Africa’s largest clothing retailer taps booming phone market

Africa’s largest clothing retailer is expanding rapidly in one of its newest segments — the sale of affordable mobile phones.

Pepkor Holdings’s new chief executive officer, Pieter Erasmus, wants to build on the 12 million devices sold by the Cape Town-based company in the year through September — equivalent to 70% of the units offloaded on a pay-as-you-go basis in the whole South African market.

Read: Pepkor reports 20% surge in full-year earnings

He sees the business as having high potential due to the number of the company’s customers that live and work in rural or unconnected parts of the continent, Erasmus said in an interview Tuesday.

“For our customers, mobile devices are the main source of communication and connectivity, so it’s a real need that we are able to serve,” said the CEO, who recently started his second tenure as Pepkor’s head.

The retailer, which has more than 5 800 stores selling low-cost clothing including in some of South Africa’s smallest towns, is tapping into a pan-African boom in the use of phones for payment and banking services as well as communication. In more rural parts of the continent, transport and online access can be limited, Erasmus said.

Pepkor sells the handset, the SIM card and offers the needed regulatory checks through both Pep and Ackermans stores. The company then gets revenue every time a customer uses that phone. With more people switching to smartphones, Erasmus expects the range of services used to increase.

“These are big, fast trends and we are in a good position to participate,” the CEO said.

Pepkor’s Flash fintech business also offers informal traders an affordable and safe payment system and enables the company to earn money beyond regular store trading hours. The unit had 19% growth in operating profit in the year, with more than R2.5 billion a month of payments being done through informal traders.

Pepkor earlier reported a 25% increase in annual net income. The company lost 313 000 trading hours due to rolling blackouts imposed by South Africa’s state-owned power utility Eskom Holdings, in line with other major companies.

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