The Foschini Group has seen an increase in online sales despite the easing of lockdown restrictions.
The Foschini Group’s switch in focus to local manufacturing has stood it in good stead through the Covid-19 lockdown.
CEO Anthony Thunström said waiting 180 days for a clothing consignment from China was risky in the current environment, given that delivery could be disrupted by the pandemic and even other factors such as the trade war between the US and China.
He said the group was currently able to make and supply its stores in South Africa with clothing in 42 days, providing opportunity to supplement stock that was selling faster, and also reducing the risk of having too much stock that was not selling that well.
Anthony said TFG employed about 550 people in local manufacture, and the group would grow this capacity over time.
He explained that manufacturing in South Africa was “not for sissies. There were, for instance, import duties to contend with, some 50 percent of fabric had to be imported and substantial retraining and re-skilling was required in a sector where there had been decades of under-investment.”
He said the pandemic had accelerated many existing shifts in the retail environment.
Anthony said that contrary to expectations, the surge of online buying in South Africa had not slowed with the easing of lockdown restrictions.
At the end of the last financial year, TFG’s South Africa stores were achieving two percent of turnover through online sales, up from one percent at the start of that year. The figure was five to six percent year-to-date, he said. “We foresee TFG reaching up to 20 percent online sales in the not-too-distant future.”
Casual clothing sales
There had also been sharp growth in casual clothing sales. People working from home during the lockdown meant fewer sales of formal and business wear, a trend Anthony said he expected to see continuing for at least six months.
The weak economy also meant TFG had continued to slow its credit sales growth. At one stage in the past up to 56 percent of the company’s sales were on credit. A year ago, the figure was around 25 percent. Currently, the figure is at 15 percent, with some months where this figure was in single digit figures.
“Cash accounts for about 60 percent of sales in South Africa, which is a good position to be in at present,” said Anthony.
Value for money
Another trend that had accelerated during Covid-19 was the search for value for money by consumers in all clothing market segments. “Market research showed the group’s pricing was well positioned to take advantage of this trend,” Anthony said.
The inner city centres were experiencing slower footfall growth after the easing of Covid-19 restrictions, while many suburban and rural shopping centres were experiencing double-digit growth.
Anthony said it might take some time for large inner city shopping centre footfalls to fully recover.
TFG also recently acquired 420 Jet stores from Edcon and a new management team has already been put in place at Jet for a year.
However, Anthony said that Jet’s stores were still “starved of stock” and trading sub-optimally as a result. But stock is being supplemented with TFG’s local manufacture, and the expectation is that stock levels will recover in the next few months.
TFG also intends to roll out new technology and points of sale devices at Jet stores, and it will provide Jet with an online presence.
Anthony added that TFG believes Jet’s stores to be understaffed, and its staff levels are likely to increase once the uncertain economic environment improves.