Retail Expansion in a Slow Economy: South African Clothing Giants to Open 600 Stores Despite Growth Downgrade

Amid a dimming economic outlook, South Africa’s top clothing retailers are forging ahead with aggressive expansion plans. Pepkor Holdings, The Foschini Group (TFG), and Mr Price Group three of the country’s largest apparel players have announced plans to open up to 600 new stores across the country over the next year. This strategy signals a strong push into underserved areas, even as the National Treasury recently revised the country’s GDP growth forecast downward from 1.8% to 1.6% for the next three years.

The new openings will primarily focus on discount and value-driven brands, targeting South Africa’s sprawling informal economy particularly in non-metropolitan regions. “There’s a lot of cash that isn’t counted in GDP statistics,” noted TFG CEO Anthony Thunström, underscoring the opportunities that exist beyond major urban centres.

However, not all retailers are following the same path. Food chains like Pick n Pay and Spar are taking a more conservative stance, expecting minimal store growth amid the country’s retail saturation and broader economic sluggishness. Analysts, such as Avior Capital Markets’ Atiyyah Vawda, point out that with limited room for organic expansion, clothing retailers are banking on recently acquired or underrepresented brands to drive growth.

Despite the bullish store openings, caution still prevails. Retailers like Mr Price are avoiding a “space race” and prioritising profitability over volume. “It’s not just growth it’s quality space,” said CEO Mark Blair, noting that the company declined nearly 70% of proposed store locations last year due to low return potential.

Meanwhile, e-commerce is also making its mark. TFG’s digital arm, Bash, already accounts for nearly 6% of domestic sales, with projections to double this share in the coming years. The shift towards online is encouraging investment in distribution hubs and dark stores, reducing the need for costly high-street retail locations. “That stock doesn’t have to sit in fully lit stores anymore,” said Thunström, adding that Bash became profitable two years ahead of schedule.

Despite their innovations and expansion plans, clothing retailers remain under pressure on the Johannesburg Stock Exchange, where they rank among the worst-performing retail stocks so far this year.

The ongoing expansion by major South African clothing retailers opens a window of opportunity for investors in logistics infrastructure, retail construction, and supply chain technologies. As these companies push into rural and peri-urban areas, there is growing demand for affordable retail space development, warehousing, and last-mile delivery networks. Additionally, the digitalisation of sales channels, like TFG’s Bash platform, presents opportunities in e-commerce platforms, data analytics, and fintech partnerships aimed at streamlining digital payments and delivery logistics.

Local entrepreneurs and SMEs may also benefit from supplier opportunities, such as garment manufacturing, store fit-outs, or providing auxiliary services in emerging retail nodes.

‍