Gamalakhe fashion designer gets exposure

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By Ntandoyenkosi Dlamini for the South Coast Herald

Hlengiwe said the main challenge she has faced as a designer is being underestimated and having to deal with people who want to know who she is before they could work with her.

Hlengiwe Gavu is a 22-year-old fashion design intern for Edgars fashion stores in Johannesburg. She is also a style maven who aims to show her knowledge of trends and clothing by the clothes she designs.

Growing up in a rural area, she was determined to make something of herself. “I was born and raised in Gamalakhe. I studied fashion and textile design in Durban. This is the place that fuelled my love for fashion and having a family that supports my studies and aspirations, made me want to do my best in fashion designing,” she said.

When Hlengiwe moved to Johannesburg in 2017, she entered for Edcon’s Design Innovation Challenge, which is an initiative that gave 14 young fashion design graduates the opportunity to bring their unique designs to the retail market. The initiative provides final year and postgraduate fashion students with the opportunity to hone their skills through learning platforms made available by Edcon.
“Unfortunately due to the nature of my contract agreement with Edcon, I can not discuss the project. But the opportunity they have given me is what I have been praying for. Seeing my fashion line, Redemption Royalty, in Edcon stores boosted my confidence as a young designer. Now I would love to work with other young women, just to share knowledge and skills. I am currently working on a collaboration with other South African designers and I am really excited,” she said.
Hlengiwe said the main challenge she has faced as a designer is being underestimated and having to deal with people who want to know who she is before they could work with her. “No man is an island but I’ve found that keeping your circle extremely small and letting your work speak for itself is essential. Also knowing your limits and where to draw the line. The people I do business with are not my friends, and my friends are just my friends; the two do not mix.”

On her way to building a recognisable name for herself in the fashion industry, she said she would love to work with South African designers such as Gert-Johan Coetzee, Orapelang Modutle, Duke Mngadi, and Ephraim Molengoane.

Article taken from the South Coast Herald

OPINION: No walk in the park for e-commerce organisers in Africa

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By Lexi Novitske , principal investment officer of Singularity Investments
JOHANNESBURG

Investors and entrepreneurs have eagerly anticipated the potential of e-commerce in Africa, where an increasingly young, digitally-savvy population is hungry for consumer options and connections to the global economy.

Last week Zinox Group, owner of more recent Nigerian e-commerce entrant Yudala, acquired Konga, a leading online retailer in Nigeria, for an unpublished sum. The sale is rumoured to be at a substantial discount to the estimated $385million (R4.6billion) valuation reported by investor Naspers in 2016, and underscores the difficulties of e-commerce giants’ expansion through Africa.

Stakeholders and consultants have fuelled excitement with projections that online shopping in Africa is projected to grow to $75bn by 2025, yet hopes have been tempered by high customer acquisition costs and a failure of consumer behaviour to live up to expectations. Konga launched in Nigeria in 2012, but after four years the company had a paltry 184000 active users, 1percent of Nigeria’s population.

In January, Rocket Internet’s Africa e-commerce giant Jumia announced they were closing their e-commerce platform in Rwanda and six months earlier announced they were closing Jumia Marketplace in Nigeria.

How did well-funded and talented teams miss such an opportunity?

E-commerce is a $2trillion global industry, but contribution from African markets has been weak. Headlines touting the rising “African middle class” omit that “middle class” in the region includes anyone able to spend $2 a day, and the consuming class – those able to spend $10 a day – makes up just 10percent of Africa’s population.

In 2013, Jumia was expected to become Africa’s Amazon and reach profitability within a year and a half by bringing shoppers online. Years later, however, 76percent of Nigerian consumers still visit traditional markets an average of 10 times per month and 67percent patronise local kiosks even more frequently.

Jumia and Konga offered incentives such as free last-mile delivery, but efforts soon fell flat in the face of widespread scepticism.

Low digital literacy and trust deficits mean that consumers value the experience of buying from familiar faces and purchasing small affordable quantities on a daily basis more than the convenience of going online.

According to McKinsey, 85percent of Nigeria’s social fashionistas would not go shopping alone. Shopping remains an important social experience, and person-to-person engagement, as well as direct sale through social media channels, drives decision-making behind purchases.

Dangerous game

Putting one’s eggs in a single geographic basket is a dangerous game in markets where economic headwinds and currency risk can be substantial drivers to already fragile consumer spending.

In 2016 Nigeria entered its first recession in two decades, costing some 8million people their jobs. Coupled with a 50percent devaluation of the naira, consumers’ purchasing ability, particularly for imported goods, was hit hard. Kenya and South Africa have recently felt their own shocks, and such economic waves are unlikely to completely disappear on the continent in the near-term. Investors looking for fast wins in concentrated markets and who are unwilling to ride market volatility have proven to be disappointed.

Large, foreign players looking to add top-line growth have set their sights on Africa, contributing to a fiercely competitive environment. With the evolution of payments products, including Flutterwave’s GetBarter, African customers are now able to shop on global online platforms, such as Alibaba’s AliExpress, with an almost-limitless inventory selection.

International apparel platforms such as Asos offer free international shipping to many African markets (making delivery cheaper from London than the minimum $2 charge for purchases within Lagos) and whispers in the the local market allude to Amazon opening warehouses in Nairobi and Lagos.

Local player Mall for Africa gives consumers access to a wide range of US retailers and allows them to pay using local mobile money, debit card, or a bank account. Unfortunately, local-only players are forced to “race to the bottom”, undercutting one another in high-volume, low-margin strategies dependent on large marketing budgets.

A lack of infrastructure can lower firm productivity by up to 40percent, eroding profitability in already narrow-margin e-commerce businesses.

Low internet penetration – only 22percent of Africans today have online access – the meagre availability of financial services (including supply chain financing for suppliers and penetration of payments products for consumers), poor logistics networks, and weak ICT systems remain obstacles in the region.

As long as these barriers persist local e-commerce companies replicating models from Seattle or Hangzhou without those companies’ resources and internal infrastructure will find it difficult to succeed. Jumia and Konga experimented with cash-on-delivery as a workaround for sceptical or unbanked customers found new challenges in terms of driver safety and theft as well as a high rate of rejected orders: Konga has since eliminated this service.

Courier fleets

The companies also found it necessary to build their own courier fleets, as the existing postal and logistics providers were unreliable.

Ultimately, the time may not be right for mainstream online retail in Africa. Winning online in Africa markets requires a long-term persistence to change (or adapt to) consumption habits, geographic diversification, and overcoming infrastructure gaps.

First-mover advantage can take time to manifest: this is as true in the US as in Africa. If the next wave of e-commerce companies can weather the coming years, learn from their peers and reform their models, they may survive long enough to reap the benefits of pioneering the wave.

Lexi Novitske is the principal investment officer of Singularity Investments, a Lagos-based investor in early-stage tech companies in sub-Saharan Africa.

Good news from Black Friday

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By Stafford Thomas for Business Live

RETAIL IS YET TO TURN THE CORNER

But December sales figures may show a slump if shoppers did a large portion of their spending during November frenzy


Black Friday did the trick for retailers in November, with shoppers scrambling for bargains and driving year-on-year sales 8.2% higher. It was the strongest rise in retail sales since June 2012 and trounced analysts’ consensus expectation of a 3.5% rise.

An overjoyed market responded by lifting the JSE general retailers index by almost 8% to its best level since August 2016 in the week of the sales data’s release on January 17. The market will now be looking for assurance that the stronger sales growth trend is sustainable.

Investec Bank economist Kamilla Kaplan has reservations. “There is a risk of the stronger than expected outcome in November giving way to weaker than usual December sales growth,” she says in a research note.

Kaplan points to the Bureau for Economic Research’s fourth-quarter 2017 retail sector confidence survey. “Confidence among retailers remained depressed and survey respondents noted that conditions in the retail sector remain tough,” she says.

A sharp slowdown in December retail sales growth would be in keeping with the experience in 2016. Sales growth in November 2016, the first in which SA consumers had a taste of a Black Friday sales drive, came in at 3.1% and was followed by a slump to 0.9% growth in Decembeshopr.

This year there are some positive factors that were absent a year ago. The breaking of the drought in the northern provinces and a stronger rand has resulted in far lower product-price inflation and in many instances product-price deflation. On the political front, deputy president Cyril Ramaphosa’s election as ANC president in December has brought hope of a revival in consumer confidence.

A spate of trading updates provides only a limited indication of how retail sales will pan out in 2018. The updates range from excellent to mediocre and downright bad.

Among fashion retailers, Mr Price impressed. It has clearly put the big setback in its past year to April 1 well behind it. It was a year in which poor product selection, big stock writedowns and market-share loss left the retailer nursing a 13.8% headline EPS (HEPS) slump.

Mr Price’s response to its past financial year’s woes has impressed Daniel Isaacs of 36One Asset Management. “I recently attended a product presentation by Mr Price,” he says. “Their fashion line-up was spot on and their pricing points excellent.”

It showed in results for the 13 weeks to December 30, with sales in its core apparel division — which accounts for 70% of total sales — up a hefty 10.1%.

The rise was led by the flagship MRP Apparel brand, which upped sales 11.3% and same store sales 8.2%, despite minimal internal inflation of only 1%.

Mr Price’s performance was not the result of a Black Friday wonder. The group reports that sales growth was consistent across all three months with retail sales and other income exceeding R3bn for the first time in a single month in December.

The market has rewarded Mr Price by boosting its price into new-high territory and its p:e to 26.7. Investors are looking to a repeat of the 23.6% HEPS rise and seem unlikely to be disappointed.

December also proved to be a good month for The Foschini Group (TFG), with the retailer reporting trading in its core TFG Africa clothing division as being “above expectation”. In December the division achieved an 11.4% sales increase, while in the first nine months of the year the rise was a solid 8.5% against the background of 0.7% price deflation.

“TFG and Mr Price both performed brilliantly,” says Alec Abraham of Sasfin Securities. “They are grabbing market share from Woolworths, Truworths and probably Edgars.”

But while consumers were still buying clothes from TFG with enthusiasm in December, they were cutting back on their spending on other items. Sales declines across TFG Africa’s nonclothing brands ranged from 0.8% on jewellery to 10.8% on cellphones.

Trading on a 17 p:e, TFG appears fairly priced at a time when investors are awaiting clarity on the impact on results of two recent acquisitions — Retail Apparel Group in Australia and Hobbs in the UK.

Falling full-square into the downright bad trading update category was Woolworths, which warns that in the 26 weeks to December 24 HEPS will fall by 12.5%-17.5%. It will follow a 7.6% fall in the year to June.

The only saving grace for Woolworths in its latest 26 weeks was a 9.4% rise in food sales. But it battled in the SA clothing space, with sales falling 0.2% and volume down almost 1%.

But it is in Australia where the really big damage is being done by its David Jones (DJs) department store division, acquired in 2014 for R21.4bn. DJs limped in with sales down 3.3% but profit damage is likely to have been far worse.

Ominously, DJs’ profit before tax slumped 73% in the second half of the past financial year. A reassessment of the carrying value of the David Jones assets is being carried out by Woolworths.

Also falling in the bad update category was Truworths, which reported sales growth of a mere 1% in its SA and UK operations in the 26 weeks to December 31. For the period, HEPS are expected to fall 1%-3% and will follow a 0.8% fall in the 53 weeks to July 2.

The only other trading update that can be termed excellent was from Shoprite, at least as far as its SA operations are concerned. In the six months to December the retailer’s SA supermarket division excelled, turning in sales growth of 7.8% despite price deflation of 0.4%.

Similarly solid performances were produced by Shoprite’s furniture and OK food franchise operations.

It was only in non-SA supermarkets that performance flagged, with sales in rand falling 0.4%. There was a particularly weak showing from its key Angola market, where sales fell 13% in rand and 9.5% in constant currency terms.

However, the sales fall is understandable given the exceptional showing in Shoprite’s year to June 2017 — when African sales, led by Angola, lifted 13.5% to R24.8bn and by 33.8% in constant currency terms.

Undoubtedly, another challenging year lies ahead for retailers. Investors wanting retail exposure should go with those who have already shown that their business models are a match for the challenge.

This article was sourced from Business Live