UK’s high street retailer Next, is the latest in a long line of fashion retailers to target the South African market. But unlike counterparts like Mango and the soon to arrive H&M, it will not open any physical stores, or even any stores within a store.
Instead Next will launch in conjunction with Spree, the fast growing online retailer that is housed within Naspers’ Media24 stable.
While Next has a chain of over 500 stores in the UK and Ireland and at least 200 franchised stores internationally, the online channel is also a driver of growth and the company is the biggest online retailer in the UK.
It sees a fit with Spree, which was launched 18 months ago and is becoming the go-to destination for South Africa’s fashion conscious shoppers. Initially Spree targeted women with its mix of South African design and global brands like Levi’s, Guess, Ben Sherman, Pringle, and Hurley. But this range has expanded to include menswear, kids & babies, beauty, gifts and homeware. Next sells a remarkably similar range of products in its stores.
Online shopping in South Africa is growing fast, but Spree launched with an in-built advantage – a trusted relationship with its online community. It was first launched as Sarie.com, the online shopping portal for the fashion magazine of the same name. Sarie is the country’s leading glossy magazine and boasts about 763 000 readers.
“Sarie had established a relationship with its community through its website which attract 250 000 to 500 000 visits a month and Facebook which has about 60 000 likes,” says Spree GM Louna Lohann. “An online store was an extension of this.”
The success of Sarie.com led to the decision to expand the concept to include other magazines. In April Spree was launched and included seven magazine titles in its line-up. This has grown to include 15 titles, not all of which are Media24 magazines.
“These magazines have their own online platforms, but they click through to us for shopping and fulfillment,” says Lohann. “It makes sense to partner with a company like Spree – we are a mall concept.”
It is difficult to get a sense of how big Spree is, and what volume of clothing Next can expect to sell through this portal.
Lohann does not disclose details but says that in the first three months of trading Spree grew by 250%. Growth has moderated, but within SA online fashion is growing at over 30% a year, while traditional retail growth is around 5% a year, she says.
The online business will be profitable within five years. “We are investing in building a sustainable business – into warehousing, accurate stock management and other retail related intellectual property. But I can tell you that our margins are good. We haven’t cut the margins to drive volumes.”
The Next brand will be available from September.