracted a range of global brands such as Zara, Gap, Topshop and River Island, many of which see the country as a new income stream in a relatively untapped market, as well as a stepping stone to other sub-Saharan markets.

The surge of consumer culture on the continent presents a compelling investment case for international companies, which are looking at rising emerging-market wealth to offset sluggish growth in traditional economies.

Labels such as H&M and Forever 21 are to open in South Africa.

Global consultancy McKinsey & Company said Africa's top 18 cities could have combined spending power of $1.3-trillion by 2030 as consumer culture grows.

Cotton On, which has been operating in South Africa for three years, has 100 stores here.

"South Africa plays a critical role in the ongoing success of our business, and is a key contributor to the 30% growth we have achieved globally for the past three years," Michael Hardwick, chief financial officer, said.

Last year, the group opened 27 stores in 27 days before Christmas, surpassing R1-billion in sales.

Robert Kenny, group executive of property, said Cotton On's 1200m² Sandton City store ranked among its four top-performing stores globally. The store is being refurbished - its size will increase 30%.

"With Eastgate and Gateway opening this year, we will have flagship stores in the top 10 centres in the country. There are at least another 50 centres on our target list in which we can open multiple brands. And with plans to expand our store footprint into Southern Africa, we're confident that within the next five years we'll have 300 stores in the region," he said.

The privately owned group was founded in 1991 and has more than 13000 stores in Brazil, Hong Kong, New Zealand and the US.

Independent analyst Syd Vianello said local operators such as Truworths, Foschini Group and Edgars were losing market share.

"A typical store will do R50-million a year. With 100 stores, we're talking a lot of turnover. Where is that coming from? Established players. They can't grow at the previous rate because the growth in the market is going to the newcomers; that will happen as long as they keep rolling out."