Managing retail presence
Truworths has continued to manage its retail presence by cautiously investing in new trading space and e-commerce infrastructure, while at the same time improving the efficiency and productivity of its real estate portfolio by consolidating stores and rationalising trading space.
Stores in South Africa were closed from the start of the national COVID-19 lockdown with effect from midnight on 26 March 2020 and Truworths was unable to trade from stores or online for five weeks. Trading restrictions were relaxed from 1 May 2020 when all stores reopened. Stores were adapted to be COVID-secure to ensure the safety of employees and customers during the pandemic. In-store layout was adjusted where necessary to meet social distancing requirements, while the number of customers permitted in stores was also limited.
Following extensive negotiation with landlords on the payment of rentals and services during the COVID-19 lockdown and subsequently when trading restrictions applied, Truworths reached agreement with most landlords and paid approximately 15% of rentals due as a concession to landlords.
Refer to Material issues, risks and opportunities for more detail.
Store presence in South Africa
The Truworths footprint in South Africa was reduced by a net 9 stores. During the period 14 stores were opened across all brands: Truworths Emporium (1), Truworths Man (1), Identity (8), Office London (1), Kids Emporium (1), Loads of Living (1) and YDE (1). A total of 23 under-performing stores were closed.
A further 28 stores were renovated and reprofiled, with certain of them being right sized through the expansion or reduction in trading space, while additional merchandise brands have been incorporated in other stores.
New store designs and concepts were introduced at the expanded and renovated Fourways Mall in Gauteng, including an enhanced Truworths emporium, a new store design concept combining Loads of Living and Context, and a new store concept for Office London including fashion and sports footwear as well as leisurewear.
During the period Truworths invested R223 million (2019: R252 million) in new store development and renovations. This was lower than planned due to the impact of lockdown restrictions when no development could take place.
Space consolidation by several major retailers is placing pressure on landlords, providing an opportunity to negotiate lower escalations and, in some instances, rental reversions or a combination of both. However, demand for quality space in good-performing malls remains high, making it difficult to negotiate better rentals with landlords.
The slowdown in new mall developments has continued, with only one new major development being completed during the period in Katlehong, where Truworths opened an emporium store.
Electricity load shedding continues to impact on trading in South African stores. Management continues to engage with landlords to connect to mall generators where possible or alternatively install its own generators or backup power facilities in stores. Currently only half of the top 100 stores in terms of sales are linked to alternative power supplies.
Growing e-commerce presence
Truworths’ e-commerce platform ranked as the fourth-largest ‘store’ within Truworths based on total merchandise sales, which grew more than threefold in the post-lockdown period relative to the pre-lockdown period.
The online offering was expanded with the introduction of selected Loads of Living homeware, cosmetics, fragrances, jewellery, branded watches and sunglasses.
E-commerce is now available across all the main Truworths brands and together with the extensive Truworths store footprint creates an engaging omni-channel experience for customers to shop effortlessly in-store and on digital devices. All products available in stores will ultimately be offered online as well.
Expanding kidswear offering
Kidswear is a strategic growth opportunity for Truworths. Truworths currently has 74 Kids Emporiums within Truworths Emporium stores (2019: 60) which house the LTD Kids, Earthchild and Naartjie brands, while there are five stand-alone Kids Emporium stores. ID Kids, the boys’ and girls’ wear brand piloted in Identity, has been expanded to 53 stores nationally.
Store footprint reduced to
(2019: 806 stores))
14 new stores
opened across all brands
(2019: 23 stores)
converted, consolidated or closed
Footprint in rest of Africa reduced to
(2019: 39 stores)
Total retail trading space
growth of 0.5%
in e-commerce sales post lockdown
Store footprint in the rest of Africa
Following the closure of three under-performing stores in Namibia, the store base in the rest of Africa reduced to 36. The majority of the non-South African stores are located in the neighbouring countries of Namibia (15), Botswana (8), Eswatini (5) and Lesotho (2).
The stores in the neighbouring countries faced similar lockdown restrictions to South Africa, while Mauritius experienced an extended lockdown. While Zambia and Kenya were not subject to lockdown, trading in these countries has been particularly challenging during the reporting period.
Defining the fashion court
Truworths aims to trade from the best positions in fashion courts of shopping malls and to be recognised as the fashion anchor tenant. This positioning strategy also applies to stores on main streets and in towns where Truworths strives to be located in the heart of the fashion retail zone.
Enticing stores and internationally styled merchandise position Truworths as an appealing destination for quality fashion apparel. Creative merchandise displays in wide window frontages showcase the latest trends, and are designed to attract customers.
Multiple store formats
Truworths emporium stores
Truworths’ 348 emporium stores house a portfolio of exclusive, market-leading brands. The store format encourages customers to cross-shop between the mainstream brands such as Truworths, Truworths Man, Uzzi, Daniel Hechter, LTD, Earthaddict, LTD Kids, Earthchild and Naartjie. These brands, together with their sub-brands, retain their unique identity and fashion styling within the emporium.
The brands available in each emporium depend on the size and location of the store. Following the expansion of the Truworths brand portfolio in recent years, four specialist emporiums are now offered within the greater emporium store: Truworths Ladieswear, Truworths Menswear, Truworths Ladieswear Designer and Truworths Kids emporiums (refer to Market-leading Brand Portfolio for detail on the brands included in each of the emporium formats).
Emporium stores are located in central positions in shopping malls and generally have three to five entrances, with maximum shop frontage and windows showcasing the wide range of brands and merchandise.
Identity and YDE stores
Identity and Young Designers Emporium (YDE) operate from stand-alone stores and are not incorporated in emporium stores as they target a different customer profile to Truworths’ shoppers. There are 258 Identity stores and 21 YDE stores.
Identity appeals to the fashion-forward and value-conscious youth market, offering high fashion merchandise at affordable prices. Stores are vibrant, edgy and fun to appeal to younger customers.
YDE showcases the fashion of emerging South African designers and targets young, fashionable customers wanting designer labels and styling. The store design is a strong point of differentiation from competitors.
Office London stores, Office London, the South African offering of the UK fashion footwear brand owned by the Group, operates 16 stand-alone stores in central positions in shopping malls, often adjacent to the Truworths Emporium. The Office London stores are modern, light and energetic and are located in the top retail locations in South Africa.
Retail presence in 2021
A project to develop a futuristic Truworths emporium store design will be launched in the 2021 financial period together with enticing design concepts for the launch of existing and new brands including the Identity Superstore, Loads of Kids Emporium, Hey Betty and a new specialist brand from Uzzi.
The online offering will be extended with the addition of an e-commerce site for Identity.
Trading space is expected to be unchanged in the 2021 financial period with continued store consolidation and rationalisation of trading space, with a net decrease in the store footprint. Management has committed R271 million to store development while retail rentals are anticipated to increase by an average of 2% in the period.