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Fashion retail is upping the trend for faster funding

3 trends helping retail SMEs to scale up


Retail is going through change along with the rest of the digital world - but it’s one of those touchy-feely zones, where online does not always size-up to an actual shopping experience.

Unless you’re the “perfect 10”, which let’s face it – may be a snugger fit than most would care to admit; the reality is that the feel of a garment, the way it hangs, the size and cut are important and not to be out dressed by a one dimensional online purchase.


While fashion is one of the top categories in which 54% of South African consumers say social media has most influenced their purchase decisions – it hasn’t flatlined the in-store experience as some of the trendoids may have expected.


According to PwC’s 2019 Global Consumer Insights Survey, in-store shopping has shown a year-over-year increase in shoppers who are visiting physical stores daily and weekly. Great news for local retailers.


Innovative funder, Merchant Capital has seen similar growth patterns amongst the retail merchants it services - having provided R1-billion to 5 000 small local businesses in recent years. The fintech has found that 10% of the working capital it provides to entrepreneurs and SMEs is in the fashion retail sector.


Fintech company Founder and CEO Dov Girnun says that access to fast, secure funding plays an important role for SMEs in retail - particularly with the trend towards experiential retail.


Pop-up merchandise located in interesting, social zones and smaller limited ranges are on trend. Shopping now has to offer customers far more than a place to shop. There’s no doubt large rentals and impersonal department stores have lost the swing on their price tags in the fast-moving retail space. Retailers have to know their customers, be innovative and know what the emerging trends are in the space they serve – whether it’s men’s corporate wear, sports apparel, teen fashion or cool weekend wear for women.





Dov Girnun, CEO of Merchant Capital


Merchant Capital points to a few trends that are good news for SMEs in retail:

Alternative growth: There is an emergence of alternative financing through local fintechs. Merchant Capital itself experienced 150% growth in new customers in 2018 alone, which aligns with the prediction of analysts who see fintechs as the solution to closing the staggering financing gap for small businesses across South Africa.


Creative blending: Retailers are moving towards creating a blend of both physical and digital retail experiences. “SMEs are ambitious by nature and need faster funding experiences tailored to their specific retail needs,” says Girnun. “And just as retailers need to customise their offerings, so do we as innovative funders, because individuality builds the signature of a retail business.” We understand the highs and lows of seasons, cyclical spend, and we’ve tailored our funding solution to measure up to these needs.


Minding the gap: Working capital is needed in an environment where banks have stricter lending requirements. “This is where alternative funders are filling an enormous gap among underserved SMEs. Capital can be accessed quickly and easily either online or using financing alternatives. In Merchant Capital’s case, Girnun explains that they have an innovative repayment mechanism linked to the merchant’s point of sale device - using monthly credit and debit card turnover as an asset for merchants to lend against, interest free.


With fashion retail upping the trend for faster funding, entrepreneurs are now in a better position than ever to create the innovative experiences required to provide stand-out retail.


Funding criteria

Merchant Capital’s model enables qualifying merchants to scale up their businesses with an upfront lump sum in the form of a cash advance in exchange for a small fixed percentage of future turnover.


Payments are aligned with the performance of the client’s business, which is ideal for retail business owners who’ve been in operation for 12 months with a monthly average of over R30 000 in credit or debit card sales, or EFT turnover of R150 000 per month. Business owners can then apply digitally and be approved within 24 hours.

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