Retail in the southern hemisphere used to have an entirely different set of rules and consumer preferences. Are the northern and southern hemispheres more alike than ever before?
Retailers are making a mistake if they’re writing off the southern hemisphere (SH) as their counter-season retail cousins. There are big changes in key markets, like South Africa and Australia, that all retailers should know about.
These markets are not exempt from the pressures felt by retailers worldwide, and despite a previous boom, are currently trading in a tough environment. Slow Christmas sales in South Africa added to a disappointing 2019 in its retail sector, and the devastating bushfires in Australia will continue to impact businesses over the coming months.
Additionally, the effect of coronavirus has seen delays in receiving shipments from China and leaves the local currencies in sensitive positions.
Despite these challenges, there is so much promise in the SH for local and international retailers. Using the EDITED Retail Decision Platform, we highlight the trends winning in the SH and how prices align globally.
Want the intel on how to tap into the southern hemisphere? Get in touch to see EDITED in action.
Growing local and international competition
For so long, SH had it pretty sweet. Thanks to geography and seasons, its niche market was largely unappealing to international retailers. However, in the last few years there has been continued growth of both local and international competition.
New overseas entrants to the SH market meant that local South African retailers have limited retail expansion opportunities. The major players there are now seeking out new African emerging markets, as well as international markets through acquisitions and license agreements.
Doubling down on the southern hemisphere
South African and Australian retailers have a distinct presence in each other’s respective regions due to proximity, parallel seasons and a similar consumer outlook. South African parent company Woolworths owns major Australian retailers such as David Jones, Country Road and Witchery. And despite Mr. Price closing retail stores Down Under, Aussie-born Cotton On continues to expand its physical presence in South Africa.
How SH retailers used to work
Even SH retailers who don’t want a slice of the international pie should be thinking more globally. But to do that, some internal processes need to shift.
SH retailers used to have a really fortuitous seasonal delay that meant they could watch their aspirational markets and act upon what they learned six months later.
With a trend lag expected in more remote locations, international buying trips were really fruitful. SH had 6-18 months to act on what they might have scouted overseas.
Now that social media has sped up trend turnover and the internet has provided consumers with global access to the fashion world, this practice no longer works.
Trends are global and they move fast. No longer can a buyer in Sydney hop on a plane bound for LA to check out the freshest trends – there just isn’t enough time to act on it upon returning home.
When you look at best-selling products in the past three few months, you can see how aligned consumer tastes are globally.
Consumers don’t care where the influencer they follow on Instagram is from. They want the same trends they see their equals wearing around the planet.
See the similarities in product again for sneakers.
There are pros and cons for SH retailers in this syncing of trends. SH consumers’ fast adoption of trends provides a great opportunity to spin frequent narratives around newness that will entice shoppers. But it also means international retailers are even more primed for directly speaking to what was once your local shopper.
So yes, expect a whole heap of new players in your markets with physical locations or targeted digital presences. Your faithful relationship with your shopper down the street is no more.
That means retailers need to go one better by owning product direction, its positioning and its price point.
More alike than different
The great thing is markets really aren’t all that different. If you look at mass market womenswear you can see how closely Australia, the UK and South Africa are aligned on price.
South Africa comes out as a little more price sensitive. There is a larger focus on the under $20 price point, specifically in dresses and footwear. That really supports deeper price analysis before the launch of new product.
Southern hemisphere opportunities
Sustainability – As the Australian bushfires intensified, more local and international retailers were using their platforms to raise awareness and support for the residents and wildlife affected by the tragedy. The disaster has served as a wake-up call to the fashion industry’s impact on the climate and we can expect SH retailers to be leaders in more sustainable practices to prevent future devastation.
Improved retail experience – While focused on gearing up their digital businesses, SH retailers need to ensure they’re delivering on the experiential front on the ground too. To create world-class retail experience, SH retailers need to embrace technology and enhanced convenience for the customer.
Truly own resort – The SH climate means local brands and retailers are experts in the resort game. The increased affordability of air travel means increasing numbers of consumers are taking vacations throughout the year. That’s resulted in retailers across market segments beefing up their holiday/vacation edits. This is a customer that SH brands, particularly in luxury and premium can really own.
Ones to watch
New Zealand
Campbell Luke – Māori owned and NZ made. This brand specializes in linens and natural fiber fabrics, and operates on a pre-order system to combat excess waste production.
Olli – A womenswear fashion label which included recycled textiles and 100% naturally dyed organic cotton in its latest collection.
Australia
A.Emery – Described as “pared back, minimal sandals for the urban and holiday environment,” this Instagram-approved footwear brand has achieved international fame stocked on MatchesFashion and Moda Operandi.
Bobby Universe – Hand-crafted handbag brand that promotes sustainable and ethical practices, as well as donates profits from every piece sold to mental health charities.
South Africa
Thebe Magugu – The winner of the 2019 LVMH prize, Magugu’s collection has recently launched exclusively at luxury e-tailer 24S.
Sindiso Khumalo – Shortlisted for the 2019 LVMH prize, the sustainable designer places an emphasis on handmade textiles and bespoke prints.
It’s going to take some smart strategic moves to truly capitalize from the shifts in SH retailers. However with the EDITED Retail Decision Platform, retailers can take the guesswork out of their global product and pricing strategies.
We’re ready, are you?
Contributions by Market Analyst, kayla.
Katie Smith
