Amazon.com Inc.’s entry in South Africa next year is going to drive online sales and bolster business at local retailers, The Foschini Group Ltd. said.
E-commerce revenue is expected to double to 10% of TFG’s total South African sales in the next two years and likely climb to 15% soon after, Chief Executive Officer Anthony Thunström said in an interview on Friday after the Cape Town-based company released first-half earnings.
“Amazon’s arrival next year is going to drive online sales a lot quicker than most people have thought,” he said. “The more people shop online, the more comfortable people get using that channel.”
While nearly three quarters of the country has internet access, e-commerce makes up about 5% of retail sales in South Africa. Amazon, which has been providing web services in the country of about 60 million people since 2004, said it will start its online delivery business in the nation in coming months.
TFG’s shares rallied as much as 7.5% by 2:25 p.m. in Johannesburg, making it the third-best performing share on the FTSE/JSE Retailers Index this year.
More from the interview:
- TFG sees opportunity to open about 700 stores in next few years, though pace of openings will be slower than previously planned as rolling national power cuts have crimped the number of people going to stores
- The clothing retailer’s focus on improving trading density in its stores is paying off
- The size of some existing stores may still be reduced
- Post-pandemic stock levels have normalized, cutting need for further aggressive discounting
