South African retailer Mr Price is looking to source 20 million more units of clothing and homeware locally in a shift away from constrained global supply chains, its CEO said after the company reported a rise in half-year earnings.
South Africa’s government offered tax incentives in 2019 as part of a programme to encourage retailers to source more goods locally, but the recent spate of supply chain problems in Asia has added urgency to what had been a slow shift.
Clothing and shoe retailers globally are grappling with strained supply lines that have driven up shipping costs and times, which means products take longer to arrive in shops.
Mr Price, owner of clothing, homeware and sports chains, currently sources 40.3% of its products from China and 39.2% from South Africa.
CEO Mark Blair said the group would increase the units of its products sourced locally to 100 million from 79.1 million in the medium term.
“Over the last 12 months we’ve on-boarded 43 new local manufacturing suppliers and when you do those kind of things one of the consequences is that you reduce your dependence on China, which came down 230 basis points year on year from last year,” Blair told analysts.
Mr Price is also diversifying into other strategic markets, which Blair did not want to mention yet.
Similarly, upmarket rival TFG said earlier this month it wanted to manufacture 30 million pieces of clothing a year locally within four years, up from 11.5 million currently, and is adding furniture and jewellery to its growing local list.
Mr Price reported a 34.4% rise in half-year headline earnings per share, with retail sales increasing 37.8% to R11.9 billion ($750.53 million), boosted by acquisitions and marking a rebound from a low base in 2020 when it was affected by virus-related lockdowns.