Out of Africa: Discount retailer Mr Price to launch Down Under

South African retailer Mr Price is set to open Australian outlets off the back of strong online sales from local customers.

The discount fashion outlet, which sells men’s, women’s and children’s apparel, is owned by Mr Price Group.

Founded in 1985, the publically-listed company now operates close to 400 stores in South Africa.

The business also has a number of other divisions, including Mr Price Home and Mr Price Sport.

The retailer will open a store in Melbourne Central in October under the name MRP, according to Inside Retail.

The location of the company’s second Australian store is yet to be announced, however it is also expected to be in Melbourne.

Releasing the retailer’s latest financial results in June, Mr Price Group chief executive Stuart Bird said the company has undertaken detailed research on the Australian market.

“We have been focused on identifying new markets for expansion of our MRP and MRPHome chains,” Bird said.

“Based on online testing and detailed desktop and on-the-ground research, we believe that there is an opportunity for a fashion value retailers in Australia.

Our plans there will commence with MRP opening test stores this year in time for peak fashion season trade.”

David Gordon, retail expert and managing partner at LZR Partners, told SmartCompany Mr Price is not a widely recognised brand in Australia and this is something the company will have to tackle when it launches locally.

“Their positioning in South Africa is one of a value-driven brand,” Gordon says.

“You could say that menswear brands in Australia struggle to make their retail model work, primarily because of our dual cost structure – store costs and staff costs – being very high. “This requires a high margin, which reduces the price-points that allow you to be seen as the price-conscious brand.”

Gordon says small, independent fashion brands should not be too worried about the launch of Mr Price in Australia.

This is because the retailer will be located initially in large shopping centres like Melbourne Central, which are generally home to large chains and not SMEs.

“South African companies have had mixed success in Australia,” Gordon says.

“Pick n Pay tried it twice and failed; Best & Less [owned by South African equity firm Pepkor since 1998] is a success. However, with the preponderance of investment into the Australian retail market by South Africans – and we can look at David Jones, Freedom Furniture and Metcash – there would be an increased level of experience and understanding of the Australian market. So it’s not surprising that they would consider exploring Australia as a potential market.”

SmartCompany contacted Mr Price Group but did not receive a response prior to publication.