HomeChoice / Enterprise Africa

HOMECHOICE

HOMECHOICE

Digital Drive Allows

HomeChoice to Thrive PRODUCTION: Timothy Reeder

HomeChoice has long been known for its commitment to adapting to consumers’ wants and needs in an ever-changing environment. In a vital response to the height of the pandemic HomeChoice elected to grow and refine its digital offering, and with its FinTech operations continuing to exhibit strong growth, results are showing remarkable bounce back.

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INDUSTRY FOCUS: RETAIL

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By no means the most significant or lasting disruption of the Covid-19 pandemic, but still notable amidst the turmoil and devastation was the gradual, almost unnoticed at first, reduction in anything leisure-related, until options had all but disappeared entirely.

Socialising, shopping, dining out - under the rigorous conditions of various lockdowns all were suddenly removed from the menu as movement was curtailed and gatherings became a thing of the past. The whole of South Africa, and large parts of the world, faced up to the new reality of recreation and relaxation taking place almost exclusively at home.

What this sudden confinement meant, however, with the home becoming the arena for every aspect of our lives both personal and, for many, professional, was a renewed and fierce desire countrywide to maximise the enjoyment of this enforced isolation.

It produced a boom in demand for

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homewares, as consumers sought to make as comfortable and enjoyable as possible the one environment left available to them.

// 96% OF OUR CUSTOMERS RATE FINCHOICE AS THEIR FAVOURITE DIGITAL FINANCIAL SERVICES PROVIDER // CUSTOMER FIRST HomeChoice is southern Africa’s largest home-shopping retailer, offering homeware and financial services. It caters primarily to the middle-income mass market with an omni-channel route delivering both its vast product range and related financial services division (FinChoice). “The business

has always been mass-marketed, targeted at females, specifically urban, of African descent,” HomeChoice Chairperson Shirley Maltz told Enterprise Africa in 2018.

At the time, Maltz also highlighted another strategy HomeChoice was employing to best respond to changing customer requirements, outlining to us in detail the then-nascent concept of the HomeChoice showroom. The second of these had just opened in Maponya Mall with the third, fourth and fifth set to quickly follow.

“The concept is that you can walk in, look at the product and feel the quality before ordering online for the product to be delivered or collected,” she explained. “Our customers can see exactly what they could have and exactly what we offer.”

Far from a ploy on HomeChoice’s part to transition to a bricks and mortar retailer, Maltz was keen to stress, these showrooms are designed to consummately compliment the

HOMECHOICE

company’s existing retail strategy and create new touch points and interaction opportunities. The burgeoning fleet has since swelled to in excess of 10, with sites in Cape Town, Komani, Pretoria and Rustenburg added in the ensuing years.

“HomeChoice understands that your home is a reflection of your personal style, which is why we’re always bringing you the best in style and quality in line with international trends,” the company says. “We stock trusted, big-name brands with quality appliances to suit all living spaces, big or small.”

“She’s always shopping somewhere, she just might not be shopping with you,” Maltz summed up of HomeChoice’s majority customer base - female, usually with children and between 30-60 years old, living in South Africa’s urban areas. “If she’s not shopping with you it’s because your products are not good enough. We push ourselves very hard to stay apace with the customer.”

// OUR DIGITAL MOMENTUM HAS ACCELERATED AND WE ARE REALLY PLEASED WITH THE 23.1% DIGITAL SALES GROWTH ACHIEVED // DIGITAL DOMINATES Even back in 2018, this commitment to responding to consumer requirements translated to an aggressive development of HomeChoice’s digital channels, embracing the transformation and possibilities for improved customer engagement via both smartphone and traditional phone access.

It proved invaluable when in-store and in-person capability was brought to a crashing halt as the virus secured a vice grip on the country.

A combination of enforced shutdowns and a haemorrhaging of consumer confidence in attending physical stores brought the focus resoundingly back to HomeChoice’s digital prowess.

Covid-19 brought about massive acceleration in the structural shifts towards digital. The South African

e-commerce market showed growth of 287% on its 2015 position, while in Deloitte’s Africa Digital Commerce survey last year two in three respondents indicated an intention to further increase their use of online in their shopping needs into this year and beyond.

As a result of its innate ability to respond to the immediate needs of both the market and the shopper, HomeChoice was able to capture this opportunity and capitalise in a big way.

It has notched up nearly a million likes on Facebook, a 7.1% increase year-onyear, while its Instagram profile saw almost a doubling of its followers. This was all joined by a 10% rise in e-mail engagement, 35 million shopping sessions and another 27% growth in adopters of the HomeChoice app.

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INDUSTRY FOCUS: RETAIL

// OUR INTERIM RESULTS REFLECT OUR CONTINUED DIGITAL GROWTH IN OUR FINTECH AND RETAIL DIVISIONS, TAKING ADVANTAGE OF THE STRUCTURAL SHIFT TO DIGITAL MOBILE-FIRST TRANSACTING // A vital arm of its multi-capability offering, HomeChoice’s FinTech business FinChoice provides personal lending,

ASSISTING YOU IN GROWING YOUR BUSINESS

value-added services and insurance products to its retail target market, who are increasingly mobile-savvy. “96% of our customers rate FinChoice as their favourite digital financial services provider,” the group enthuses of its mobile-first, technology-driven solutions.

New customer acquisition doubled from the comparable period in 2020, with an additional 42,000 customers brought on board in the first half of 2021 alone. “Using API data-driven technology we are able to make personalised loan offers to prospective customers from sources external to the Group,” HomeChoice furthers, “now contributing 64% of new customers.

“Pleasingly, 65% of new customers are originated end-to-end digitally, further entrenching the FinTech automation benefits.

“Our retail recovery plan is

gaining traction,” the group summates.

“Retail sales grew by 8.5%, driven by digital momentum and the additional showrooms opened in H2 of 2020.

“Our digital momentum has accelerated and we are really pleased with the 23.1% digital sales growth achieved. One in four new customers are digital and there has been a 27% increase in HC App installs, supporting our mobile-first approach to drive digital adoption by our customers.

Monetisation of social media has also proven effective, with sales up 27%.”

EXCEPTIONAL TRADING PERFORMANCE In large part thanks to such strong digital growth, HomeChoice was able to post a highly resilient set of interim results for the six months ended 30th June 2021. “In challenging market and socio-economic

As a proud partner to HomeChoice for over 15 years, Transaction Capital Risk Services (TCRS) has provided debt collection, customer service and debt acquisition solutions, that have enabled the business’ growth, customer retention and rehabilitation, and improved performance.

TCRS offers a variety of outsourcing solutions to many of South Africa’s largest companies and public sector entities including: Pre-legal and legal debt collection solutions Customer service management Comprehensive debt management services Human Resource and payroll management Payment services For more information on how we can assist you to grow your business visit our website www.tcriskservices.co.za

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HOMECHOICE

conditions, group revenue increased by a creditable 7.4% to R1.7 billion,” the group reported. This was driven by strong loan disbursements growth of 99.0% to R1.6 billion and retail sales growth of 8.5% to R0.9 billion.

“Our interim results reflect our continued digital growth in our FinTech and retail divisions, taking advantage of the structural shift to digital mobile-first transacting, accelerated by the Covid-19 restrictions,” commented Maltz.

FinChoice was without doubt the outstanding performer, succeeding exceptionally well in the six months measured. Loan disbursements doubled and insurance premiums increased by 40%, with revenue growth of 15.3% and trading profit increasing by an outstanding 87.8% to R139 million.

“The structural shift to digital has accelerated an already strong momentum achieved by the FinTech division,” HomeChoice summed up.

“With a 0.95% market share of the

National Credit Regulator’s reported debtors’ book for short-term and unsecured lending, the Financial Services business is well placed to grow and take market share by capitalising on our FinTech platform.”

Despite recent unrest, HomeChoice remains focused on driving sales, as the acceleration of the vaccine roll-out provides relief and supports growth in GDP, alongside early indications of improvements in South African consumer credit health. The resurgence in homeware attention looks set to be a lasting one, too, as the number of South Africans living in owneroccupied housing continues to expand and provides a constant supply of purchasers of homewares.

“We will continue to invest in technology to support the FinTech’s vision to be our customers’ favourite digital financial services provider,” HomeChoice rounds off. “The retail division is focused on the execution of

our recovery plans, product innovation and excellence combined with ongoing digital transformation.”

“Our significant investments made in technology in recent years, with cloud-based platforms, digital marketing and social media monetisation, as well as machine learning algorithms and datadriven customer acquisition to drive digitalisation have enhanced the customer experience and made it easier for her to transact with the group,” Maltz said.

“We will continue to focus on delivering exciting products, new merchandise categories and attractive financial services to both new and existing customers.”

WWW.HOMECHOICE.CO.ZA

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September 2021

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