2010 FIFA World Cup and the SA industry

Retailers set to score: Get ready to benefit from the 2010 FIFA World Cup

South Africa celebrated victory when we hosted the 1995 Rugby World Cup, we proudly hosted the African Cup of Nations in 1996 and we successfully hosted the Cricket World Cup in 2003. Now it is soccer’s moment as we prepare to host our biggest sporting spectacle yet.

The 2010 FIFA Soccer World Cup will be here before we know it. Various sectors across South Africa are set to benefit from the massive influx of visitors who will be gracing our shores.

The retail sector is no exception, and retailers can expect to reap some of the benefits that will be permeating our economy.

Branding and Merchandising

Replica shirts and memorabilia are the main World Cup items that sport retailers will be selling.

International brand management and licensing company Global Brands Group (GBG) has been appointed by FIFA as its worldwide exclusive licensing representative and store operator for FIFA branded retail destinations.

Additionally, GBG has rights as the on-site concessionaire for all FIFA events throughout an eight-year term.

They recently opened an office in Johannesburg. "As the host country for the 2010 FIFA World Cup, SA is a key market for Global Brands and the country’s licensing program will be a major component of Global Brand’s worldwide licensing activities for the event," says Mark Matheny, CEO and co-chairman of GBG.

According to Matheny, Global Brands will work with best-in-class SA licensees and retailers across an extensive range of product categories to deliver a world-class merchandising programme that will be accessible to a wide cross-section of South African consumers.

At the time of writing this article, Global Brands, was expected to make an announcement soon as to the official local retailer for the 2010 soccer World Cup. The successful bidder will have the right to sell 2010 FIFA World Cup merchandise.

Global Brands will, in addition, manage a worldwide network of South Africa 2010 stores, as it has been appointed store operator for FIFA-branded retail destinations.

As the on-site concessionaire for FIFA events, the company could sell merchandise from kiosks around the venues used for FIFA events.

Various categories of merchandise pertaining to all FIFA competitions that Global Brands might sell consist of: FIFA-branded apparel, which is expected to account for more than 50% of products sold; souvenirs (15%); all FIFA-branded balls, except match balls and replicas thereof (9%); toys and games (6%); publishing (4%); and miscellaneous items (10%).

Global Brands are excluded from promoting certain categories which FIFA has signed up specific partners for, such as Emirates, the official airline; and FNB, the official national supporter in the financial services sector, and Coca-Cola, the official soft drinks provider.

Team replica shirts will also be available to retailers from the licensed supplier.

A victory for business

There have been numerous discussions and round tables conferences as to how the Soccer World Cup will benefit small medium and micro enterprises (SMMEs). Local Organising Committee CEO Danny Jordaan has indicated that SMMEs would have ample opportunities to conduct their business at venues outside stadiums.

Various venues such as pubs with huge television screens showing matches and similar gatherings of football fans would allow ample scope for small business owners to benefit from the soccer feast.

Fanparks, which will be set up outside all the stadiums where matches are to be played, will also be of major benefit to retailers, as thousands upon thousands of fans congregate at these events. The FIFA fan park projects are still to be discussed and finalised.

Positive effect on retail

"There is no doubt that the World Cup will have a significant and positive effect on the retail industry but it is difficult to quantify," says Janine Myburgh, President of the Cape Town Regional Chamber of Commerce & Industry.

According to Myburgh, the hospitality industry will clearly be among the first to benefit, leading to increased sales of food and beverages.

"The growing popularity of self-catering accommodation will ensure that the sales benefit will be reaped by all players in the industry from the supermarkets to the small convenience stores.

This, in turn will generate jobs, and the effect will ripple through the whole economy. The effects will not be confined to small-ticket items for car hire companies will increase their fleets, new buses and coaches will be bought and as the construction industry responds to the challenge purchasing of supplies will gather pace. Most of the wages paid will convert into retail sales down the line."

Africa is now widely considered as one of the key tourism players on the global scene. SA is also a key player. Global interest in this part of the world is set to soar as a result of the 2010 World Cup. More than 7-m foreigners visited SA during 2005, which is more than a 10% increase on the number of visitors during 2004

The World Cup will thus bring huge numbers of tourists to SA and many will travel to games or fan zones across the country.

Myburgh points out that aside from spending on food and accommodation they can be expected to do a fair amount of general shopping, souvenir hunting and typical tourist purchases. Thus, the retail sector will benefit although the effect will not be the same across the whole industry.

It is clear from Grant Thornton’s 2007 International Business Report, released earlier this year, that the build-up to the World Cup will boost business sentiment in SA, and expectations for growth in vital areas such as turnover, profitability and employment are higher than ever before.

Seventy-five percent of companies surveyed in SA were looking forward to some level of financial benefit from the World Cup. According to the Report, 60% of SA companies are considering diversifying their products or services in order to maximise their returns from the tournament, 53% are increasing their workforce, and 46% are making additional capital investments in their businesses.

Furthermore, a third of the businesses surveyed said they were increasing their geographic spread in preparation for the event and its build-up, while 25% said they would be importing more goods from abroad.

Retailers should prepare themselves and alleviate any possible problems to ensure that they are able to embrace the opportunities that the World Cup will bring.

It is almost time to play ball!