Retail news. Semester 1 of 2014 table of contents

Consumer spending online rises 30% to R2,6bn [bizcommunity 9 Jan 2012]. 9 Jan 2012

South Africans spent about R2,6bn online last year, 30% more than in 2010, research from World Wide Worx shows. "The final numbers are not yet in and this figure could grow to almost 40%," World Wide Worx MD Arthur Goldstuck said late last week. "There were a few key ingredients that the growth can be attributed to."

"Firstly, there has been significant growth in internet users that have been online for more than five years." These people are just waiting to be persuaded to spend their money online, he said.

"Secondly, websites are far more user-friendly now with more payment options. More and more evidence shows people are using retail websites to make purchasing decisions and to do research, which has meant the websites have become an integral tool."

According to a World Wide Worx research report, entitled Online Retail in SA 2011, the total retail market in SA was worth R561bn in 2010 with online retail accounting for R2bn or 0.36%.

This is up almost threefold from 0.13% of total retail sales in 2004, but remains a small part of the overall pie. As online retail sales grow, however, there is clearly much potential to realise in this market, Mr Goldstuck said.

This has been the case for latecomer to the market for luxury goods Forevermark - a diamond brand of jewellery produced by De Beers. The brand introduced in 2008 has found its online presence has helped people to learn more about the brand and driven sales in the East, Forevermark CEO Stephen Lussier said.

Local high-end retailer Woolworths said the number of customers and sales have grown each year. "Improved connectivity and online user experience has been the key to driving e-commerce activity. Many Woolworths customers are transacting on our site from work, possibly for convenience. The range of products available online will continue to grow, as will the delivery coverage area," the company said.

In the US, world's largest ecommerce market, online retail was about US$165bn in 2010.

Even as traditional retail sales fell in 2009 in response to the worldwide recession, global online retail sales grew 14.5% in 2009 to $348,6bn. The biggest contributor was electronics, making up about 22.6% of the market, the research report says.

According to the report, in terms of proportion of all global retail, online retail sales accounted for only 2.5% of the total. For the top 100 retailers worldwide, online retail accounted for 6.6% of sales. By 2014, global online retail is expected to reach $778,6bn, increasing at 22.2% a year.

CTC okays TM Deal [HERALD 2 DECEMBER 2011].

Martin Kadzere Senior Business Reporter THE Competition and Tariff Commission has given Pick ‘n' Pay permission to increase its equity in TM Supermarkets to 49 percent. Pick ‘n' Pay - which manages more than 700 stores in South Africa, Zambia, Angola and Mozambique - already holds 25 percent in the TM Supermarket chain. The South African group will invest US$13 million. "The CTC has now approved the additional investment by Pick ‘n' Pay into TM Supermarkets," a TM spokesperson said yesterday. "All regulatory approvals pertaining to this transaction are now at hand." The deal had been approved by the Reserve Bank of Zimbabwe and the Youth Development, Indigenisation and Empowerment Ministry. The first Pick ‘n' Pay branch will be opened in the first half of 2012. The branch, formerly TM Kamfinsa, is currently being refurbished and upon completion will trade under the Pick ‘n' Pay brand. "As we refurbish the TM branches, some will be rebranded into PnP while others will retain the TM brand," said the spokesperson. TM will now be able to tap into the skills base of PnP through secondment of staff from TM to PnP and vice versa. The exposure visits by TM staff to PnP outlets in the region will assist staff in acquiring new retail skills and assist in uplifting the store's standards. In addition, TM will leverage on the PnP logistical infrastructure, including the supply chain, warehousing and distribution with minimal investment. TM will be able to ride on the back of PnP's creditworthiness when dealing with SA suppliers. The extension of credit to TM would allow for adequate stocking of TM and PnP outlets in Zimbabwe. It is also the intention of TM/PnP to offer franchising to the local operators who would like to use the PnP brand. The franchises would have access to the supply chain, skills and all the other advantages that come with being part of one of the biggest retailers in the region. The franchise will create opportunities for the local businesses and when done properly, would lead to growth of the sole traders and creation of employment. PnP will be exposed to the quality of local products and where these meet its standards, opportunities for local industry to start or increase their exports into the markets serviced by PnP. "Zimbabwe is ideally located to service Mozambique, Zambia, Angola, Malawi and other Sadc countries where PnP is or will be expanding to. "Discussions are already underway for the export of packed Tanganda tea for distribution throughout the PnP outlets," said the spokesperson.

Edcon still struggling to grow market share. 28 Nov 2012

Edcon‚ the unlisted owner of clothing chains Edgars and Jet‚ on Tuesday said retail sales increased marginally by 2.4% to R5.5bn in the second quarter of financial year 2013‚ as it continued to trudge along and step up efficiencies in order to arrest market share declines to rivals.

The company‚ which also owns CNA‚ Red Square and Boardmans‚ made a loss of R592m in the three months to 29 September‚ from a loss of R1.18bn a year earlier.

Jürgen Schreiber‚ CEO of Edcon‚ said the quarter under review was a challenging one.

"But we are on the right track‚ which is the important thing. There's still a way for us to go; it's not a fixing from one corner to another‚" he said. Revenue was at R5.8bn from R5.7bn in the same quarter last year. Trading profit slipped to R139m from R194m.

Simon Anderssen‚ equity analyst at Kagiso Asset Management‚ said Edcon's 2.4% year-on-year retail sales increase in the second quarter‚ showed that the group continued to lose market share to its listed competitors.

"Same-store sales growth of 0.8% highlights that the group is not yet seeing meaningful benefits from its strategic interventions‚" he said.

Local players such as Truworths‚ Woolworths and The Foschini Group have streamlined their fashion supply chain in the face of heightened competition as global players such as Zara and others expand in SA.

Edcon's Edgars division grew total retail sales by 4.9%‚ but on a like-for-like basis there was a 2.4% reduction in retail sales.

"We took a pretty tough stance on the winter markdowns. We really wanted to go for a good hard clearance strategy‚" Schreiber said.

The company is pushing hard to fix its Edgars business by revamping stores‚ and beefing up its merchandising as it turns its attention to "quick response" modern fashion. It is also adding more international brands to attract footfall.

The company entered into a partnership with local group The House of Busby and Britain's Arcadia Group to bring Topshop‚ known for its cheap‚ chic apparel to SA.

Edcon's discount division‚ which includes Jet and Legit‚ grew same store retail sales by 4.9%. Abri du Plessis‚ CEO and chief analyst at Gryphon Asset Management‚ described Edcon's results as "disappointing".

"They're struggling to get it right. They have a huge debt load but that should not be affecting the way they're trading‚" he said.

Edcon‚ which was once known as the retail jewel of SA‚ has significantly underperformed its peers since its highly leveraged private equity buyout in 2007 by Bain Capital.

Five years on‚ the company is still saddled with debt: as at September 29‚ its debt was at R23.4bn‚ compared with R24.5bn on March 31.

It is expected that the R10bn injected since Absa took over Edcon's store card book in June will allow it to reduce debt.