RE TA IL
Cash is still king
T
he Cash Crusaders franchise experienced something strange after the country moved to level 3 lockdown in June. Instead of people streaming in to sell their wares when the group was permitted to start trading again, new goods started flying off the shelves. Cash Crusaders CEO, Sean Stegmann, says they were anticipating “queues with customers eager to sell,” but the opposite happened. “We realised bank payment holidays, the introduction of the Temporary Employee/Employer Relief Scheme, and closed restaurants meant people had been sitting on cash.” He says Cash Crusaders outlets are “entrenched” in the community and customers preferred travelling Richard the shorter distances to their Mukheibir stores rather than heading for malls further away. With kids being homeschooled, games, game consoles, laptops and cellphones were in high demand. So while second-hand purchases were down 10 per cent in August
A strange thing happened on the way to the second-hand goods and money-lending market during COVID-19. By NIA MAGOULIANITI-MCGREGOR compared to August 2019, new goods enjoyed a 50 per cent growth. Less second-hand stock available also pushed the move to new goods. “This is a recession-proof model,” says Stegmann of his franchise. He is looking forward to eight new stores opening within the next three months.
GOING FOR BROKE Cash Converters says their pawnbroking – or secured lending (up to R20 000) – and unsecured microfinance (up to R4 000) business has proved increasingly popular
for customers who need easy access to cash “without going through piles of paperwork and possible rejections from financial institutions”. While loans were 30 per cent quieter than last August, CEO, Richard Mukheibir, says he expects the downturn to be shortlived. “We expect the demand for cash will increase as the consequences of COVID-19 begin to bite into the economy and as people’s expenses start to increase after eating out and socialising more.” Even in these difficult financial times, he says 75 per cent of customers come back for their goods on the pawnbroking side. For the other 25 per cent, their goods are then put on the retail floor.
“We expect the demand for cash will increase as the consequences of COVID-19 begin to bite into the economy.” – Richard Mukheibir , CEO, Cash Converters
Casualties, comebacks and calamities owned by Long4Life, managed to survive months of forced lockdown, but has since reopened. Extensive marketing campaigns to maintain consumer awareness with help from employees in the form of food vouchers, meant the group was saved to file and paint another day. • Homey: All Jack’s Paint franchises are still operational despite some suffering depending on how lenient landlords were in the first five weeks of lockdown, says marketing manager, Ryan Waldauer. With retailers trading normally again by May 1, DIY picked up big time. “We saw three of our better months in a long time.”
TIME TO GET ONLINE Retail franchises need to embrace e-commerce and consider scaling down their physical footprints, says Stefan Terblanche of Argility, which provides IT solutions for retail and supply chains. “There’s either total death of the retailer, where your brand is killed, or there’s rationalisation: for the sake of survival, you scale down and shift towards e-commerce.”
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Jack’s Paint Melville’s Lorraine Cox says five weeks of customers locked up at home looking at neglected paintwork saw the industry “skyrocket”. • Cheers: While a bottle of brandy was selling for R400 in the shadow market during lockdown, Liquor City was firmly corked. Though no one is popping the champers just yet, what with restricted trading hours continuing, a company spokesperson says guidance from the franchise team pre-COVID-19 prepared franchisees for the crisis. Most had no debt, were not overstocked and had the right complement of staff.
A recent report from Statistics South Africa shows that retail sales in June were 7.5 per cent lower than 2019, while the second quarter showed sales down 22.8 per cent compared with last year.
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• Food fight: Certainly the COVID-19 domino effect has hit 50 stores of Domino’s Pizza franchises now liquidated after Taste Holdings failed to find an investor for a business already teetering pre-lockdown. That’s as Spur Corporation, whose sizzle has been fizzling since last year, is trying to claw back into a “protracted period of recovery” after local operations saw sales decline by over 80 per cent in May. Franchise and marketing fees were discounted throughout lockdown. • Face it: Sorbet franchisees breathed a collective sight of relief as the company,
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2020/09/16 5:53 PM
