The South African retail market has witnessed significant disruption with the entry of Chinese e-commerce firms, Shein and Temu. Together, they constitute 3.6% of the nation’s retail sector, specifically the clothing, textile, footwear, and leather (CTFL) market. This translated to 7.3 billion rand (US$405 million) in sales in 2024.
Shein made its debut in the South African market in 2020, with Temu following in 2024. Both companies have effectively shaken up the local retail scene with competitive pricing, strategic marketing, and tax loopholes that initially provided them with an advantage over domestic retailers.
The allure of these platforms for cost-conscious shoppers has had significant effects on local retailers. In response, these retailers appealed to regulatory bodies last year to address the tax loophole, which was subsequently closed.
The Localisation Support Fund (LSF) report indicates that the market share of domestic CTFL retailers has gradually dwindled from 75.3% in 2011 to 74% in 2024. In comparison, international physical store brands such as H&M, Zara, and Cotton On hold a combined market share of 3.4%.
Shein and Temu together now hold a 3.6% share of the CTFL market, and a commanding 37.1% of South Africa’s e-commerce CTFL market. In particular, Shein has cornered 28% of the online women’s CTFL sales.
Sean Mercer, a principal consultant at consulting firm BMA, observed that international retailers had spent 13 years building their market share. In contrast, Shein and Temu have managed to equal and even surpass this in a mere five years.
What market share do Shein and Temu hold in South Africa’s retail sector?
Shein and Temu together hold a 3.6% share in South Africa’s retail sector, specifically in the clothing, textile, footwear, and leather market.
What strategy did Shein and Temu use to disrupt the South African retail market?
Shein and Temu disrupted the South African retail market with competitive pricing, strategic marketing, and by leveraging tax loopholes that initially provided them with an advantage over domestic retailers.
How has the entry of Shein and Temu affected local retailers?
The entry of Shein and Temu has significantly impacted local retailers, leading to a decline in their market share. The cost-effective offerings of these e-commerce platforms have drawn cost-conscious shoppers, affecting the sales of local retailers.
