Most people don’t realise just how big Shein is, TFG CEO Anthony Thunström said as he announced his company’s Bash website and app are now SA’s fourth-most-visited retail sites, after Takealot, the Chinese retailer and Amazon.
That measure is based on three firms that monitor website traffic data, though they don’t gauge whether site visits lead to actual sales.
Announcing its results for the half-year to end-September, TFG said its Bash app and website that sell more than 30 of its brands were driving online sales, which grew 56.5% in the period.
In February, TFG launched the Bash app that brings together goods from multiple chains including Fabiani, Markham, Sportscene, Foschini, @home, Jet, Sterns and Coricraft.
The app is expected to be profitable in three years.
TFG said 26% of buyers on the app were first-timers who hadn’t used its online outlets before. TFG Africa sells just more than 4% of goods online.
Still, the Bash app and website attracts fewer visits than Chinese online retailer Shein.
Shein, whose founder Chris Xu does not give interviews, uses a network of Chinese factories and advertises more than 2,500 styles a day on its site at low prices.
Believed to be one of the world’s highest revenue-generating clothing retailers, it uses AI to track fashion trends and responds with new styles within days.
Global phenomenon
SA clothing retailers have refused to say how Shein is affecting them, but the National Clothing Retail Federation, which represents large retailers, complained to the department of trade, industry & competition earlier this year, which suggests it poses a threat.
“Shein has become a global phenomenon,” Thunström said. “And it’s already probably bigger than most people think in SA.”
Still, its target market is mainly female teenage fashion, to which, Thunström said, TFG has little exposure.
Consumers importing Shein goods are paying a 10% customs duty — the government levy charged for small parcels — while retailers pay a 45% duty on imported Chinese clothes, handbags and shoes.
The 10% duty is however being abolished in favour of the 45% tariff, said Thunström.
“Frankly, it was artificially cheap,” he said. “The majority of people are [now] paying 45% duty as everybody else would.”
TFG said on Friday that group revenue grew 12.9% year on year to R28.4bn, boosted by new stores and acquisitions.
TFG Africa’s retail turnover grew 17.3%, driven largely by the clothing and homeware merchandise categories, despite higher unemployment rates, reduced consumer confidence and continuing load-shedding.
TFG Africa reported price inflation of 9%-10% in its first half and like-for-like store sales grew 4.2%, indicating that volumes in same stores are falling.
Still, it is growing through expansion of some of its brands that it believes are sustainable.
The company also has clothing businesses in the UK and Australia where sales slowed as expected. In the previous half to end-September 2022, consumers were coming out of strict lockdowns and spending heavily on work and event wear.
TFG said keeping up with that after the lockdown boom was unsustainable but both countries’ revenue are above pre-Covid-19 levels.
TFG Australia’s retail turnover fell 7.2%, due to the effect of higher inflation and interest rates on customer demand. Retail turnover in TFG London fell 10.5%, but its gross margin was constant.
Overall group operating profit improved 1.2% to R2.7bn, but profit was down 15.9% to R1.3bn and headline earnings per share, a common profit measure in SA that excludes certain items, fell 15.3% to 393.6c. The interim dividend was lowered by 11.8% to R1.50.
The group faced higher costs and interest on its R7.1bn debt.
TFG expects consumer confidence and the tough environment to continue.
“The outlook remains cautious, especially in the UK, with possible further softening in the coming months as many industries battle persistent inflation, higher energy costs and higher interest rates, which may have a negative effect on jobs and consumer confidence,” said the company.
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