consumers at the heart of strateg y - advertising &...

Sunday Times Combined Metros 1 - 05/10/2012 11:47:10 AM - Plate:

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�STRATEGIC thrust to winthe loyalty of consumerswhere it matters most — intheir pockets and purses —

has paid handsome dividends forp e op l e s ’ lower-price championS h op r i t e .

Shoprite took the prestigiousGrand Prix award in this year’sRetail Awards for top retail outletof 2012, with Pick n Pay and Clickssecond and third r e sp e c t ive ly .

Shoprite also scooped the pool inthe supermarkets and hypermar-kets category, ahead of Pick n Pay,with Spar third.

In other triumphs for the award-winning retailer, the ShopriteLiquor Shop came second in theliquor category, while Shoprite alsonotched up fourth spot in thehousehold appliances sector. And ittook seventh place in the entertain-ment segment.

into real savings and morechange in their pocket over time.

“We encourage people to shopwith us not because of once-off orsporadic deals on limited items,but rather the fact that over timepaying less on everything you buyjust makes sense. The fact thatwe have won awards in both thissurvey and the Sunday Times TopBrands survey for a number ofyears now is indicative of our abil-ity to remain relevant. But ulti-mately we’re not actively tryingto win marketing or brand awards— our customers and their needsremain our greatest focus.”

According to Schreuder, receiv-ing accolades such as this is sat-isfying because they are voted forby consumers rather than a panelof experts. “It is valuable feed-back for us.”

Neil Higgs, senior adviser andhead of innovation for TNS SouthAfrica, said a major factor inS h op r i t e ’s success is its huge foot-print. “Shoprite is by far thebiggest retailer in terms of outletsand locations. Pick n Pay achieves

a higher user score than Shoprite,as does Woolworths. And whileWoolworths has a much bigger in-spirational pull among non-users— similarly with Pick n Pay com-pared to Shoprite — s h op p e r saren’t always able to go to thesestores because outlets are notalways available in their areas ofchoice. But Shoprite seems to

have a presence everywhere.Shoprite also scores very well onvalue for money.”

Sean McCoy, chairman of theBrand Council of South Africasaid Shoprite has built a strongbrand proposition through deliv-ery over the years “almost to thepoint of focusing less on its brandpositioning and more on execu-tion of the value proposition —potentially not every marketer’sideal approach, but clearlywith massive appeal to con-su m e r s … and the bottom line ofits business”.

“S h op r i t e ’s growth has beenexceptional over the years and itspenetration of the African conti-nent has been significant as abusiness that has been deeplycommitted to the region for manyyears and is clearly ahead of thepack. Its model appears to havebuilt sustainability through theeconomic cycles — strong valueproposition in the downturnscombined with loyalty and sup-port in the upturns. It is an en-vious position.”

McCoy, who is CE of brandingstrategists HKLM, said the morepremium-positioned Spar andWoolworths, for example, “arecaught in more niched segmentswhere growth is pressurised, andthis is signalled by the aggressiveshift toward garage forecourt re-tail activity as retailers look tocombine convenience and newchannels to market”.

Preston Gaddy, divisional direc-tor of Broll Retail Property Man-agement, said: “Shoprite has setthe tone from a price perspectiveand has made no bones aboutmarketing this. Consumers arebeing squeezed for their randsand need to respond accordinglyin their shopping habits.”

Shoprite appeals to the massmarket, in the LSM (Living Stan-dards Measure) 1 to 6 or 7 range,Gaddy noted. “Stablemate Check-ers’ ‘green line’ stores compete inthe higher-end, C-income plussegment of the mall market,where their offering has improvedfrom a look, feel and aestheticp e r sp e c t ive , ” he said.

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RETAIL GRAND

PRIX AWARD

84.73

78.36

74.15

74.14

72.67

72.39

69.38

67.56

67.08

66.75

Shoprite

Pick n Pay

Clicks

Edgars

Totalsports

Woolworths

Spitz

Makro

Spar

Game

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‘A major factor in

Shoprite’s success is

its huge footprint’

Shoprite marketing executiveNeil Schreuder attributed the re-tailer’s success to an “u nwave r i n gcommitment to provide SouthAfricans from all walks of life withlower prices you can trust, always”.

“We understand all too well thatwe have a big responsibility to-wards our customers. We focus ondelivering the lowest possibleprices on those items most impor-tant to our customers consistently,further amplified by the tough eco-nomic circumstances in the pastthree to four years. Our successdepends largely on the degree towhich consumers trust us to deliv-er on our promise and thus supportus. If we judge our success basedon this we certainly are SouthAfrica’s trusted low-price champi-on,” he said.

Schreuder said Shoprite was notso much trying to appeal to avalue-for-money shopper, butrather those who realise that pay-ing the lowest possible prices onthe things they buy every day,month-in and month-out, translates


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Tops

Shoprite Liquor Shop

Pick n Pay

Ultra Liquors

Makro

Liquor City

Liquor World

Solly Kramer’s

Picardi Rebel

Liberty Liquors

Edgars

Woolworths

Truworths

Mr Price

Jet

Foschini

Ackermans

Legit

Identity

The Hub

Woolworths

Edgars

Truworths

Jet

Pep

Mr Price

Baby Boom

Truworths

Pick n Pay

Baby City

Vodacom

MTN

PEPcell

Vodacom 4U

Cell C

Telkom Direct

Chatz Connect

8ta

Edgars

Woolworths

Truworths

Markham

Mr Price

Jet

Identity

Queenspark

Ackermans

Dunns

Shoprite

Pick n Pay

Spar

Checkers Hyper

Woolworths

Makro

Fruit & Veg City

Boxer

OK

FoodCo by Game

Makro

Metro Cash & CarryMetro Hyper

Kit KatCash & Carry

Jumbo

RhinoCash & Carry

DiscountCash & Carry

AfricaCash & Carry

63.4

60.1

57.1

55.6

54.8

48.9

47.9

47.7

46.2

45.6

LIQUOR WHOLESALERS

SUPERMARKETS

& HYPERMARKETS

TYRE & AUTO FITMENT

CENTRES

HOME ACCESSORIES &

DÉCOR

ELECTRONIC, COMPUTER

& GADGET

WOMEN’S CLOTHINGJEWELLERY MEN’S CLOTHING

SHOES CHILDREN’S & BABIES’

CLOTHING

HEALTH & BEAUTY ENTERTAINMENT HOUSEHOLD APPLIANCES

FURNITURE HARDWARE & BUILDING TELECOMS

SPORT

67.3

59.9

54.9

47.4

47.2

41.9

40.0

51.4

48.2

41.2

40.6

37.4

32.5

30.6

29.5

24.3

22.9

60.0

59.9

50.1

48.7

41.3

Sterns

AmericanSwiss

NWJ

Galaxy & Co

Arthur Kaplan

74.1

72.4

65.6

64.3

58.5

54.9

50.8

50.3

50.3

50.1

70.2

67.5

63.0

62.9

59.2

52.1

50.3

47.6

45.3

44.2

69.4

56.9

52.0

49.7

48.8

48.3

47.5

38.9

Spitz

Rage

Green Cross

Nine West

Tekkie Town

Prato

Shoe City

Bata

70.1

63.7

60.8

58.3

53.2

52.6

47.6

44.1

38.3

37.5

64.8

63.2

58.1

49.0

44.8

32.1

31.9

16.5

64.4

57.2

55.8

51.5

50.0

44.3

39.1

Game

Hi-FiCorporation

Makro

IncredibleConnection

Dion Wired

ElectricExpress

Hirsch’s

Totalsports

The CrossTrainer

SportsmansWarehouse

Mr Price Sport

Due South

Cape UnionMart

Sneakers

74.2

62.4

54.5

52.9

51.7

48.7

37.9

Clicks

Dis-ChemPharmacies

Pick n PayPharmacy

MediRitePharmacy

Red Square

Discom

The BodyShop

66.8

58.4

58.2

53.5

52.2

51.9

49.7

47.7

47.5

46.1

Game

Musica

Makro

CNA

Look & Listen

Pick n Pay

Shoprite

CUM Books

Top CD

ExclusiveBooks

Cashbuild

BuildersWarehouse

Build it

Timber City

Mica

Al’s Hardware

BuildersExpress

Pennypinchers

KwikBuild

Geen & Richards

Game

Morkels

AkhonaFurniture

Lewis

OK Furniture

Ellerines

Russels

House & Home

Bradlows

Game

Makro

Hi-Fi Corporation

Shoprite

Checkers Hyper

Pick n Pay

OK Furniture

House & Home

Clicks

Hirsch’s

Mr Price Home

Sheet Street

Woolworths

Boardmans

Edgars

@Home

Pep

Ackermans

Home etc

Tiger Wheel& Tyre

Supa Quick

Speedy

Hi-Q

TrenTyre

Mr ExhaustMr Tyre

Dunlop Zone

Autozone

Kwik Fit

66.3

62.1

61.0

51.8

51.5

50.5

49.8

46.0

46.0

43.2

66.0

56.4

56.1

50.6

47.9

47.4

39.2

38.1

23.2

63.7

63.3

56.6

56.5

55.2

54.1

53.8

53.0

52.5

52.5

64.2

62.1

60.4

58.1

57.2

54.1

48.2

46.5

29.0

65.7

52.9

52.2

51.8

51.2

51.1

50.1

49.8

49.7

72.7

52.2

51.1

50.3

47.8

45.3

35.3

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How Top Retail Awards are compiled

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R E TA I L E R S ’ fo o t p r i n t s ,customer experience ratings andaffordability influenced the TopRetail Award results, accordingto the 2012 Top Retail survey.

It was conducted among 3 000people in metropolitan regionsand 500 in non-metropolitanareas to paint a representativeview of opinions about 24 retailc at e g o r i e s .

“The outstanding example of abig retail chain whose footprintis huge, but whose ratings arenot as good as other outlets, isS h op r i t e , ” said Neil Higgs, senioradviser and head of innovation atTNS in South Africa.

“In the supermarkets andhypermarkets category Shopritetook the top position followed byPick n Pay and Spar,” he said.

“Shoprite has a huge footprintand that is why it does well, eventhough its rating by users andthe pull among non-users isnothing like as big as some of itsc o mp e t i t o r s , ” Higgs added.

He said that the barrier toShoprite customers shoppingelsewhere is either price orc o nve n i e n c e .

“Another example isAckermans and Jet, which havebig footprints, but indifferentratings compared to competitorswhen it comes to customerexperience and pull among non-users,” he said.

For example, Higgs saidWoolworths won the childrenand baby clothing categorydespite having a footprint of only9%. Ackermans and Jet eachhave footprints of 24% and 23%,but the Woolworths ratings byusers and non-users is very high.

The findings of theCommitment Economy, a TNSglobal survey of more than 39 000people in 17 markets, showedthat UK retail chains couldincrease their share of shoppingvisits by addressing the needs of“shallow shoppers” —

consumers who would love toshop at a better-quality retailerbut cannot because alternativesare too far away or tooex p e n s ive .

These findings are reflected inthe Top Retail awards survey,

which indicated that a number oflocal retailers might fall behindif it were not for cost andconvenience factors.

According to the UK data,Waitrose and Marks & Spencerare in the strongest position toconvert this type of shopper, whois currently most likely to shopat the big four: Tesco,Sainsbury’s, Asda and

Judith Passingham, CEO atTNS Northern & Eastern Europe,said: “Waitrose and Marks &Spencer are in the enviableposition of being desired bymillions of ‘shallow shoppers’ . . .The opportunity can be realisedby making their productsaccessible to those people.”

TNS said the findings provethat even in tough economictimes, quality and a fulfillingconsumer experience are still ahigh priority for UK shoppers.Speciality retailers such asbakers, butchers andfishmongers emerged as havingthe growth potential behindWaitrose and Marks & Spencer.These smaller players could gainup to £5.4-billion collectively byoffering fresh, local produce anda more intimate shoppingex p e r i e n c e .

What is the lesson for SouthAfrican retailers?

Jan Hofmeyr, chief researcherinto behaviour change at TNS,said: “Many of the biggest namesin the retail sector enjoy

unrivalled market share, but thisdoes not secure their long-termgrowth if consumers have littleor no commitment to the brand.

“They may continue to partwith their money for reasonsbeyond their control, but theminute more attractive optionsare available they are likely toswitch. This makes them an easytarget for competitors looking tosteal a march.”

Hofmeyr said ambivalence inthe minds of consumersrepresented a significant risk tothe market leaders in retail. “Soin the case of Tesco, a dual focuson hearts and minds will help itretain its dominant marketshare,” he added.

Te s c o ’s key strengths ofconvenience and affordabilityhave helped it to retain itsleadership position, but a need toconnect with customers througha good experience is also key. Tothis end the chain recentlydeployed 20 000 new staff toensure every shopper receivesexcellent customer service.

Quality-cost equation is key in SA

‘This makes them an

easy target for

c o m p e t i t o rs ’

Morrisons. The premiumretailers emerged as the mostdesirable grocers among theshoppers surveyed, regardless ofwhere they shopped themselves.

Together, Waitrose and Marks& Spencer stand to gain morethan £14-billion of new businessfrom customers who wouldswitch retailers if they could.

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�OR the fourth consecutive year,Tops at Spar — which celebratedits 10th birthday in August —came out tops in the liquor cate-

gory of the Retail Awards. It was rankedthird in the inaugural event in 2008 buthas dominated the category since then.

Overall usage of this category showeda significant increase this year, indicat-ing that consumers have more disposableincome than previously, some of whicht h ey ’re spending on alcohol. And, withShoprite LiquorShop and Pick n PayLiquor in second and third place thisyear, the key driver in the liquor catego-ry seems to be convenience.

With 25 new stores opening during thefirst part of 2012, taking the total numberof outlets around the country to about525, Tops has the advantage of havingthe greatest reach in what it calls “theneighbourhood sector”.

In its unaudited interim results for thesix-month period ended March 31 2012,the Spar Group reported: “Liquor tradingremained very strong with wholesaleturnover for the period increasing by animpressive 19.7% to R1.6-billion”.

There are 165 LiquorShop stores coun-trywide, while Pick n Pay has 113 liquoroutlets around the country.

Like Tops, LiquorShop and Pick n PayLiquor haven’t replaced the wine depart-ments within supermarkets.

Instead, the stand-alone stores — u su -ally adjacent to a supermarket — p r ov i d ea choice of beers, ciders, spirits and al-c op op s .

The Tops brand, said Spar Groupliquor manager Mark Robinson, is “allabout fun, entertainment, socialising anddiscovering new things.” With a signifi-cant presence at key wine events — Top sis the headline sponsor for the Sowetoand Guguletu wine festivals — and bydeveloping exclusive ranges like OliveBrook and Carnival wines, the chain hastaken the opportunity “to introduce theTops brand as the preferred wine suppli-er”, Robinson said.

The Spar group has developed a livelysocial media strategy for Tops on Face-book and Twitter. This might, at least inpart, explain why consumers surveyed

for the Retail Awards assigned it thebest-advertised liquor brand.

Advertising, sponsorship, social mediaand wide reach notwithstanding, conve-nience is probably the biggest factor in-fluencing the success of the liquor out-lets belonging to supermarket brands.After all, it’s handy to wheel a trolley ofgroceries directly into the adjacentliquor store and stock up on drinks.

Wine industry expert, Michael Frid-jhon, said pricing was a major factor inthe rise of liquor stores linked to super-markets. “The aggregated buying powerof the big groups and their focus on theitems they know people buy most meansthat, within a narrow-ish range, they canreally meet the demand/value nexus.”

Fridjhon also pointed to research con-firming that an increasing percentage ofliquor purchases are made by women.One such study says women make 65% to70% of the alcohol-purchasing decisions.And while previously stand-alone bottlestores may not have been female-friend-ly, national retail outlets are positioned

in key locations within safe environ-ments and with convenient parking.

“Finally, there is the question of thedemise of smaller, independent liquoroutlets. Many have been battling to makea profit and several of the chain licencesare the result of the acquisition of mom-and-pop stores or small chains where theowners have elected to exit u np r o f i t ab l ebusinesses,” added Fridjhon.

Woolworths, which in May 2010 intro-duced its Wine & Spirit stores that standas separate concession stores withinWoolworths stores, is yet to make an ap-pearance in the top 10 stores.

Another potential future challenger isMarket Liquors, which is the result of arecent RMB Corvest and Fruit & VegCity deal. Fruit & Veg City has acquireda stake in RMB Corvest’s Diamonds Dis-count Liquors, which will become MarketLiquors and be positioned near Fo o dL ove r ’s Market stores. If national retailchains continue to dominate the liquormarket, Woolworths Wine & Spirit andMarket Liquors could be names to watch.

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RECENT growth in the apparelsector of South African retailhas been supported by the on-going burgeoning of the mid-dle-income group, according toresearch by EuromonitorI n t e r n at i o n a l .

The rate of growth, however,is unlikely to continue as con-sumers come under pressuredue to rising costs and limitedjob creation, which are expect-ed to curb spending on so-called “a sp i r at i o n a l ” brandsand compel consumers to focuson purchasing clothing per-ceived as “value for money”.

This could explain the ap-pearance of long-establishedSA discounter Ackermansamong the top 10 clothing re-tailers in both the men’s(where it was placed ninth) andwo m e n ’s (seventh) categories

this year. While the top sevenplaces in men’s clothing re-mained unchanged from 2011,Ackermans this year replacedStuttafords, which disappearedfrom the top 10 a l t o g e t h e r.

But, said Ackermans market-ing director Louise Hamman,there are other factors asidefrom increased demand for val-ue that may also have influ-enced the brand’s improvedperformance in the survey.

“Certainly, Ackermans hasbeen well established as a val-ue retailer in South Africa formany years — we celebratedour 95th birthday last year —and the value equation contin-ues to be vital to us,” she said.“However, we’ve also undertak-en a number of significant re-

cent initiatives which have be-gun showing positive results.”

Ackermans — which is partof the Pepkor group and oper-ates more than 450 stores insouthern Africa, includingBotswana and Namibia — has

increase in its user base.But the chain is determined

to broaden its reach and cus-tomer base beyond clothing forlittle ones. Hamman said by re-freshing its brand identity ear-lier this year, the retailer notonly reminded customers thatit caters for the whole family,but confirmed that it is pre-pared to move with the timesand keep up with customers’changing values and needs.

Having briefed its advertis-ing agency, Ninety9cents, to“refresh and update” the logo,Ackermans set out to affirm itsstatus as a retailer that catersnot only to value-consciousconsumers but also fashion-conscious ones.

“The more contemporary lo-

go works well alongside allAckermans product ranges,”said Hamman.

“We also created a newtagline, ‘The look for less’ and,in terms of fashion, took aclose look at what is importantto our customers,” she said.

Ackermans also sells home-ware, cellular phones and fi-nancial services, all of whichattract more customers.

Information gathered fromcustomer behaviour and pur-chasing patterns, product per-formance and customer re-search, helps get the productmix as accurate as possible,said Hamman.

“Price is not enough andwe ’re determined to get thecombination of affordability,fashion and durability right inall instances. We’re workinghard to improve our customers’experiences in-store.”

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�OUTH African consumers’

preoccupation with gad-getry, entertainment andall things electrical is

borne out by the surge in userpopularity at relevant retail out-lets this year — with Game com-ing up trumps in three separatec at e g o r i e s .

Neil Higgs, senior advisor andhead of innovation for TNS SouthAfrica, said Game’s performancethis year had been exceptional.

It had set the benchmark in theelectronic, computer and gadgetstores category — in which therewas a significant increase in cat-egory usage — entertainmentstores; and household appliances.

Game remained top in the elec-tronic, computer and gadgetstores segment, with its increasedindex score being driven by a no-table increase in users.

HiFi Corp overtook Makro to fillthe number two position, whileHirsch’s entered the top 10, basedon the number of users. The cat-egory for entertainment stores,which had a significant increasein custom, was also won by Game.

The most notable shift wasExclusive Books, which droppedfrom fourth to 10th place, drivenby decline among users and non-users.

In the household appliance cat-egory — which also had morebuyers — Game remained at thetop, while Makro recorded themost notable increase, from 10thplace to second.

Game won in the household ap-pliances category for the secondyear running, and this year hasincreased its scores for footprints,users and non-users.

Game was also a new entrant inthis year’s grand prix awards forSouth Africa’s top retail outlets in2012, making its debut in 10thsp o t .

Said Higgs: “Clearly Game isdoing something right, and onewonders whether this might bethe influence of Walmart’s pres-ence in South Africa through itsowner, Massmart.

“Game in particular seems to

be much less of a down-marketmishmash and far more organisedthan it used to be, as regardsstore layout and presentation.

“Game also scores well onproduct range and is definitelyupping its performance in gener-al,” Higgs said.

HiFi Corp also rose from thirdto second place in the electronicscategory this year.

Sean McCoy, chairman of BrandCouncil South Africa, said that ina recent Nielsen’s shopper trendreport, findings suggested thatSouth Africans had become in-creasingly store- and brand-loyalas rising prices and continuedeconomic uncertainty underminedconfidence.

“Perhaps this trend supportsthe Game success, which is under-pinned by a good value-for-money,no-frills proposition. The Wal-

mart-Massmart results weredeemed disappointing by theirown CEO recently, but this hasnot hampered their growth ambi-tions,” McCoy said.

The company projected itsgrowth from a R9-billion to a R20-billion business. Although the tar-get date had not been specified,“this signals a clear intent, andthey will remain a serious con-tender in the retail segment”, saidM c Coy .

S’bu Manqele, an executive di-rector of branding and designagency Switch, said that for theconsumer, Walmart’s i nvo lve m e n texposed who was where in thepecking order, and enabled Gameto reclaim its space as a supplierof accessible, affordable goods.

Manqele said there was a per-ception among some consumersthat “Game is for everybody”,

while its stablemate Makro isseen as more of an exclusive clubbecause of the membership card— although free of charge — t h atis required on entry.

Game CEO Jan Potgieter said:“As a subsidiary of the second-largest retailer of general mer-chandise in South Africa, Mass-mart, we continuously strive togive our customers what they wantat the most competitive prices.

“Game is proud to have re-mained number one in the elec-tronic, computer and gadget storescategory as well as the entertain-ment stores category. Havingachieved this position only moti-vates us to continue providing ourcustomers with the best varietyand service in South Africa.”

Potgieter said the TNS surveyprovided insight into what SouthAfricans were looking for.

Ackermans pops up in top 10

‘The value equation

continues to be

vital to us’

long been a leading retailer ofclothing for children and ba-bies. It overtook Edgars to gointo second place behind Wool-worths in the children’s andb ab i e s ’ clothes category of theawards this year, recording an

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SPITZ maintains its top position inthe shoe-store category, whileRage moves up from fourth tosecond place with an increase innon-user awareness of the brandand a subsequent increase in non-user ratings. Tekkie Town, a newentrant in 2012, sits in fifth place.

Anna Dodds, marketingexecutive at Spitz, said Carvela,Kurt Geiger, Tosoni, Lacoste, andJ Reneé — the brands which havebecome synonymous with Spitz —had enhanced the image of thebrand and created a point ofdifference from the competition.

She said: “In South Africa,luxury products tend to tap intothree key elements: firstly,consumers subscribe to the idea ofbrand soul or history; secondly,they value the quality,authenticity and exclusivity ofluxury brands; and, finally, luxuryproducts are acquired because oftheir ‘m u st - h ave ’ nature and theircurrent appeal.”

Another boost to the stores hasbeen their premium menswearretailer, Kurt Geiger — wh i c hrewards its customers with freetailoring but, more importantly,with a loyalty programme, KurtGeiger VIP. Customers were puton various levels, depending onhow much they spent, Dodds said.

“One thing is certain — sp e c i a lVIP treatment and great benefits,such as free tailoring, areavailable at every level, whileVelvet-tier members qualify forfree delivery of tailoring andconsignment merchandise.”

For no extra charge, Black andVelvet-tier customers could t a keadvantage of free membership to aconcierge service, she said.

“This opens up a world ofspecial treatment, including travelbenefits, discounts and specialaccess to events such as musicconcerts and festivals.”

Furthermore, VIPs could shoponline, 24 hours a day, withSuitcase.

“Becoming a Kurt Geiger VIPmember literally puts fashion atyour fingertips by providingaccess to an online selection ofmerchandise through whichmembers can browse at theirleisure and put aside what theyl i ke , ” Dodds said.

“Their selection will be placedfor safekeeping in their suitcaseand ready for them to try onbefore buying at theirc o nve n i e n c e . ”

Dodds said, however, that the

greatest challenge faced by luxurybrands such as Spitz, was the“classes-to-masses” cyc l e .

“As soon as high-incomeearners are seen to be partial toa particular brand, even peoplewho are not traditionallycategorised in this income bracketwill aspire to purchase the sameluxury goods,” she said.

As a result, top brands had tobe regularly assessed andconstantly monitored.

Jeffrey Gochin, CEO of Rage,attributed his brand’s climb in theresults ladder to affordability, anddelivering high-fashion shoes andclothing with the addedembellishments its customers loved.

Other factors were the look andfeel of the stores; Rage’s innovativemanagement style; and the hands-on service required for the buyingof shoes.

Despite shoppers being undereconomic pressure, Rage wasexpanding: it now had a total of227 shops, having opened 179 newones in the past four ye a r s .

Year-on-year profitability also

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Top brands had to

be regularly assessed

and constantly

m o n i t o re d

grew from 83% in 2011 to 142% in2012 by the financial year end.

Gochin said: “We only stockown-brand shoes and clothing,ensuring a consistent brand image.

“Consequently, customers knowwhat to expect from a pair of Rageshoes or an item of clothing, andthis builds trust and loyalty.”

He said credit sales were closeto 50% of total turnover, makingcredit a significant factor in Rage’ssuccess. This percentage waslikely to keep growing, whichmade it an important area forthe retailer.

Gochin said that, in the past fewyears, Rage had become adestination store — meaning thatwhile a great position in ashopping centre was always good,it wasn’t critical to success.

“W h at ’s more important to us isthat we take the brand closer towhere people actually live andplay, so while flagship stores insuper-regionals and regionals areimportant, we have opened manystores in convenience centres bothin suburbs and rural areas,”Gochin said.

��

�ECHNOLOGY is trans-forming the retail land-scape, giving con-sumers more choices

than ever and providing retail-ers with some challenges —most notably testing their abil-ity to change and adapt to com-parative shopping.

Traditional retailers are hav-ing to incorporate their cus-tomers’ online behaviour intoproviding more compellingphysical shopping experiences.

The biggest trend re-shapingthe retail sector is the risingimportance of the so-called mo-bile economy. While onlinecommerce is growing at around30% a year, it’s being increas-ingly being driven by the use ofsmartphones, which allowsshoppers to make more intelli-gent buying decisions, on them ove .

“We are seeing such a rapidrise in smartphones and this isgiving consumers more powerin the store,” said Karin DuChenne, managing director ofTNS SA.

Internet analyst and manag-ing director of research firmWorld Wide Worx, ArthurGoldstuck, said around 10 mil-

lion phones are sold in SouthAfrica every year.

“It is expected that by 2013smartphones will account forhalf of this number. Smart-phone users eventually becomeinternet users and the numberof experienced users will beginaccelerating in 2013. It will con-tinue to do so for the next f iveye a r s , ” he said.

The result is that an interneteconomy worth R59-billion in2011 and making up 2% of theSouth African economy willgrow to as much as 2.5% of theeconomy by 2016.

Goldstuck said many majorconsumer brands and chainshave not yet devised compre-hensive online retail strategies.

“This makes the scope for fu-ture growth even greater,” hesaid.

However, retailers are goingto have to react swiftly to techadvances that could see com-petitors benefit, particularly inan online environment that en-courages comparative shopping

— from within a physical store.Andre de Wet, CEO of

PriceCheck, an online pricecomparison service, said con-sumers could compare prices ofgoods between supermarkets,while standing in one of them.

“You can scan the barcode ofa product in one retail outletand immediately check compar-ative prices in other stores us-ing an smartphone app,” hesaid.

“Half of all consumers arespending more than half oftheir total shopping time re-searching products online orusing their mobile devices. Re-tailers are protected from com-parative advertising outside oftheir stores but shoppers cannow see competing brandswhile standing right in theirown aisles. The information iscoming up on their own phoneas a result of their own actions— it’s far more trusted than‘push’ advertising in the retaile nv i r o n m e n t , ” said De Wet.

Google SA’s statistics showthat around 62% of smartphoneusers have used their mobilephones to do a product search,and over 26% of users havingchanged their mind as a resultof the information obtainedwhile shopping in-store.

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Online shoppinggaining traction

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PRICESARE ALWAYSPOPULAR

www.game.co.za

Sunday Times Combined Metros 8 - 05/10/2012 12:41:38 PM - Plate:

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Gateway

Maponya Mall

Loch LoganWaterfront

Greenacres

Menlyn Park

Eastgate

Sandton City

The Pavilion

Mimosa Mall

East RandMall & Galleria

Greenacres

HemingwaysMall

Moffet onMain

Vincent Park

MdantsaneCity

Loch LoganWaterfront

MimosaMall

TOP SHOPPING CENTRES

EASTERN CAPE MALLS

FREE STATE MALLS

GAUTENG MALLS

KWAZULU-NATAL MALLS

WESTERN CAPE MALLS

65.3

64.1

63.0

62.2

62.0

60.9

60.5

59.1

59.1

56.2

58.6

52.3

50.6

43.7

39.3

52.7

48.8

67.6

65.5

64.4

63.9

59.7

59.4

58.6

58.5

58.1

58.1

Maponya Mall

Menlyn Park

Eastgate

Sandton City

East RandMall & Galleria

Cresta

Greenstone

Clearwater

Westgate

Southgate

Gateway

The Pavilion

Musgrave

La Lucia Mall

Westwood

63.7

57.5

46.5

44.0

38.4

59.7

56.5

55.4

54.5

52.4

49.4

48.5

45.8

44.8

Canal Walk

V&AWaterfrontCavendish

SquareLiberty

PromenadeKenilworth

Tyger Valley

Westgate

N1 City

Parow

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�HE Aisle of Man is nota typing error. It is aterm used by retailspace designers to de-

scribe a convenience aisle at asupermarket for men.

It’s a single strip where mencan quickly find pretty muchall they need from the shopwithout having to negotiateand browse the entire store.

Apart from casinos, thereare few places as carefully de-signed with the psychology oftheir inhabitants in mind as re-tail shopping malls. Until shop-ping malls appeared about 40years ago, people shoppedwithin their communities, inthe local shopping centre.

Robert Silke, design directorat Cape Town architecture firmLouis Karol, said about fourdecades ago shopping centresstarted emptying out into shop-ping malls as urban dynamicschanged.

“It still happens. Business inMain Road in Sea Point justabout collapsed when the V&AWaterfront opened. Locals, aswell as tourists and Capeton-ians from further afield, foundit easier to shop under one roofwithout the hassle of lookingfor street parking or walkinggreat distances,” Silke said.

Nowadays many of the func-tions of a town or city’s mainstreet take place in a shoppingmall — everything from goingto a movie to shopping at sev-eral stores or visiting a travelagent. “Obviously one of theretail imperatives is to keepshoppers in a mall,” said Silke.

“So we see things like prayerrooms for devout worshippersand improvements in parentand child facilities. Some mallseven have daycare centres

where parents can leave theirchildren is a dedicated, safe en-vironment while they get onwith the business of shopping.”

The design philosophy ofmodern shopping malls is in-fluenced by many sources. Thethinking behind customer re-tention owes a lot to casino de-sign where every moment of aperson’s journey through thebuilding is steered by design-ers. In some of them it’s veryeasy to get in but not as easyto find an exit, for instance.

Retail space is a little lesscrude but there are devicesemployed to influence be-haviour in certain spaces.

“This is no accident. In manyretail outlets designed forwo m e n ’s clothing, all the seat-ing has been removed. Themessage is clear — men arenot wanted here. It’s an envi-

ronment where women canshop for clothes in an placet h at ’s designed to make themmore comfortable,” said Silke.

He said environmental con-cerns and technology will in-fluence the design of retailmalls in future.

“Although malls have gotbigger over the years — j u mp -ing from 15 000m² to some aslarge as 150 000m² — economicand environmental imperativeshave seen authorities startingto replace restrictions on de-velopment, particularly in theUS and UK near small towns.

“Strip malls, which are most-ly uncovered, are less expen-sive to develop in depressedeconomic times and are cheap-er to run. You don’t need asmany air conditioners becausethe pathways between shopsare in the open air,” said Silke.

While consumer technologydoesn’t have any significant ef-fect on actual architecture, it ischanging the way people shop.

“Social media and location-based mobile services meanpeople are able to broadcasttheir presence at malls andhook up with friends,” he said.

“Shopping centres and re-tailers are starting to exploreopportunities for marketing byplugging into social networkslike Facebook, Twitter andFoursquare. Technology is alsoinfluencing the way peopleshop for media.”

There remains, however,strong demand for physical re-tailers — people want to seethe food they buy and try onclothes — they want to seethese items in front of themand make comparisons beforemaking buying decisions.

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A NUMBER of shifts have takenplace in the furniture storescategory from 2011, with onlyGeen & Richards maintaining itsleader position.

Game shot up from fifth tosecond place due to an increasein usership and favourable userratings, as well as an increase innon-user ratings. Morkelsdropped from second to thirdand Akhona Furniture has comeinto the rankings at fourth.

Lewis climbed from sixth tofifth and OK improved threeplaces from ninth to sixth.

Russells — unplaced last year— has come into the rankings atseventh place and Ellerines, alsounplaced last year, has arrived atnumber eight, leap-froggingHouse & Home and Bradlows(who drop from third and fourthto ninth and tenth respectively)as a result of lower user ratings.

While the furniture storescomprise an old, well-established

and competitive sector andaccount for significantemployment, the future outlookseems promising, with demandkicking in from the low tomiddle-income households.Opportunities for niche marketsremain open for local retailersand prospects for growing theirfootprints both locally and inother African countries are upfor grabs.

However, in a retail sector thatis highly priced and credit-competitive a word of cautionhas been sounded with reports ofa rapid growth in unsecuredcredit.

Johan Schalkwyk, marketingmanager at Ellerines, confirmedthe importance of credit as animportant driver in the furniturestore sector. He said the majorityof Ellerines’ sales were on credit.

“The innovative credit offers

facilitated via African Bank haveenabled the brand to makefurniture purchases moreaffordable for customers,” hesaid.

Schalkwyk said marketconditions have been tough in

available spend in the furniturem a r ke t . ”

Schalkwyk said the ability tooffer customers the lowestmonthly instalments on qualityfurniture products as well ascash loans via African Bankdifferentiates the company fromc o mp e t i t o r s .

“Ellerines has opened anumber of new stores during thepast few years and we now havea national footprint in excess of600 stores in South Africa, withadditional outlets in fivecountries in the rest of Africa.

“Our sales and overallprofitability have also shownstrong growth during the lastthree years,” he said.

No matter how innovative theproducts, there remains concernabout the amount of unsecuredcredit available in South Africa.

According to African Bank,

contribution of steadilyincreasing unsecured lendingbook to total lending hasvirtually doubled over the lasttwo years and cannot simply beignored, although the rate ofgrowth has slowed this year.

It was recently reported byI-Net Bridge/BusinessLIVE thatthe Lewis Group’s chiefexecutive, Johan Enslin, joined anumber of industry players whenhe said that there was a rapidgrowth in unsecured credit of thegroup’s lower and lower-middle-income target market.

The National Credit Regulatorrecently commissioned researchon the spike in unsecuredlending in South Africa.PricewaterhouseCoopers (PwC)reported that the regulator haswarned there is a danger ofcustomers being over-indebted.This was particularly the case ifthe loans were being used forconsumption.Two of the biggestplayers in unsecured lending areCapitec and African Bank.

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niche markets remain

open for local

re t a i l e rs ’

recent years, with consumersunder pressure to make endsmeet.

“Due to the competitiveness ofthe business environment thebrand had to present innovativeproducts and credit solutions tocustomers, in order to attract the

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�HE battle of the mobilephone retail outlets hasseen a big surge fromVodacom this year, over-

taking MTN for first place in theTelecoms Stores category — withCell C some distance behind thetwo front runners.

Vodacom moved up from thirdplace in 2011 and this year alsotook fourth spot with Vodacom4u,ahead of Cell C store in fifth place.8ta also entered the top ten thisyear with a fairly large user base,but did not fare as well as the oth-er players overall.

Said Neil Higgs, senior advisorand head of innovation for TNSAfrica: “Vodacom have bouncedback this year, gaining a numberof new users in the process. Theirscores have also risen considerablycompared with last year. It appearsthat Vodacom has put in a lot of ef-fort after the 2010 Fifa World Cup,when MTN was dominant, andhave now made up for lostground.”

He added that Vodacom hadscored higher this year both interms of its footprint and with adramatic improvement in userscores. “Their attraction to non-users has also improved. So, clear-ly some of their above-the-line ad-vertising has been paying off,” saidHiggs.

Zunaid Dinath, managing execu-tive Consumer for Vodacom, saidthat in April last year the compa-ny ’s brand changed from blue tored. “This provided us with an op-portunity to revisit retail brandingand move towards absolute cus-tomer-centricity. We reduced theclutter and simplified the overallretail customer experience.”

Dinath said Vodacom was morewelcoming in the new red. “Th elook and feel of our stores has alsobeen simplified and our stores arenow more customer-orientated. Wealso ask our customers a lot moreabout what they like before we dothings.

“The strength of our extensiveretail distribution also played inour favour and continues to do so.Our retail staff have embraced ourgoal to make every customer smile,which has transformed the retailculture. In addition, we have fo-

cused on speed and simplicity askey drivers in our in-store processdesign and we ensure that the spir-it of consumerism is a focal point,”he added.

Dinath said simplified in-storeprocesses were key to any success-ful interaction in retail. “Our newin-store Tech Zones in selectedstores offer customer support onall technical-related aspects. Onceour customers have made theirpurchase, we offer a ‘perfect start-up’ that provides them with imme-diate setup and support on theirdevices. Our repair offering has al-so been extended to include moredevices and short turnaroundtimes on warranty repairs.”

S’bu Manqele, executive directorat the Switch design company, saidVo d a c o m ’s rebranding, in line withits Vodaphone parent, has made animpression on consumers. “Ty p i -cally with handsets that incorpo-rated a sub-branding of Vodaphoneto prepare consumers for the newbranding space they are now in.Vodacom in South Africa remainsbigger in numbers than MTN, butthey had lost their way in brandingand positioning. By having the op-portunity to rebrand, they wereable to address areas where theyhad lost ground, and the new redcolouring does tend to make themmore visually attractive,’’said Man-qele.

In his view, Cell C is unlikely tobecome a major player in compar-ison to MTN and Vodacom and“will tend to be seen as the othercousin.” Others think the company(Cell C) would be interesting towatch under its new leadership.

Frontr unnersmaintain the lead

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�VER the past three yearswholesalers have witnessed analmost exponential increase inconsumer support. Between

2011 and 2012 alone, usership rose fromjust over a quarter to more than a third.

Makro has fared particularly well inthis year’s retail awards, jumping from61.8 points in 2011 to 67.3 points this year.

“On our index, 5.5 points is a significantl e ap , ” said Neil Higgs, senior adviser andhead of innovation at TNS South Africa.

“Makro has a massive footprint — 17%— far higher than any of the others; itsnearest competitor is Metro Hyper at 11%.”

While Metro Hyper (formerly TradeCentre) has maintained its position in sec-ond place, its score has also increased —from 56.6 to 59.9. The third, fourth and fifthspots show a fair amount of movement,

stock to ensure that customers aren’t dis-appointed, and creating a shopping experi-ence that is exciting and rewarding.”

Nezar said: “We ’ve tried to bring toretail customers the value associated witha wholesaler, while retaining the elementof surprise that keeps customers comingback to our stores to see what deals wehave on offer.”

He said Makro had invested a lot oftime and money in making their storesmore efficient, and reducing the impact onthe environment.

“Technologies such as natural-light har-vesting; energy management systems thatgenerate and store thermal energy at nightwhen demand is low, and thendeploy it during higher-demand periods; aswell as condensate reclamation projects,contribute to an energy efficiency improve-ment of over 40% in the past five years.”

Even among its non-users, Higgs said,Makro had massive pull — 0.8 aboveaverage. Makro’s rating of 8.8 among itscustomers is 0.4 above average. “Makro’shigh score means it even comparesfavourably with some malls. It’s right upthere with Gateway, which at 8.9 is thehighest-scoring megamall.

“Th e r e ’s no question that Makro hascome into its own as an extremelyattractive place to shop,” Higgs added.

Nezar said customers liked the additionof fresh fruit and vegetables in some stores.

“Our promise of high quality, combinedwith our efforts to reward our customersfor buying more or bigger, have positionedus as a retail destination where customerscan complete their shopping.

“The upgraded butcheries have alsocontributed to this view and we’ve seenexciting growth in this area.”

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Gone are dim,dusty warehouses�� ‘ �� ’

‘M a k ro ’s high score meansit even compares favourably

with some malls’

with a new player: Africa Cash & Carry.Chris Nezar, marketing director for

Makro, said wholesalers gave c u st o m e r saccess to low-price goods by keeping costslow and volumes high. “We are able topass on these savings to our customers . . .”

There was no question that price was akey driver in s h op p e r s ’ move to wh o l e s a l e r s ,said Higgs, but it was not the only factor.

“Nowadays, wholesalers have become amore acceptable place for the ordinaryperson to go. In the past, the wholesalerconcept conjured up images of dim anddusty warehouses, manned by people whodidn’t know what they were doing.

“Looking at the Makros of this worlddisproves that view,” Higgs said.

Nezar attributed much of Makro’ssuccess to getting the basics right.

“It’s about fulfilling our commitment toour customers. That means having the bestbrands at the right price, having enough

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www.timbercity.co.za

Your Project Partner

Congrats,Chippie

We welcome all those who are keen to

discuss a franchise opportunity with us.

Let’s turn your outlet into

a Timbercity. For more

information, please

contact André de Jager

on 021 927 5000

or email

[email protected]

and thanks to our store operatorsfor once again exceeding customer expectations

53212 www.zoomadvertising.co.za


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Cashbuild still leadingpack with good results��

�ITH 4 453 employees and191 stores in South Africa,Namibia, Lesotho,Botswana, Swaziland and

Malawi handling 14.4-million cus-tomer transactions over the last year,Cashbuild remains first in the hard-ware and building stores category.

There were no movements amongthe top three players from last year’sresults. Cashbuild is followed byBuilders Warehouse and Build It,while Timber City and Mica haveswopped places, with Timber Citynow in fourth place. Pennypinchersand KwikBuild are the new entrants.

In a tough economic climate, Cash-build’s two-year compound operatingprofit of 24% is impressive, whichchief executive Werner de Jager attri-butes to the retailer’s focus on onebusiness only — selling quality build-ing material at the lowest prices.

“We have a robust business model.Our processes and procedures areour guiding light — we call it ‘Th eCashbuild Way’. With over 30 yearsin the market Cashbuild is a well-trusted and respected brand. This isnot something that we take lightly asthe trust and loyalty of the brand hasbeen built up over many years andcan be negatively impacted in a flashif you’re not careful,” said de Jager.

He said an important contributing

factor to the company’s success wasits predictable offering: “You will notpay a price for an item and then afew days later find the item is beingsold at below cost. Our prices arevalid for at least a month.

“We understand our customers andmarkets, which enables us to offer afocused range of products and ser-vices suited to the needs of each ofthese markets,” De Jager said.

Critical to Cashbuild’s ability toserve its customers and markets arethe locations of its stores. “We haveseen in the past when we relocatestores in a town to the correct loca-tion a substantial jump in turnoverand transactions in those stores.”

It’s not all about hardware. “Ca s h -build is also filled with excellent peo-ple. People that succeed in Cashbuildare people with a passion for people.Our business is about serving cus-tomers — externally and internally.

“The work ethic among the major-ity of people in Cashbuild is second tonone. We focus on working smarterand not just harder. We employ excel-lent people who take responsibilityfor their daily tasks.

“It is not possible to run the com-pany from the support office, so we

rely heavily on our divisional man-agers and store managers to overseethe daily running of the business. Ata corporate level we keep focused onthe exceptions and assisting the oper-ators to implement corrective ac-tions,” De Jager added.

The last ingredient to Cashbuild’swinning recipe is its VIC Loyalty,which plays an important role — inthe region of 10% of turnover is fromVIC customers with potential to im-prove on the contribution.

De Jager said Cashbuild providedvery little credit itself — ab o u t R10-million a month in turnover value.Nedbank provides the credit for theirHomeAccount card. He said onlyR400-million to R500-million a yearout of the total R6-billion turnoverwas a result of credit extension.

De Jager said market conditionswere “ tough at the moment” withvery little happening on the housingdelivery front. “Consumers are seem-ingly under more pressure. Competi-tion in the market has also increasedand there are a number of playersthat are debasing the market withwhat we believe are irresponsiblespecials — selling way below cost.”

However, inflation in building ma-terials is around 3%, which helpsmaintain affordability.

Ca s h b u i l d ’s biggest challenge is tofind suitable sites to roll out stores aswell as good managers to run them.

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�HE 2012 edition of the TopRetail survey has indicat-ed a marked increase inthe usage of electronic,

computer and gadget stores. Thissuggests the popularity of newage entertainment is growing fast.The question is whether this willmean the death-knell for tradi-tional forms of entertainment.

Console gaming and handhelddevices have captured a largeshare of the entertainment market,but the interesting issues arearound the new wave of e-readers.The potential of these devices sug -gest the traditional printed bookmay soon be a thing of the past.

According to Sean Bacher, edi-tor of Gadget.co.za, the populargaming consoles — S o ny ’sPlayStation, Microsoft’s X-Boxand Nintendo’s Wii — hold alarge percentage of the market al-ready, and continue to grow.

“Both Nintendo and Microsofthave consoles that promote morephysical activity in gaming, whilealso encouraging the family toplay games together. This hascertainly led to an increase inpopularity for this form of enter-tainment,” Bacher said.

“The usage of smartphones isalso growing all the time, as moregames and applications becomeavailable for these devices. Anoth-er advantage these devices haveis that it costs a lot less to pur-chase a game for one of these,compared to a game for a console.However, it is important to realisewe are dealing with two differentgaming markets here: the hard-core console gamers will neverswitch to gaming on a

smartphone, and vice versa.”Arthur Goldstuck, MD of re-

search company World WideWorx, said it remains interestingto see how console gaming plat-forms remain popular, despite therise of the tablet and smartphone.

“Instead of these devices —particularly tablets — replacingthe console as a means of gaming,it is fascinating to see that theyhave instead introduced gamingto a whole new generation ofgamers,” he said.

“In SA the earlier featurephones were traditionally heavilyused for gaming. Ironically, theintroduction of the smartphonehas actually seen the amount ofgaming conducted on these de-vices taper off,” Goldstuck said.

Is all this bringing about thedemise of more traditional formsof entertainment? Amazon report-ed earlier this year that theirsales of e-books through Kindlehad exceeded their sales of bothsoft and hardcover printed books.

Furthermore, far from the Kin-

dle fading away once the iPadcame to the market, the two de-vices have been shown to servetwo very different markets. Unfor-tunately for the traditional book-stores, both types of device are in-truding on the printed domain.

Bacher suggested that initiallythe advent of the iPad did wipeaway some of the thrill of theplainer e-readers. However, Kin-dle has since brought out the Fire,which is Amazon’s answer to thetablet, offering far more usability.

Asked whether he thought e-readers and tablet-type devicesare a threat to the traditionalbook store, Bacher said the threatmay be exaggerated.

“When iTunes was launched,people predicted the demise of theCD, but it hasn’t had that impact,at least not yet. However, that isnot to say that these devices willhave no impact on traditionalsales, and they may even force achange to the more traditionalbusiness model.”

Goldstuck agreed to a point,suggesting that while there willremain a place for the printedbook for many years to come, thesame cannot be said for the tradi-tional bookstore.

“There are two words thatstrike terror into the hearts ofanyone running a book, music orvideo rental store, namely TowerRecords. This chain of stores wasubiquitous in the US just a fewyears ago. It was renowned as themusic store with most extensiverange of CDs and DVDs of anylarge retail chain.

“This failed to save it from thedigital revolution — today there isnot a single Tower Records storein the US. I believe that in our lo-cal music industry, there is some

recognition of the change that iscoming. We are starting to see themusic moving further back intothe store, while accessories aretaking over in the front. Thesestores are starting to become elec-tronics retailers,” Goldstuck said.

Goldstuck believes this will be-fall book stores. If they are to sur-vive, he said, they will need totransform into shops that focusmore closely on the sale of e-read-ers and peripheral content-relatedelectronics, as well as of the elec-tronic content itself.

Tra d i t i o n a lenter tainmenton the way out

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�S PEOPLE become moreaware of which homedécor and accessories out-lets offer good value,

some retailers which fared lesswell in the past are now cominginto their own. Mr Price Home isa case in point, having leapt to topspot with a massive seven-pointimprovement in its score.

Sheet Street t a ke s second place,pushing Woolworths, Boardmansand Edgars — last year’s topthree — into third, fourth andfifth positions respectively.

Last year Mr Price Home fin-ished third, tying with Edgars. Lastyear was interesting because Wool-worths was a winner in the catego-ry. In fact, last year’s Retail Awardswere very much a Woolworths sto-ry, with Woolworths going up orleading in most categories.

Neil Higgs, senior adviser andhead of innovation at TNS SA, feltpart of the reason for this year’schange-up lay in increased con-sumer confidence and a generalwillingness to experiment with abigger range of brands.

Mr Price Home featured in twocategories: furniture and homedécor and accessories. In the fur-niture category, it’s not yet a bigplayer and its ranking reflectedthat, but in the home décor and ac-cessories category it dominatedthe ranking algorithm, which looks

at three facets of store usage.“The first is how many people

use the outlet within a specifiedtime period. On that note, Mr PriceHome and Sheet Street were at thetop of the list, with Mr Price Homeat 20% and Sheet Street at 21%. Butthen our algorithm goes a stagefurther and also looks at how peo-ple feel about the store in terms ofthose who shop there and forthose who don’t shop there, howthey would feel about going there.So we add an attitudinal, mind di-mension as well as a simple inci-dence of use,” Higgs said.

“It does pretty well on the userrating — it’s well above average;only Boardmans gets near it andSheet Street doesn’t do as well.And then in terms of the nonuser

pool, Mr Price Home is numbertwo behind Woolworths — t h at ’sprobably aspirational pull. ButMr Price Home isn’t doing badlyand that combination of a highfootprint and above-average userand nonuser score are what pushit into the top slot,” Higgs added.

Arn de Haas, MD of Mr PriceHome, felt the retailer hadn’tdone anything differently over thepast two years. “But we’ve beenmore focused. We’ve alwaysaimed towards what we’ve termeddelighting our customer.

He said in a tough economic en-vironment, the value in Mr PriceHome was hard to match in themarket. “Our key elements werefirst and foremost value — we tryand drive that hard.”

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�DCON’S drive to breathelife into its Edgars chain isworking — for the secondconsecutive year, Edgars

beat Woolworths in the men’sclothing category of the 2012Retail Awards.

The brand also unseated Wool-worths at the top of the list in wom-en’s clothing this year, showinggrowth in its user base and win-ning consumer hearts by providinga wide range of merchandise.

While it’s not a big surprise —the company has been hard atwork giving stores a face-lift, up-grading its merchandising andchanging the mix between inter-national brands and the Edgarsprivate label during the past year— the early signs of achievementare encouraging.

“It is thanks to our customersthat Edgars has been recognisedas one of South Africa’s most pop-ular shopping destinations. Recog-nition like this encourages us toconstantly drive to understandand serve the needs of our cus-tomers,” said Edcon CEO JurgenSchreiber. “Edgars aims to pro-vide customers with the choice,value and fashion.”

The brand has worked on build-ing customer loyalty in recentmonths with the launch, in Febru-ary, of a new customer rewardprogramme, Thank U, which —for the first time — covers all Ed-

con retail brands includingEdgars, Edgars Active, RedSquare, Boardmans, Jet, JetMart,Legit and CNA.

The Thank U programme is oneof South Africa’s largest loyaltyinitiatives, with more than 7.2 mil-lion members. Edgars also hasone of the retail sector’s largestcredit books, with more than 3.8-million active accounts. Althoughit announced the sale of its pri-vate-label store-card portfolio to

Absa in June, Edcon will continueto manage all related customeractivities, including sales andmarketing, customer service andcollections.

Schreiber said the Edcon-Absatransaction was an important partof the retailer’s strategic plan forgrowth by allowing for a greaterfocus on core retail operationsand providing a more efficientfunding structure to grow creditsales. It also follows the trends set

by leading global retailers: part-nering with third-party providersfor the provision of credit.

About a year ago, Edgars intro-duced its Great Price initiative,stepping up its marketing andpromotional calendar to give cus-tomers access to discountedprices throughout the year. Theidea was to increase sales by con-stantly communicating pricepoints and value to customers.

Edgars also recently expanded

its speciality chain, Edgars Active,which focuses on branded activewear including active footwear,active clothing and branded den-im for the “cool urban customer,who mixes active wear and brand-ed denim to create a unique streetlook”. Edgars Active sales haveexceeded expectations, Schreibersaid.

Since October 2011 Edgars hasopened 92 new Edgars and EdgarsActive stores and recently under-took extensive customer researchin women’s clothing “to better un-derstand and respond to what ourKelso customers truly want”.

Kelso is the retailer’s biggest-selling women’s wear label, whichincludes clothing, footwear andaccessories. Other private labelbrands include Free2BU, StoneHarbour and JX, while popular in-ternational brands are Guess,Levi, Polo, Pringle, Pierre Cardin,Nike, Billabong, Accessorize,Steve Madden, Aldo and ForeverNew .

Schreiber said Edgars wants tooffer more international brands.Earlier this year Edgars part-nered with US cosmetics retailerKiehl’s to bring its premium skin,hair and body care products toSouth Africa. The first Kiehl’sstore is in the Edgars at SandtonCity, with roll-outs planned forother parts of the country in 2013.

Leading UK fashion brandsTopshop and Topman, which in-cludes a range of clothing de-signed by Kate Moss, will belaunched by Edgars (also in Sand-ton City) at the end of November.This will be followed by furtherTopshop and Topman launches inthe Gateway Shopping Centrenear Durban before the end of theyear. Stand-alone shops are alsoin the pipeline.

Edgars surges ahead inclothing power drive

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�HE pecking order at thetop of the highly competi-tive retail sector is asvolatile as ever, with indi-

cations that one or two estab-lished players may be under somepressure as consumers switch al-legiances in the quest for valueand quality.

Neil Higgs, senior advisor andhead of innovation at TNS SouthAfrica, said that Woolworths,while retaining its reputation formerchandise of exceptional quali-ty, appeared to have lost some ofthe momentum in user ratings itachieved last year.

“In men’s clothing, the distancelast year between Woolworthsand Edgars was very close, whilethis year it has widened. Edgarshas pulled away from Woolies tosome extent, in terms of theiroverall index.”

Edgars also beat Woolies thisyear in women’s clothing. “Wo o l -worths is ahead on quality andoverall look and feel, but not socompetitive on value for money,according to the market feed-back,” Higgs added.

In this year’s various cate-gories, Woolworths was in fifthplace in the supermarkets and hy-permarkets segment. S h op r i t e ,Pick n Pay and Spar took the firstthree places.

In children’s and baby clothing

stores, where there was a signif-icant increase in category usage,Woolworths remained in firstplace this year, despite a declinein its index score, with lower rat-ings from both users and non-users. Edgars shifted from secondto third place, being overtaken byAc ke r m a n s .

Woolworths was also second inwo m e n ’s clothing stores, behindEdgars — and also took secondplace in men’s clothing, whereEdgars retained its top spot.

In the home accessories anddécor stores category, wherethere was another notable in-crease in category usage, Wool-worths shifted from first to thirdplace, with lower ratings notedamong users and non-users.

Finally, in the grand prix awardrankings of the top 10 retail out-lets in 2012, Woolworths wasranked in sixth position.

Higgs said, generally speaking,“Woolies seems to have had atough year — one that has notbeen helped by one or two publicrelations mishaps and slownesson the uptake.”

Chairman of the Brand Councilof South Africa, Sean McCoy, saidWoolies had indeed been underpressure given its PR challenges,and had been the subject of occa-sional consumer boycott senti-ment in certain quarters as a re-sult. “One has to admire the clar-ity of the Woolworths positioningand its unwavering stance on this,backed up by exceptional quality,

albeit at premium prices. Clearlythere are still market segmentsthat are happy and willing to partwith their cash for this.”

McCoy went on to say the obvi-ous challenge was growth. “Th equestion is whether this nichesegment will grow in line with theexpansion of the economic elite inSouth Africa, or will continue tobe under threat of consumerstrading down and in search of im-proved basket value across the

board. The economic climate re-mains challenging, but it willsurely turn and potentially posi-tion Woolies well in the long haul.Time will tell,” McCoy said.

In the meantime, he suggested,pursuit of growth in the conve-nience channel through its fore-court strategy may buffer this. “Itwas first to market in its partner -ship with Engen and currentlyhas 42 Food Stop stores, withplans to open another 34 sites

over the next three years.”Executive director at Switch,

S’bu Manqele, argued that Wool-worths needed to rethink its posi-tion in the market and to define“not only what they are but whatthey are not, particularly as theyexpand into bigger stores”.

Manqele said: “In the big storesit needs to maintain and managethat overall feel of individualityand personal service that is im-portant for consumers. It alsoneeds to deal with some PR issuesand to manage the brand moreclosely. Nothing is sacred and onealways has to be careful aboutniche markets, because nichescould be perceived as being‘small’ — and I don’t believeWoolworths want to be smaller.”

Manqele said Woolworths hadcertain values it was not commu-nicating to consumers that well.“Therefore consumers are oftenmaking decisions based on issuessuch as price alone.”

Hannah Ross, head of customermarketing at Woolworths, said:“Our customers are very impor-tant to us and we constantly lis-ten to their feedback on what wedo well and, more importantly,what we can improve. number of ways of measuring ourown performance in the eyes ofour customers, some of which areindependently run.

“We are always looking to im-p r ove . Any insights this researchcan give us will be very useful,”she said.

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Maybe it’s our expanding range, our great value and our smart shopper benefi ts, our green approach to store design, or simply that we start by putting you fi rst, listening to your needs and helping you make life easier. Whatever it is for each one of our customers, we know that in bringing our Goodness philosophy to life, we’ve earned your recognition and support.

Thank you for fi nding goodness in what we do for you, for our country and for the future.

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