Archive for year: 2019

South African department chain Woolworths said on Thursday it had turned around its fashion, beauty and home business after fixing poor product choices in clothing, which had weighed on its sales the previous year.

Woolworths shares jumped more than 8% to a 6-1/2-month high after it said sales in its fashion, beauty and home business in the 52-weeks to the end of June rose 1.5% “as a result of a focus on core ranges and basics, backed by improved availability”.

Basic ranges at Woolworth include classic knitwear which is priced from 250 rand ($17.95) to 1,299 rand and jeans selling for between 450 rand and 699 rand.
Woolworths South Africa, which also trades in 11 countries in sub-Saharan Africa, accounts for 71.1% of operating profit.

Sales at Woolworths, which also has a presence in Australia and New Zealand, fell by 1.5% in previous year in the fashion, beauty and home business as its womenswear modern range failed to resonate with its core customers.

In February, Chief Executive Ian Moir said Woolworths would focus on getting back to “beautiful basic” items in South Africa to appeal to its core customers, who are not looking for items which are either too fashionable or too youthful.

Woolworths said group sales for the comparable 52-weeks rose 3.9% and by 5.9% in the 53-weeks ended June, while food sales grew 7.7%, driven by further investment in price, innovation and convenience, resulting in continued volume growth, it added.

The year ended June 2019 had 53 trading weeks compared to 52 trading weeks for the year ended 24 June 2018.

In Australia, where retail trading conditions remain challenging, David Jones was also significantly impacted by sales disruption from the Elizabeth Street store refurbishment, with online sales jumping 46.8%, Woolworths said.

The group’s year-end results are due on Aug. 29.

 

Article found on Fashion Week website

Article by Daphne Howland

Dive Brief:

• Arcadia Group, which in the U.S. runs its Topshop and Topman brands and in the U.K. and Ireland also runs Dorothy Perkins and Miss Selfridge, among others, could shutter all 22 of its U.S. stores, according to multiple media reports and documents filed Wednesday with the United States Bankruptcy Court Southern District Of New York.
• The London-based company will also close at least 23 stores at home, although it will likely be at least double that, according to a report from U.K. newspaper The Guardian. Arcadia Group didn’t immediately respond to request for comment
• The conglomerate doesn’t usually reveal financial details, but in documents sent to its landlords in recent days Arcadia said its total comp sales fell 9% in its last fiscal year, and that even after cutting 70 million pounds in expenses last year it can’t afford its 170 million-pound annual rent bill, according to the Guardian’s account.

Dive Insight:

Apparel retail is tough on a good day, but adding financial improprieties and sexual harassment claims spells doom. The conglomerate’s ability to withstand everyday retail challenges plus uncertainties introduced by the so-called “Brexit” plan for the U.K. to leave the European Union has been undermined by its billionaire chairman, Sir Philip Green, who has piled it with debt and whose personal behavior has lost it key partnerships.

That’s the situation that Arcadia and its brands find themselves in, as the conglomerate’s operations unravel. Some problems, like financial issues related to contributions to the company’s pension fund and insufficient investment into its operations, go back years, while others are more recent. Last year, for example, after a member of Parliament surfaced allegations that Green had committed sexual harassment and other abuses, covering them up through non-disclosure agreements, Arcadia brands were dropped by partners that once served as a sign of their success. Beyonce, for example, severed the 2014 tie-up she had forged between her Ivy Park brand and Topshop.

The pension fund deficit threatens to endanger regulators’ ability to approve the company’s U.K. restructuring plans, according to a Thursday letter to Green from the chairman of the House of Commons Work and Pensions Committee. Those plans, known in the U.K. as a “company voluntary arrangement (CVA)” wouldn’t be sufficient to save the company’s brands in any case, according to data and analytics company GlobalData.

“The proposed closure of only 23 UK stores (4% of its current UK estate) and rent reductions at 194 stores, as part of its CVA, will not be enough to save Arcadia in a world where rising online sales continue to threaten the high street,” GlobalData Senior Retail Analyst Chloe Collins said in comments emailed to Retail Dive. “The closures would leave a large portfolio of 543 stores remaining, and with only £50m to be invested as part of the proposal, any attempt to pay for an increase in store standards would be spread too thinly to make up for years of underinvestment.”

A recovery seems distant. “For Arcadia to survive, Green must revamp its brands; ensuring they have a clear target audience, a point of difference from competitors, and enhanced digital platforms,” Collins said.

But that’s a tall order. Much of the portfolio has “lost relevance in today’s retail landscape due to their uninspiring fashion ranges and weak multichannel offer,” she also said. “Even Topshop, which used to be Arcadia’s star player, has lost appeal among fashion shoppers thanks to tough competition from the likes of Zara, Primark and H&M, as well as online pureplays such as ASOS, PrettyLittleThing and boohoo.com.”

 

Article by Daphne Howland

Article by Rob Davies

‘Dozens’ of less profitable stores could be shut as chain starts insolvency procedure

Fashion chain Monsoon Accessorize has become the latest high street retailer to deploy the controversial tactic of closing stores and seeking rent reductions in a bid to mend its finances.

Accountancy firm Deloitte has been hired to help the retailer secure a company voluntary arrangement (CVA), an insolvency procedure used by numerous struggling retailers and restaurant chains including Mothercare, New Look, Debenhams, Giraffe and Byron.

The increasingly common strategy involves closing less profitable or loss-making stores, while seeking agreement from landlords to reduce rents on other properties, rather than risk the company going bust altogether.

Sources told Sky News that “dozens” of Monsoon Accessorize’s 270-strong store network could disappear if the plan goes ahead, although the number of closures is yet to be agreed.

The largest shops, in both the Accessorize and Monsoon chains, are thought to be most at risk.

A spokesman for Monsoon Accessorize, owned by its founder Peter Simon, told Sky News: “The UK retail trading environment is tough and we are continuing to look at options to reduce our overall costs as we restructure the business in the UK and internationally.

“We have made no secret of the fact that we have steadily reduced our store portfolio in recent years and shall continue to do so as leases expire.

“We are looking at options to accelerate these store closures.”

Deloitte declined to comment on whether it was advising Monsoon Accessorize on the plan.

CVAs are supposed to be the last resort for companies that have run out of options and are flirting with bankruptcy.

But they have proved unpopular with landlords forced to slash rents, with some claiming that badly managed companies see CVAs as an easy way to cut costs rather than taking more fundamental action to improve their businesses.

The retail and hospitality sectors have been flooded with CVAs over the past couple of years. Philip Green’s Arcadia group, including Topshop and Topman, is expected to seek one imminently.

Article by Aaisha Dadi Patel, Bizcommunity

Lauren Dixon-Paver faced a dilemma a couple of weeks ago when she needed to get a new pair of pants: for over a year now, the 25-year-old graphic designer has made a concerted effort not to buy new clothing from fast-fashion retailers. Dixon-Paver, who also runs a YouTube channel which focuses on craft and sewing tutorials, has been a consistent critic of the fast-fashion industry for two reasons: the ways in which it oppresses workers in far-flung countries, and encourages mindless shopping. She got her first sewing machine when she was 12, and has been making much of her own clothing since.

The fast-fashion industry exploits people in far-flung, often Eastern, developing countries, using cheap labour to quickly mass-produce clothing that keeps up with trends.

These trends are quick-evolving, and as soon as something’s outdated, people simply don’t want to buy it anymore; Bloomberg reported in March last year that H&M had a record piled-up inventory of unsold garments worth more than $4 billion.

A report compiled by Oxfam Australia called ‘Made in Poverty: The true price of fashion’ highlights the human cost of fast fashion. The report, part of the ‘What She Makes’ campaign, surveyed 470 workers at factories in Bangladesh and Vietnam, and found that they live on “poverty wages,” with many earning the equivalent of just over R5 an hour. 100% of the women surveyed in Bangladesh, who are employed at factories which supply brands including H&M and Cotton On, are unable to make ends meet.

Jehan Ara Khonat, co-owner of modest fashion and lifestyle store My Online Souk, says analysing the social structure of trends is integral to understanding how fast-fashion operates. “As soon as the fast-fashion industry catches on to what’s trending, an elite group creates something else to differentiate themselves. Fast-fashion companies make it available for the masses, and the cycle continues.”

What She Makes

The What She Makes campaign is calling for big clothing brands to pay the women who make clothes that they sell a living wage. “The women who make our clothes do not make enough to live on – keeping them in poverty. Despite long hours away from their families, working full time plus many hours of overtime, big clothing brands do not pay garment workers enough money to cover the basics of life – food and decent shelter,” the campaign website reads.

According to the report, available on the website, one factory owner in Bangladesh reported the extensive measures a company had taken to keep the clothing they produced safe in case of a fire, but a lack of interest from the very same company in fire safety measures for the workspaces where the people who sew the clothes spend the better part of their day.

One of the workers that Oxfam spoke to, 20-year-old Fatima, lives in a two bedroom apartment with 10 other people, including her landlord, and sleeps on the floor. When Fatima gets paid late, she stresses about paying rent on time and getting money to her sick mother, who lives in a rural area in Bangladesh. As is sometimes the case with outsourced contracts, Fatima’s seniors don’t always pay her and her colleagues their full agreed-upon wage. “The owner doesn’t know about this, that the line chief keeps our money,” she says. If Fatima has low wages some months, she forgoes her budget for food, sending the money to her mother instead.

Another woman that Oxfam interviewed, 22-year-old Forida, earns the equivalent of R3.50 an hour. This is below the minimum wage in Bangladesh, because deductions have been illegally taken from her overtime wage for mistakes and not meeting unrealistic daily targets.“I feel embarrassed when I am scolded in front of so many people [when I make mistakes] and then I feel bad about myself because I’m not able to do the work properly. If I could do the work properly, then I wouldn’t be scolded so hard and this makes me cry.”

Forida and her family – her husband, mother-in-law, and toddler son – live in a hot and cramped compound with six other families, including her landlord’s. There is just one toilet and place to bathe for the whole compound, and two shared cooking areas. Her income usually runs out before the end of each month, leaving them without food. “If we were paid a little more money, then I could one day send my son to school,” she says. “I could provide food for the last week of the month. We could live happily, we could lead a better life.”

As part of the campaign, Oxfam have initiated a company tracker to monitor the progress that brands are making, with both Cotton On and H&M ranked as having taken action to be transparent and committed to change.

But for now, stories like Fatima’s and Forida’s still remain a reality. “People are working in awful conditions to make clothes for us, so we can buy fantastic bargains,” says Dixon-Paver.

Article posted on BizCommunity by Dean McCoubrey

 

At present, e-business in Africa remains a challenge. It may be better than it ever has been, but the truth is that lower literacy and internet penetration levels continue to limit the growth on the continent.

However, this will not remain the status quo for long, as smartphone proliferation increases, data costs decrease, and usability improves. E-wallets, now commonplace, are an excellent example of this, bypassing the continent’s challenges around depositing, withdrawing and transferring cash, as well as buying airtime and electricity.

Untapped market

Africa represents one of the world’s finest untapped markets, pointed out by MTN’s Herman Singh during his presentation on ‘Scaling in Africa’ at the recent edition of Africacom.

Unpacking the success story that is Jumia, Africa’s largest online marketplace, he illustrated that the growth of the platform across the continent is comparable to, if not more impressive than Paypal. In addition, 41,000 active merchants in the ecosystem offered over 6.1 million products ranging from hotels, to real estate, jobs, TV, airtime, restaurants, flights and more.

He explains, “Africa’s e- and m-commerce opportunity has a potential client base of 400 million internet users, and a rapidly emerging middle class expected to grow by 54% between 2020 and 2030 and decreasing data costs in some countries (43-45% decrease in the lowest data plan in both Egypt and Nigeria between 2016 and 2017.”

Additionally, in building out financial ecosystems – stores that offer a diversity of products or even online “malls” – Africans will no longer be limited by their location, as long as logistics and payment issues can be solved. Singh stated that Jumia has created a network of over 4,000 logistics partners in order to work across the 15 countries they had been working in. And payment by cash at this stage was still commonplace, causing significant challenges.

Regulatory issues

With respect to payment, enterprises on the continent are seeing the opportunity as well as global merchants now eager to be active in Africa but need to understand and fast-track the regulation – or lack thereof – across infrastructure issues, handling of cash, wallets and alternative payment methods that they are not accustomed to. They want a one-stop payments provider to get them to these markets, so they don’t have to deal with the complexities.

Payment intermediaries

Karen Nadasen, country manager of PayU South Africa, the country’s leading payments provider, explains that the role of a ‘payments intermediary’ will be critical, having already dealt with the complexities in these countries and created its own relationships, partnerships and agreements but underpinned by the credibility, infrastructure and proven results of a global brand.

Nadasen says: “Global enterprises do not have the time to make mistakes. Hyper-localisation means we are knowledgeable about the markets we are in and ‘speak’ the local language. This is particularly important with regards to licensing. As we know, some markets in Africa are not as regulated as SA, but this is starting to change. Our partnerships in SA, Kenya and Nigeria have been an essential springboard as we branch out through these ‘hubs’ to cover the rest of Africa.”

Smart device growth

The opportunities will be compounded as sub-Saharan smart device growth is now the fastest in the world. As literacy levels increase, amidst Africa’s new dawn, digital services such as microfinance will improve lives and enable people to do business, while marketplaces will bring products and stores to people so they can make purchases – assuming enterprises like Jumia continue to expand the delivery network and solve logistics challenges.

“From an African perspective, we use our single integration point for merchants to springboard into Africa using our global infrastructure – leaders in emerging markets in India, Eastern Europe, and Latin America – and then hyper-localising the expertise through our groundwork in Africa, offering cross-border execution on payments, compliance and fulfilment. It’s our experience across these emerging markets that has allowed us to deliver a user experience that works in these types of market, keeping it simple and accessible.”

In his “What it takes to win” conclusion, Singh outlined why Jumia has been Africa’s most successful online case study to date. He attributes the company’s explosive growth to ten factors – establishing a community of users, building trust, access to the channel itself, a robust payment and micro-payment partner, fulfilment and logistics, merchandising, location and maximising customer insights.

Research firm Statista estimates that the e-commerce sector in Africa’s 54 countries and 1.25 billion people generated $16.5 billion in revenue in 2017 and forecasts revenue of $29 billion by 2022, despite internet penetration lying at only 35 percent. The potential most certainly exists.