Samantha Enslin-Payne
Clothing retailer Naartjie Kids aims to open a further 50 stores in the Middle East and north Africa by 2015 after entering the region in July and will continue to expand in the US and South Africa while it seeks out new markets.
Managing director Glenn Wood said recently that, by the end of the year, the company aimed to have 20 stores in the Middle East and an additional 50 stores by 2015, including in north Africa. Currently the company has seven stores in Saudi Arabia.
This is part of a multiyear licensing agreement with Fawaz Alhokair & Company, a retail group based there.
The group currently has 52 stores in the US and 25 in South Africa. The plan is to open between 10 and 15 stores a year in the US and between four and five new outlets each year in South Africa.
Wood said retail space was restricted in South Africa and the group was already in the big malls.
“We will only go into a location if the mall, the size of the store and the rental is right,” he said.
The ideal size is between 80m2 and 100m2. “Any bigger and trading densities suffer.”
New geographies being considered are Canada, Japan, Brazil and the UK.
Wood said expansion into the Middle East was the group’s first foray into franchising, which is a model that would be used in unfamiliar markets, such as India, China and South America.
Naartjie Kids was started 21 years ago, by Anne Eales who, unable to find suitable clothes for her young sons, designed clothes for them and initially also sold these clothes at Greenmarket Square fleamarket in Cape Town, before it became a formal retail brand.
About eight years ago Eales sold the business to US investors, but they were unable to fund business growth and it was then sold on to US private equity firm Nogales in 2008.
Eales still has a stake in the business and continues to head the group’s design studio in Cape Town, where all Naartjie merchandise is conceptualised.
Clothes sold in South African stores are primarily made here, but clothes for other regions are made in China.
Woods said the volume for South America, once stores were opened there, would come to South Africa.
He said the problems in sourcing merchandise for the entire group in South Africa was that the local textile industry was in trouble.
“The biggest challenge is manufacturing continuity. Twenty years ago the textile industry was robust, but retrenchments and downsizing have resulted in a dearth of technical skills.”
It would be too costly to import fabric into South Africa for the clothes to be made here and then exported to the US and the merchandise could not be made up in time to meet the tight timelines for delivery of 10 to 11 full ranges a year.
Wood said group annual growth in revenue in the year to date was in double digits, off the high base created by last year’s World Cup. “We did not believe we could make these kinds of numbers,” Wood said.
Naartjie Kids targets upper-income consumers in South Africa but, as the brand is aspirational, it is also frequented by middle- and lower-income consumers on occasion.