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H&M

H&M shifts focus to African middle class

With production up and running in Ethiopia, Swedish clothing giant H&M said Africa could also be key growth market as the middle class continues to swell.

H&M shifts focus to African middle class
File photo: Hjalmar Hjalmarson Neideman/TT
"I think there is huge potential in Africa south of the Sahara when it comes to production," CEO Karl-Johan Persson told the Dagens Industri (Di) newspaper on Wednesday. "We started production on a small scale in Ethiopia and we'll see how it goes. It feels very interesting." 
 
With stores about to be opened in South Africa, the clothing chain is homing in on the growing middle-class. World Bank data on Purchasing Power Parity (PPP), a measure of what citizens' income affords them at home, showed that South Africans's cash clout rose by 10.6 percent between 2009 and 2012.
 
Estimates of the size of the middle class vary, but  Mthuli Ncube, vice president of the African Development Bank, told the IMF last year that some 300 million citizens of African nations are considered middle class – earning between $2 and $20 a day. There is, however, an important caveat.
 
"Half are what you call the floating middle class. They could revert into poverty very easily because of a death in the family, or some other shock," Ncube said.
 
The H&M CEO remained upbeat about the growth potential, and said, without specifying which markets, that the chain would likely add stores in other Sub-Saharan nations in addition to South Africa. 
 
"Africa is a continent where many countries are growing very quickly, where there is a growing middle class, and in the longer term a huge potential for sales," Persson told Di. 

The company's December sales were up by 12 percent, compared to the same month the year prior. The number of stores went up to 3,176 from 2,809 worldwide in the past year, the company noted.  

 

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H&M

H&M competitor to sponsor Sweden’s Olympic team

Six months after establishing itself in Stockholm, Japanese clothing brand Uniqlo has announced it will sponsor Sweden’s athletes at the 2020 Olympics.

H&M competitor to sponsor Sweden's Olympic team
Anna Hasselborg of Sweden's curling team tries out new kit supplied for the country's athletes by Uniqlo. Photo: Henrik Montgomery/TT

The clothing chain, one of the world’s fastest-growing retail companies, is also set to open more stores in the Scandinavian country.

“Swedes are so sophisticated and warm-hearted,” Uniqlo Europe CEO Taku Morikawa said, stressing how welcome his company has been made to feel.

Morikawa was in Sweden to present the partnership between Uniqlo and the Swedish Olympic Committee at an event at Uniqlo’s store on Hamngatan in Stockholm.

Sweden’s athletes wore teamwear supplied by H&M at the last two Olympic Games.

The Stockholm store, Uniqlo’s first in the Nordic region, opened its doors in August 2018. An expansion is now planned on the Swedish market, although Morikawa declined to reveal where.

“We definitely have plans to open more stores here,” he said.

A store will also open in Danish capital Copenhagen in the coming spring as Uniqlo’s holding company Fast Retailing continues its global expansion.

Sales figures in Sweden’s clothing retail sector have seen a downward trend in recent years, with an exception in 2015.

H&M is usually cited as one of Uniqlo’s main competitors.

The impact of a new player on an already-competitive market is difficult to predict, according to the Swedish Trade Federation (Svensk Handel).

“Locally, competition is sharpened, but competition is already fierce. I would be inclined to say that this type of partly new concept store can, instead, help to revitalise the physical retail sector for clothing,” the association’s head economist Johan Davidson said.  

READ ALSO: H&M profit down sharply despite rise in online sales

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