EDCON
EDCON
Retail Warriors
Ready for the Fight PRODUCTION: Timothy Reeder
Backed by nearly 90 years of experience, Edcon is southern Africa’s largest non-food retailer and has grown a footprint to include over 1100 stores across South Africa, with operations also in such key locations as Namibia, Botswana, Zimbabwe and Zambia. It is responding to a tough market environment with a set of key strategies, Timothy Reeder writes. www.enterprise-africa.net / 3
INDUSTRY FOCUS: RETAIL
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Edcon conducts business under four principal brands: Edgars, Jet, CNA and thank U. These cover the full scope of potential customers, giving Edcon total market coverage: Edgars is aimed at middle to upper-income customers, while Jet sells quality value fashion, home and beauty merchandise and targets the lower to middle-income customers. CNA, meanwhile, is South Africa’s favourite stationery store, and the perfect complement to a growing, learning nation. The first Edcon store opened
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its doors to the public at its Johannesburg base in September 1929, a holding which by the late40s had quickly multiplied tenfold. Commencement of trading in Swaziland, Lesotho and Botswana kickstarted a wave of development for the business, and the intervening years, also marked by numerous successes and acquisitions, have led to Edcon’s standing today as southern Africa’s largest non-food retailer with 1100 stores to its name and 14 million customers having employed its services.
TOUGH TIMES However, none of this has shielded Edcon entirely from the negativity which continues to surround the retail sector. The doom and gloom which so often accompanies any talk of retail business is not idle speculation, sadly - far from it - and it continues to be amply backed by facts. Africa Business Communities reported that South African retail sales for June 2018 grew by just 2.9% year-on-year excluding the effects of inflation, to mark the slowest pace of growth since October 2017. This was
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based on data from the Mastercard SpendingPulse June 2018 report, which provides a macro-economic analysis of retail spending trends in South Africa. June’s retail sales volume was slightly below the three percent yearon-year gain recorded in May 2018 and signals the third consecutive month that the rate of growth has decelerated in South Africa’s retail sector. Total retail sales growth, including the effects of inflation, grew 5.8 percent year-on-year. “While real spending in the retail sector remains in positive territory, we did see the rate of growth continue to slow in June. Retail price inflation also ticked up for the first time in a year, after bottoming out in May. This may further weigh on consumers in the coming months
as they already face tight wallets due to weak wage growth and rising unemployment,” says Michael McNamara, Senior Principal, Data and Services at Mastercard. “Slowing GDP growth in the first quarter, rising fuel prices and a strengthening US dollar also contribute to a challenging macro-economic environment,” McNamara says. UP TO THE CHALLENGE This has required some creative, innovative thinking on the part of Edcon, and the company has responded quickly and decisively in order to arrest any decline resulting from the widespread pressure currently on the retail sector in southern Africa. One key strategy involved what could appear to be a counterintuitive move, as
Edcon opted to close three of its chains, including Red Square and La Senza lingerie. It was an astute decision, though; by shutting down selected chains the hope is that more customers will be attracted to flagship Edgars stores instead. As Edcon steels itself for this battle against economic adversity, it is the perfect time for the company to go ‘back-to-basics’ and revert to the original 89-year-old department store format of Edgars. Mike Elliott, CEO, says that in order to change brand perceptions, Edgars will have to change its marketing approach to revitalise the brand and regain fashion credibility. “A revitalised in-store experience will also centre on elevating store windows with a focus on displaying private brands and enhance story-
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INDUSTRY FOCUS: RETAIL
telling with co-ordinated looks,” Elliot says. “Revised store layouts and product adjacencies facilitate the creation of strong category statements and have been captured in the design of Edgars’ Store of the Future that will form the basis of the new Fourways store to be completed in April 2019.” The focus on resuscitating its Edgars department stores will equally be matched by a sprucing up of Edcon’s Jet and CNA outlets. The company’s credit and financial services business, meanwhile, is a vital cog in the wheel it hopes to resurrect, especially coming on the back of a loss of market share over the past 10 years. The group’s financial services and credit business are key to
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leveraging Edcon’s 14 million loyalty customers, according to Grant Pattison, Edcon’s Chief Executive since February. “We are now focusing on running the business properly,” he set out to Business Report. “What we are not going to do is to use the credit and financial services business to make Jet, CNA and Edgars better businesses; they are going to think of themselves as cash businesses with a close cousin that gives financial services,” he said, adding that the credit would not be increased to improve sales in the group. Pattison also had encouraging words with regard Edcon’s previously high level of debt, which he pointed out had stabilised and even reduced since these measures had been put in place.
“These days we still have problems, but they are more in the hundred million. What you can conclude is that Edcon is not finally through this, but it is in a better position than it was a few years ago,” was his estimation. GREEN SHOOTS While Pattison is at pains to make clear that the road ahead may still contain its share of bumps, Edcon is already looking to the many positives it can draw from the current situation. There was cause for celebration at the company’s event in Claremont Cape Town, as 26 women graduated from the year-long programme as part of the Edgars UNiTE Orange Day Campaign, which seeks to support women survivors of gender-based
EDCON
violence by developing their skills in the world of fashion design and sewing through workshops and accredited training courses. Elliott commented: “This initiative will result in tangible opportunities for job creation in the local manufacturing market and boost financial independence
// OUR CORE PURPOSE REMAINS THE SAME: TO PROVIDE SELFEXPRESSION FOR ALL SOUTH AFRICANS FOR ALL OCCASIONS //
and enterprise development. Our strategy is to ensure that the women we train are skilled enough to produce garments that can help them generate an income for themselves.” One thing which has kept Edgars in pole position throughout its illustrious history is its insistence on responding to customers’ wishes, and when they started asking for more options and a bigger choice, all of it under one roof, Edgars sat up and took notice. Already known for its distinctive range of homeware, the brand is now showing up differently and taking it to the next level for décor, foodies, and home enthusiasts. Elliott says: “Edgars Home has been created for the South African consumer, after all, we’re all decorators and lifestyle enthusiasts who love our homes and love sharing
experiences with friends and family in a space that expresses who we are. “Our core purpose remains the same: to provide self-expression for all South Africans for all occasions. This has been interpreted through all aspects of our refreshed home strategy resulting in an entirely different shopping experience. We also recognise that the South African consumer is under increasing pressure and we strive to offer them fantastic everyday value in price, quality, and fashion, and to delight them with exciting promotions on the products that they love.”
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