Archive for category: Uncategorized

By Adele Shevel for Business Live
When Mr Price posted its full-year results last week, its share price rose nearly 4% — and spiked to an even higher level in the course of the day. This was in spite of it posting a 12% drop in earnings.

The earnings decrease, its first in 16 years, marks a dismal milestone for the company, which has for years been the darling of apparel retailers.

The market appears to hold the view that Mr Price is in a turnaround phase and is focused on regaining market share from competitors. It’s not quite clear what this involves other than sourcing better products to appeal to more shoppers, but the increase in share price suggests buy-in.

The retailer has been fighting in a maelstrom of frenzied price discounts, as its traditional competitors have promoted these more heavily than before in a tough landscape. Consumers are under pressure, and international chains such as H&M, Cotton On and Zara continue to reshape the landscape, offering fast fashion.

Mr Price, which also sells homeware and furniture, maintained its full-year dividend, which has not declined in the past 31 years, at 667c/share. The final dividend was 438.8c/share, up 4.7% on the previous comparable period. Total revenue increased 0.7% to R19.8bn, with retail sales decreasing 0.5% to R18.6bn and comparable stores down 3.6%.

The apparel sales since the year end — combined with the identification of issues of the past year related to inventory, such as seasonal shifts and getting the fashion wrong — have given the market some confidence that there is a turnaround.

Ashburton Investments fund manager Wayne McCurrie says: “The true problem was that [Mr Price] got its fashion wrong in Mr Price Apparel. People didn’t like what it had on its shelves. It had lots of sales, but people didn’t want to come in and buy what it had.

“[That is] not unusual — it does happen.”

Sales volumes were heavily negative at Mr Price Apparel, including at Miladys.

Overall, sales volumes were down about 10% in volume terms.

However, “that unloved fashion is now out of the system. The new lot looks quite good,” says McCurrie.

Mr Price has changed its procurement policy. Competitors are doing less discounting and, says McCurrie, “it looks as if [Mr Price] is achieving a turnaround from the very poor year it had last year. It’s still early days, but the market has certainly liked what it’s seen.”

Mr Price has positioned itself to be differentiated, as it offers a wide range and low price. Competitors tend to offer either a small range, or a big range at higher price.

“It felt a lot of its competitors moved into its niche,” says McCurrie. This wasn’t helped by very weak economic growth last year.

“We believe it’s a turnaround story. It probably won’t get worse than it did last year, when there was an accumulation of mistakes: new competitors, higher than normal discounting and a very poor economy. And the company got the fashions wrong.”

Last week Mr Price was referred to the consumer tribunal after an investigation by the national credit regulator showed that the retailer charged consumers a club fee on credit agreements, which is not allowed by the National Credit Act. This could cost it up to 10% of its annual turnover.

The company says it will oppose the referral, as it does not agree with the view held by the regulator.

Other retailers have already been referred to the tribunal in this regard, including Edcon.

Jean Pierre Verster, portfolio manager at Fairtree Capital, says: “There seems to be a lot of noise, and a lot of retailers have fallen foul of technicalities of the act. We are waiting to see what happens there. Hopefully it won’t have a material impact.

“It does seem as if credit is increasingly a lever Mr Price wants to pull as well, a mechanism it wants to use to stimulate sales. It needs to play by the rules if it wants to use it to compete with more credit-based retailers such as Truworths, TFG and Edgars.”

Verster says the marked price difference between Mr Price and its competitors has shrunk to a point where it’s small enough for customers to go elsewhere.

“Whether this is a sustainable turnaround needs to be seen,” he says. “We’ll have a better idea at the interim stage.”

Not everyone buys into the idea of a turnaround. Senior equity analyst at Sasfin Securities Alec Abraham says: “The performance was bad. I think to say it’s a turnaround is to clutch at straws. I don’t think there’s much of an improvement in the economy. They say the turnover of Mr Price and Miladys is up a combined 10% this year, but one swallow does not a summer make.”

Abraham says the problem extends beyond Mr Price to all local apparel retailers. “They need to reinvent themselves for this new, structurally different clothing environment. In the old days it was very cushy — everybody had a place. Now there are other [players], and the SA retailers need to find their place in the new structure.”

Mr Price was largely unchallenged “in the old regime, but now, all of a sudden — partly through its own doing and also because both the international and the local companies are trying to up their game – the differentiation between everyone else and Mr Price has narrowed. The company needs to do something to cope with that.”

Mr Price says any improvement in the consumer environment is likely to be gradual. “The year proved to be exceptionally challenging for the retail sector. Consumer confidence remained low as a result of the poor state of the local economy and a lack of faith in the current political leadership’s ability to set high standards of governance and deliver inclusive growth.

“Cabinet reshuffles and downgrades by ratings agencies have caused further exchange rate volatility, which the consumer ultimately has to absorb. As a result, the retail environment has become more competitive, with any growth in a stagnant market coming from increased market share. This has led to retailers in our sector increasing their promotional activity to drive sales and manage stock levels.”

Finance group HSBC expects virtually no growth in apparel sector profits until 2019. According to Bloomberg, HSBC analysts Jeanine Womersley and Harshul Sharma said in a note that SA consumers are “unlikely to see a cyclical recovery in 2017, and even if this does materialise, it’s unlikely to be of the magnitude required to offset the structural headwinds we believe face the sector”.

Can fashion retailers wage war against the seemingly invincible Amazon? Undoubtedly, says Doug Stephens.

By Doug Stephens for Business of Fashion

TORONTO, Canada — Amazon recently posted its eighth straight quarter of growth. In fact, in the first quarter of 2017 its revenue grew by a jaw-dropping 23 percent, hitting net income of $724 million. Amazon Prime subscribership jumped to over 80 million members, representing a gravity-defying increase of 36 percent. And, while slowing marginally, Amazon Web Services, the company’s cloud computing cash cow, continued to post growth in the mid-40 percent range, giving Amazon plenty of cash to burn on furious innovation.

For one, Amazon continues to expand the capabilities of its Alexa Voice Service, the operating platform of its popular Echo digital assistant, a technology that not-so-subtly aims to disintermediate not only Google but every retailer on the planet from the consumer product search process, 55 percent of which already defaults to Amazon.

In addition, Amazon is steadily adding products to its Dash Replenishment Services platform which builds re-order capabilities directly into products like printer ink cartridges, water filters and appliances, to name only a few.

And in a move that elicited a collective “holy crap” from the grocery and convenience industries, Jeff Bezos and team unveiled Amazon Go, an automated store design free of checkouts, cashiers and lineups. The first such store is currently in beta on its Seattle campus and the word is they intend to roll out hundreds more across the United States.

Making their spider web of value even stickier, Amazon will spend a whopping $4.5 billion on original and licensed content this year to feed its burgeoning video streaming business, falling just shy of Netflix’s $6 billion investment. As Bezos himself has said, “When we win a Golden Globe, it helps us sell more shoes.” And speaking of shoes, Amazon has also secured the number two spot in US apparel sales, second only to Walmart, which it is expected to eclipse very soon.

Amazon isn’t a fun experience. People don’t take selfies of themselves ordering things on Amazon.
For some brands, a list of wins this long would represent a lifetime of achievements. For Amazon, it’s quickly coming to be seen as a decent quarter. Amazon, it would seem, is unstoppable, invincible, undefeatable.

Yet, despite all these recent achievements, innovations and accolades, there are some adjectives that I can’t ever recall hearing mentioned in the same sentence as Amazon. Conspicuous by their absence in most commentary on the internet giant are words like fun, beautiful and joyous. You’ll very rarely, if ever, hear Amazon described in these terms.

And that’s no coincidence. Amazon isn’t a fun experience. Friends don’t meet for dinner and then go on an Amazon shopping spree. People don’t take selfies of themselves ordering things on Amazon. I’m a card-carrying, dyed-in-the-wool Amazon Prime member and order plenty of stuff but I’ve never perceived my time doing it to be fun.

As for beauty, Amazon is about as aesthetically pleasing as a wood chipper. But, like a wood-chipper, Amazon is purpose-built, not for beauty but for efficiency, expediency and volume.

And, regardless of its early success, I have yet to hear anyone recount stories about what a “joy” it is to shop using Echo. Nor can I recall anyone giddily running from one room to another pushing their Dash Buttons. The point of these technologies is not to elicit joy but rather to eliminate altogether any consciousness of shopping.

Amazon is a passionless yet wickedly effective means of consuming. They’ve taken what used to be a sometimes painful, arduous multi-site online buying experience and literally brought it down to one-stop and zero clicks with Alexa. It is the all-you-can-eat buffet of consumerism. It’s the Wikipedia of shopping, which is to say that whatever you’re looking for is probably there but getting it is never what you’d call a memorable experience.

And so, as “cheap” is to Louis Vuitton, Fendi and Rolex, fun is to Amazon — it’s simply not in the brand’s DNA. Nor was it ever intended to be. Jeff Bezos never set out to create a delightful shopping experience. Amazon is quite simply the shortest distance between wanting and getting.

THE ART OF RETAIL

So, if truly great retail can be considered fine art (which I fully believe it should be) then Amazon is the paint-by-numbers equivalent. It’s fast, easy and simple but about as artistic as Dogs Playing Poker. In other words, Amazon has — to its credit — reduced shopping to a science, but in doing so has also sapped it of its aesthetic, social, kinetic and human joy.

And it’s this one tiny yet glaring chink in Amazon’s seemingly impenetrable suit of armour that may just offer their competitors an opportunity to inflict a small wound, or at least save themselves from outright annihilation. Using art to counter Amazon’s science, retailers may just stand a chance of surviving, if not thriving in their shadow.

Using art to counter Amazon’s science, retailers may just stand a chance of surviving, if not thriving in their shadow.
But it’s a strategy that demands that these same retailers finally come to grips with a longstanding and inconvenient truth. Most retail experiences aren’t fun, beautiful or joyful either. There’s a reason people aren’t going to the mall anymore. There’s a cause for all the store closures.

So how does one engineer joy? How does retail reclaim its artistic ground? How do stores become fun again?

It begins by getting out of the store business entirely.

Don’t build stores. Build stories.

Ultimately as humans we acquire products but we invest emotionally in stories. The world doesn’t need another concrete commercial real estate box with racks, registers and shelving, or another cold, catalogue-like website. It needs physical and online shopping places that celebrate unique brand stories. It needs enchanted spaces and installations that promote interactions with products. It needs powerful experiences that engage on every sensory level. Great retail must be nothing less than a form of performance art where the cost of admission is a purchase only-too-gladly made.

Don’t conduct commerce. Create community.

Visit any major city and you’ll see the same thing — people gravitating to and congregating in public spaces. Parks, squares and plazas are communal gathering points. Yes, your business succeeds by selling things. But all those things are sold to people and people are, by nature, social animals. Building a tightly connected community of customers who are galvanised by a common passion, place, idea or interest is the surest way to cultivate a sense of community and an atmosphere of fun. Doing so raises your stores and websites beyond the level of commerce and into the realm of becoming powerful places for communal gathering.

Don’t sell mass. Sell me.

Mass is the realm of Amazon, which has little interest in personalising products. Personalisation costs time, money and effort — all of which dilute Amazon’s competitive advantages of selection, speed and affordability. So, find a means of personalising and customising products and solutions for your customers. This can be by leveraging clientele data, using technology to offer personalised solutions, or by offering bespoke and customised options, replete with concierge levels of service. Regardless of how you achieve it, it’s essential to leave every customer feeling that your store, your products and your staff were there especially for them.

Don’t measure sales. Measure experiences.

In a world where online sales are growing exponentially, relying on sales per square foot, per hour or per sales associate as a measure of store productivity is folly. Focus instead on creating experiences per square foot. Ensure physical opportunities to try, play, learn, be inspired and perhaps even co-create in the space. Deploy brand ambassadors to share their expertise and experience with your guests. And don’t worry — sales will get measured, your accounting department will make sure of it!

It’s experiences that you, as the retail leader, need to focus on, because it’s the experience that will not only differentiate you relative to competitors, it will also help you outperform in your category. Studies indicate that businesses that outperform in the realm of customer experience can, depending on their product category, enjoy up to a 35 percent revenue lift compared to mediocre competitors of the same size.

Forget the petri dish. Use a palette.

Amazon has, as they say, “scienced the shit” out of retail. Their technological prowess and financial war chest for experimentation is formidable. More reason that rank and file retailers are wise not to chase Amazon’s technological vapour trail. Doing so has proven to be a costly road to ruin for many retailers.

That said, retailers must also embrace the fact that there are now technological table stakes involved just to play. But instead of trying to lead with technology, begin by more artfully engineering a new and exciting path to purchase in your category. Reinvent the journey. And after breaking this new, unique and remarkable customer journey into its most granular moments, ask a simple question: where could technology remove friction or deliver joy? I assure you, creating a unique, ownable and repeatable path to purchase is the heavy lifting that most brands are afraid of doing or simply too lazy to take on. But once complete, finding the right mix of technology to bring it to life will be the easy part.

Don’t train. Rehearse.

This isn’t your grandma’s retail era where a little product knowledge and a smile are enough to get by. The future of retail is about mind-blowing and meticulously staged performances. From the moment a consumer connects with your brand to well beyond the purchase they must feel a part of a production so perfectly executed, so meticulously performed and so brilliantly written that that it’s memorable and begs to be shared.

Can Amazon be combatted? Undoubtedly. But in order to do so, retailers must start from the premise that their stores, stock, people and merchandising is merely an empty stage. The story, the narrative, the action and interaction are what bring that stage to life.

For most retailers, it’s a story that is just waiting to be written.

BY TIMOTHY ANSCOMBE-BELL for The Drapers

Four years on from the Rana Plaza collapse, Drapers looks at what steps have been taken by fashion retailers to prevent a similar disaster and how once secretive supply chains are being opened up.

“The question I’m asked the most is how far we’ve come since Rana Plaza,” says Orsola de Castro, founder and creative director of Fashion Revolution, a not-for-profit organisation that campaigns for reform in the fashion industry. “And the answer is: it’s complicated.”

Last month marked the fourth anniversary of the disaster, in which 1,135 garment workers lost their lives after a factory building collapsed in Dhaka, Bangladesh. The tragedy was seen as a wake-up call for the industry and as a chance to improve the safety of global supply chains. More than 200 brands and retailers from Europe and the US signed legally binding agreements – the Bangladesh Accord on Fire and Building Safety and the Alliance for Bangladesh Worker Safety. They agreed to improve labour rights and safety standards, and collectively pledged $100m to enforce the standards of the Accord and the Alliance.

But progress remains slow. An investigation published last year by the NYU Stern Center for Business and Human Rights found that only 27% of Bangladeshi factories are covered by the initiatives, effectively excluding almost 3 million garment workers from their protections. Campaigners are calling for further action from retailers and brands, including strengthening the Bangladesh Accord.

Bangladesh accord 6 points

“The health and safety situation in Bangladesh is far from resolved,” explains de Castro. “Workers in developing countries around the world continue to suffer huge abuse, and are not yet being paid a living wage or an adequate wage to support their families and live a dignified life.”

However, some steps to improve fashion’s ethical record are being taken. Greater public awareness of the issues is helping foster a more erudite vocabulary when consumers talk about the provenance of their clothing. Ethical considerations have shot up the retail agenda, and many brands are making efforts to address their historically opaque global supply chains.

“The first step has to be transparency,” says a spokesperson for H&M. “It means we can hold ourselves and our suppliers accountable on issues such as human rights, fair jobs [terms] and environmental protection. We want our customers to know that we do our best to ensure that the fashion we offer has been made, transported and sold responsibly.”

Retailers have been working towards this transparency by releasing lists of their suppliers, a practice H&M has followed since 2013. Asos published a list of all the approved factories it uses for its own brand on its website in March and Japanese retailer Uniqlo released a list of its 146 core supplier factories the same month.

The Fashion Transparency Index (FTI), Fashion Revolution’s annual report into companies’ commitment to cleaning up their supply chains, also charts progress in this area. The index ranks how much information 100 of the largest global fashion businesses disclose about their social and environmental policies, practices and impacts.

The second annual report was published last month and found that 31 brands are now disclosing full lists of their direct suppliers – a healthy increase from just five in 2016.

However, publishing lists of their suppliers highlights just how much of a job many retailers have when it comes to ensuring fair practice throughout their supply chains. Large retailers can have hundreds of suppliers spanning several continents, so ensuring high ethical standards across them all is extremely difficult.

“There are weak points throughout the fashion supply chain where negative things can happen and exploitation does occur – in terms of both the environment and the lives of the people that work in the garment industry,” says Peter Needle, CEO of Segura, a cloud-based supply chain management firm.

He notes that the 2015 Modern Slavery Act, which requires all businesses with an annual turnover of £36m or more to publish a statement setting out the steps they are taking to ensure slave labour is not being used anywhere in their supply chains, has placed the onus on businesses in the UK to look into their suppliers and their subcontractors.

Green issues

Of course, there are also ethical concerns for retailers outside of supply chains: textile production uses enormous amounts of chemicals and factory run-off leads to water pollution. Given this bleak outlook, who is leading the charge when it comes to environmentally conscious fashion?

For the most part, it is the brands – from Patagonia to Stella McCartney and Nike – who have long been vocal in championing cleaner production practices, and today invest significant sums in tracking and improving their environmental impact. But smaller brands are getting in on the act: UK-based outdoor clothing company Finisterre builds relationships with trusted suppliers who share a similar outlook.

“When we started out, it was hard to have enough buying power to develop our own low-impact textiles and products. Today, we’re lucky to work with suppliers who believe in challenging the norm – we rely on these relationships to evolve our product,” explains Debbie Luffman, Finisterre’s product director.

“All of our cotton is certified organic, we use low-chemical and low-water-use finishing processes, and our Asian factories are fully audited to ensure social standards.

”But it’s the commitment and expertise of our manufacturers that helps us to develop the fabrics and product that impact least on the environment.”

Gap has also committed to reducing its environmental impact, by taking steps to obtain 100% of its cotton from sustainable sources by 2021.

“We have the opportunity to make a big impact on the global cotton community, and bring to light what’s so incredibly important to the future of garment manufacturing,” says Gap’s chief product officer, Wendi Goldman.

Demand is there, and retailers are adapting. But weak points threaten to undermine the progress made. Reports of police brutality against protesting garment workers in Bangladesh surfaced earlier this year and elsewhere in the world, a Pakistani garment factory in Karachi was razed to the ground by fire in March. Undercover reporting by the BBC’s Panorama last year found children and Syrian refugees working illegally in Turkish facilities, manufacturing clothes destined for the UK market.

The reality is that today’s fashion industry is paying the price for years of inadequate regulation, inconsistent compliance and opaque systems that hide traceability and accountability. The sheer scale of the market for apparel – which is worth $2.4 trillion and employs tens of millions of people – makes it very difficult to unravel.

It is clear that far more needs to be done. Progress will require a concerted effort from governments, regulators, NGOs, trade bodies and factory owners, as well as consumers, brands and retailers.

Author : Timothy Anscombe-Bell

Like the classic black dress and white tee, a pair of denim jeans is seen as a wardrobe staple. Chances are high that you recycle denim season after season for many different looks – in fact, you’re very likely to be wearing a denim item right now.
Denim through the seasons
In 1969, a writer for African Fabrics magazine declared denim as “one of the world’s oldest fabrics, yet it remains eternally young.” Donna McPherson, buying manager at value retailer Ackermans, agrees.

“Denim’s popularity is due to its timeless appeal and versatility – we see it reinvented season after season. Unlike other fabrics such as corduroy or linen which go in and out of fashion, we never seem to tire of denim.”

Donna shares a few fun facts about this eternally popular fabric.
When did denim first become popular?

Denim first become popular for casual wear in the 1950s. Teenagers, rebelling against the more conservative generation of their parents, started to include denim in their everyday wear. It wasn’t long before designers began to play around with different styles.

Style through the eras

The late 60s saw ‘bell bottoms’ come into fashion, followed by the ‘punk’ look of the 70s where denim featured rip and patch detail. The early 2000s saw the rise of ‘skinny jeans’, with this sleeker aesthetic popular among teens all the way up to those in their 30s.

The evolution of colour

Denim’s most popular colour is blue. The fabric used to be dyed using natural indigo from the plant Indigofera tinctoria, but is now coloured using synthetic dyes.

Denim in bright or sorbet/candy shades became fashionable in the ’80s. Almost a decade ago, denim in multiple hues made another comeback and has since evolved into a fashion staple.

Denim through the seasons
Led by Europe and Miami, in summer 2016 we started to see shaded denim raise its head again, this time in washed neon tones.

Even with the ongoing popularity of coloured denims, many people are still most comfortable in shades of indigo, and this remains the most purchased.

Dress it up or dress it down

Denim is versatile and can be worn for just about any occasion. Dress skinny jeans up by pairing it with a beautiful blouse, well-fitted blazer and stilettos, or dress it down by wearing a pair of boyfriend jeans with your favourite sneakers and a tee.

Wear and tear

Not only is denim versatile, the cotton twill material is also incredibly durable – making it perfect for adults and active kids. When looked after properly, denim can last for many seasons to come.

Says Donna, “Denim is an essential in every wardrobe – it’s a fabric that lends itself to multiple interpretation and re-imagination, and truly deserves its ‘classic’ status.”