Retail in the Southern Hemisphere used to have an entirely different set of rules and consumer preferences. Are the Northern and Southern Hemispheres more alike than ever before?
For a long time, retail in the Southern Hemisphere (SH) had it pretty sweet. Thanks to geography and seasons, its niche market was largely unappealing to international retailers. Local retailers could watch their aspirational markets for trend inspiration and had between 6-18 months to interpret what they learned, where only the most successful trends were realized.
But, we all know things don't work that way anymore. Enter the internet and social media, speeding up trend turnover and giving consumers global access to the fashion world. Brands can’t afford to lag behind. Combined with international retail conglomerates imprinting themselves on every corner of the globe and squeezing out local designers, the SH was forced to evolve.
No longer the counter-season retail cousins. There are big changes in key markets like South Africa, Australia and Brazil that all retailers should know about.
Whether you're a local or an international player, using the EDITED Market Intelligence Platform can help minimize risk operating worldwide and help monitor prices globally. Reach out for a demo.
The challenges of COVID
While no country was immune to the detrimental effects of the pandemic, Brazil became an epicenter. The death toll passed 330,000 with no plans to implement lockdown measures. Unsurprisingly, retail struggled with the region reporting a 0.4% drop in December 2020 while January sales this year were only up 0.3% YoY, according to Retail Gazette. With the fate of Brazil's retail climate tied to the success of the vaccination roll out, experts have forecasted it to pick up to 3% by the end of the year.
After a slow start to the year, retail in South Africa saw a slight lift of 2.5% in February - the region's first growth in 11 months. Unfortunately, this boost may be short-lived with South Africa returning to lockdown on March 26th until the end of April. This proved the situation is still volatile even one year on, making it all the more important for retailers to invest in their ecommerce presence to reach consumers at all times and keep sales generating.
Australia: Fashion's new focal point?
Emerging as the bright spot in the Southern Hemisphere, Australia has been largely free of COVID for months now, following draconian lockdowns over its winter that allowed for a "normal" summer. Permanently a season behind the Northern Hemisphere (NH), COVID saw the tables turn. All eyes shifted to the continent for reopening best practices and a blueprint of what consumers will be wearing post-pandemic.
NH retailers can get some pretty solid insights examining what's working Down Under. First, there is still demand for pandemic hero categories. EDITED data can attest Aussies are still buying loungewear and sleepwear, with comfort now integral to lifestyles. Across these categories, full price sell outs of new products over the past three months lifted 12% YoY. Activewear is also showing no signs of slowing down with sell outs up 6% YoY.
While these categories have reached evergreen status, serious growth is in products that were neglected over 2020. If this market is anything to go by, denim brands are in for a more fruitful year as the number of full priced sell outs for denim goods across menswear and womenswear in Australia increased 65% YoY. Since events have been back on and venues reopened for some time, occasion and partywear is experiencing a rebound. Party dress sell outs have surged 198% and high heels by 183%. Swimwear is also poised for a comeback, with new sell outs increasing 113% throughout a successful Australian summer season (Dec-Feb).
Additionally, a new wave of Aussie designers are swiftly becoming fashion's cool kids, setting the trends that inspire the fast fashion behemoths across the pond. With Jéan, DAISY, Réalisation par and I.AM.GIA are just some of the household favorites generating a global cult following.
Australian retail is in the recovery position too. February sales for clothing, footwear and personal accessories rose 1.6% MoM and 11% YoY.
While the market is showing promise, it's not without its challenges. Its sluggish response to vaccination campaigns could set its progress back. Australia is 85% behind on its schedule, which could lag further after pausing the rollout of its primary immunization, AstraZeneca, due to blood clot concerns.
Analyzing the top performing worldwide trends reaffirms the need for investment in ecommerce and data. The hottest items are global and move fast, shattering the now-defunct process of international buying trips. No longer can a buyer in Sydney fly to LA to check out the freshest trends – there just isn’t enough time to act on it upon returning home. Combined with overseas travel paused for the foreseeable future, scouring the globe for inspiration will need to be done digitally.
When you look at best-selling products in the past three few months, you can see how aligned consumer tastes are globally. See the similarities in product for sneakers.
Okay, white sneakers may be a no-brainer. The data also points to the sexy dressing trend resonating in both hemispheres. Consumers don’t care where the influencer they follow on Instagram is from. They want the same trends they see their equals wearing around the planet. Check out some of the best performing top styles, all with variations of cut-out details.
There are pros and cons for SH retailers in this syncing of trends. SH consumers’ fast adoption of trends provides a great opportunity to spin frequent narratives around newness that will entice shoppers. But it also means international retailers are even more primed for directly speaking to what was once your local shopper.
That means retailers need to do one better by owning product direction, its positioning and its price point.
Pricing: More alike than different?
The great thing is markets really aren’t all that different. If you look at mass market womenswear you can see how closely Australia, Brazil, the UK and South Africa are aligned on price.
Brazil comes out as a little more price sensitive. There is a larger focus on the under $20 price point, specifically in dresses. Australia and South Africa place a greater emphasis on jeans between the $40-$60 threshold than the UK. Having this kind of information on hand can support million dollar decisions before entering a new market.
Southern Hemisphere opportunities
Truly own resort – The SH climate means local brands and retailers are experts in the resort game. With 2021 slated to see an increase in regional travel, retailers across market segments can concentrate on beefing up their holiday/vacation edits and make them hyper-tailored for their own consumers. This is a customer that SH brands, particularly in luxury and premium, can really own.
Rethink the store of the future – In addition to gearing up their digital businesses, SH retailers need to ensure a seamless connection with physical stores upon returning to normalcy. In-person retail experience needs to be modified to cater to the post-pandemic landscape as stores aren't equipped for the times we live in now. Retailers need to rethink the purpose of their physical outlets and rapidly action change, which could see some major shifts in areas like Brazil that have a focus on mall culture.
Sustainability: A global priority. SH countries ranked lower on the index of the greenest countries in the world with Brazil placed 55th and South Africa at 98th. Contrastingly, Australia ranked 13th, with wealthier nations reported to fare better across implementing sustainability measures, highlighting the importance of intersectional environmentalism. With circularity dubbed as fashion's holy grail of sustainability and a gradually reopened world, the rental market is poised for a rebound. These platforms are heating up in the SH, with regions creating localized platforms to boost the longevity of clothing for native shoppers - StyleRotate in SouthAfrica, WeUse in Brazil and GlamCorner in Australia.
Brands to watch
The continent is also home to a blossoming scene of First Nation fashion designers who are championing Indigenous representation within the industry. 2021 will hold the first runway dedicated to these designers at Australian Fashion Week, showcasing looks from Aarli, Amber Days, Clair Helen, Nungala Creative and more up-and-coming talent.
The beach climate and the popularized images of supermodels like Gisele Bündchen and Alessandra Ambrósio have led to an uprising of brands designing for the majority that don’t fit the slim, white-European beauty standards placed on the region. Brands such as Unusual Brasil, Fudida Silk and Inserto are ones to watch as industry disruptors.
Thebe Magugu’s 2019 and Sindiso Khumalo’s 2020 LVMH prize win spotlighted South Africa as a global fashion hub. Specializing in luxury craftsmanship infused with heritage, Rich Mnisi is another local brand to look to for inspiration.
It’s going to take some smart strategic moves to truly capitalize from the shifts in SH retailers. However with the EDITED Market Intelligence Platform, retailers can take the guesswork out of their global product and pricing strategies.
We’re ready, are you?
With additional contributions by Katie Smith.
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