Woolworths, the South African retailer, aims to expand its clothing chain by opening smaller stores in townships where it currently has no presence, with plans to open about 20 shops in the current financial year.
- The existing 10 stores in townships, including Gugulethu, Thembisa, and Giyani, are expected to eventually increase to around 100 in the medium term, according to CEO Roy Bagattini.
- The trend of retailers and restaurateurs opening smaller-format stores in townships is growing as they seek to tap into the untapped spending potential of the informal economy.
- Woolworths’ smaller fashion stores, spanning 300m², are nearly 10 times smaller than the traditional 2,000m² stores found in shopping malls. The limited stock range is compensated by a unique product offering and skilled employees who excel in styling and selling.
- Unlike traditional self-help outlets, the smaller stores will have more engaged customer service employees who actively encourage customers to try on clothing, creating a more personalized shopping experience.
- The smaller outlets will have shorter leases and the limited stock will facilitate easier replacement of items that do not sell well.
- Woolworths reported significant financial growth, with profit before tax increasing by almost a third and the dividend rising by 36.4% to R3.13 per share. The company’s turnaround strategy, including cutting debt and selling the struggling David Jones business, has contributed to its improved performance.
Woolworths’ expansion into townships through smaller stores reflects its strategic focus on growth and capitalizing on the potential of previously underserved markets. By tailoring their approach to meet the unique needs of township consumers, Woolworths aims to tap into new revenue streams and further solidify its position in the retail industry.