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Does Africa really need the Gap?

The continent's first store opens in Joburg, with other-worldly prices.

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The new Gap store in Johannesburg's Sandton City shopping mall. (Erin Conway-Smith/GlobalPost)

JOHANNESBURG, South Africa — Promising its "casual American style" to South African shoppers, Gap, the giant San Francisco-based clothing chain, opened its first shop in Africa this month. But its prices here are far from casual.

Prices are two to three times higher than in the US — for example, 1,000 rand ($130) for a pair of jeans, or 300 rand ($40) for a plain T-shirt. And so far, there is no sales rack offering discounts. This is not the affordable Gap that American shoppers expect.

"True, true, but we ship this stuff over you know," a sales clerk named Thembakazi told a customer who complained about the steep cost of the goods.

While import duties for South Africa are indeed high, they do not seem to account for the higher charges. The Johannesburg store is located in a newly opened wing of Sandton City mall, in the wealthiest part of the city, alongside retailers such as French Connection, Ben Sherman and watchmaker Tag Heuer. Other shops in the mall include Gucci and Louis Vuitton.

At the Gap shop, many of the clothes on display bear the brand's distinctive logo in big block letters, for consumers who may want to flaunt the American brand.

At a time when established markets are struggling — and the number of Gap stores dropped by about 5 percent in the US last year — sub-Saharan Africa is a bright spot with a young population and economic growth averaging 5 to 6 percent, according to IMF figures.

South Africa’s economy is Africa's largest, with a GDP of $363 billion, but the wealth is distributed so unequally that the market for fashion clothes is relatively small, said Chris Gilmour, an analyst for the investment wing of ABSA, one of South Africa's largest banks. The real prize will be the rest of Africa, with potentially lucrative markets in Nigeria, Angola, Kenya and elsewhere, he said.

But supply chains are “incredibly difficult,” Gilmour said. “It’s going to be a very long road. Anyone who comes into the African market has to be prepared for it to take decades.” 

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Spanish clothing retailer Zara has opened two South Africa stores in the last six months, while Gap is planning to open another shop in Pretoria later this year, through its franchise partner Stuttafords, a major South African department store chain.

Other international retailers looking to set up shop in South Africa include the UK’s Topshop and American clothing brand Abercrombie & Fitch.

Gilmour said it is the first time big international brands are moving into South Africa and challenging established local retailers, such as Truworths and Edgar’s, that became entrenched during the years of apartheid, when foreign companies shunned the country.

He said Gap’s high-price gambit will be successful because South African consumers are willing to pay more for what are perceived as higher quality goods.

“Clothing in South Africa has been very poor quality and very expensive,” Gilmour said. “In a South African context, because it is reasonably high quality, Gap is seen as being upper end.”

Gilmour added: “If enough people believe that it’s high quality, they are going to buy it and they are going to want more and more and more, even if they can’t afford it.” 

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http://www.globalpost.com/dispatch/news/regions/africa/south-africa/120329/gap-south-africa-retail