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Aspirational fashion – Truworths

Truworths strives to create winning merchandise ranges across its brand portfolio, season after season, offering customers internationally-styled, aspirational fashion and homeware of superior quality. Truworths’ proven merchandise philosophy of offering customers an extensive range of garments and styles, while offering a limited quantity of each style, ensures exclusivity.

Proven processes are followed by the merchandise buying and planning teams to manage and mitigate the risk of fashion throughout the product life cycle. This includes forecasting and interpreting international fashion trends, tailoring these trends to the South African market, designing garments, planning and assorting ranges, sourcing and engaging with suppliers, delivering fast fashion and quick response to new trends and popular styles, and managing production across the supply chain until the merchandise reaches stores and, finally, the customer.

The youthful fashionable customer

Truworths targets a youthful and fashionable customer and through its exclusive market-leading ladies’ and men’s brands aim to cater for the varied lifestyle needs of these customers from casualwear to workwear, eveningwear, accessories, lingerie and footwear.

Fashion is aimed at making customers look attractive and successful and feel enthused with confidence. This single customer focus on youthful, fashionable South Africans removes the risk of over-segmenting the market and provides clarity and focus to the buying and marketing teams.

Truworths also offers kidswear and has an expanding presence in this market through its exclusive kidswear brands LTD Kids, Earthchild, Naartjie and ID Kids.

A selection of superior quality homeware is offered through Loads of Living to complement the fashion offering.

Forecasting fashion trends

The Truworths ladieswear and menswear Fashion Studios drive the merchandise forecasting process. The studios research international fashion trend information from a wide range of sources, including trade fairs, online fashion intelligence and social media, and by following global and local street trends.

Merchandise designers from these studios work in partnership with buyers to track trends and formulate the key fashion direction for each new season. A design and customisation process is completed for each brand, providing direction on colour, fabric, print and trim in line with the latest emerging trends. Season-ahead travel to the northern hemisphere, which has been curtailed since the onset of the COVID-19 pandemic, together with ongoing insights from consultants in the major fashion capitals of the world, supplement these seasonal processes.

Similarly, homeware ranges for Loads of Living require the buying team to monitor local and international trends to meet the needs of discerning homeware customers.

Consistent fashion formula

A consistent merchandise buying and planning process is applied to every six-month season. Developed over many years, this process is constantly refined and updated to align with the growth and complexity of the business, and to continue to meet the challenges of the fast-moving and evolving global fashion retail market. Management intervention at critical stages in the process limit the risk of fashion failure.

Garments are selected and designed to complement each range and to showcase the differentiating characteristics of each brand. Detailed planning and balancing of ranges ensures consistency of the merchandise offering, strict control over stock holdings, and provides structure to the entire creative process.

Merchandise is sourced from a combination of local and international suppliers based on a carefully considered methodology that provides flexibility and reliability, and mitigates supply chain risk. At each stage in the process there are interventions to ensure that the merchandise meets the exacting quality standards that customers both value and expect.

Following the outbreak of the COVID-19 pandemic, the merchandise team developed a virtual method of creating, buying, and reviewing ranges during lockdown, enabling teams to meet buying deadlines despite the restrictions.

Superior quality fashion

Truworths is synonymous with quality fashion, with industry-leading metrics for low levels of quality-related customer returns. The quality assurance team partners with local and international suppliers to ensure merchandise is manufactured to consistent quality and prescribed standards.

During the COVID-19 crisis interim virtual quality assurance processes were implemented to counter the impacts on the supply chain partners and prevent delays in quality assurance processes. Certain of these processes will be retained post COVID-19 as they have contributed to a more efficient quality assurance process.

The in-house fabric and garment testing laboratory, accredited by South Africa’s Council for Scientific and Industrial Research (CSIR), ensures that the laboratory’s methods and results are aligned with international standards.

Managing fashion risk in 2021

While specific merchandise strategies are implemented to reduce fashion risk, weaker demand for fashion clothing during the COVID-19 pandemic, together with the constrained economic environment, created particular challenges for the merchandise teams.

The change in lifestyle due to people working from home and having limited social contact during varying levels of lockdown led to a material reduction in demand for formal ladies’ and men’s apparel and footwear, and glamour merchandise.

At the same time, sales of leisure product have increased significantly across ladies’, men’s and kidswear. Leisurewear has become an unusually competitive category and ranges have evolved to offer excellent value in order to meet customer expectations.

In the post-lockdown period, sales were under pressure owing to a reduction in the number of customers shopping, rather than customers spending less. The average value of transactions per customer has remained stable.

Planning teams have adjusted sales and purchase plans to ensure that the business is not overstocked with unwanted product. Owing to the close relationships with key local suppliers and CMTs, ranges have been restyled into more casual product, or fabric has been held over for the next corresponding season.

The softer consumer demand, along with the challenges being faced by certain competitors, has led to higher and ongoing levels of discounting and promotions in the market. In this environment cash-strapped consumers are seeking value and increasingly buying on promotion.

In response to this trend, several competitors are sacrificing quality to drive down prices. However, Truworths has continued to follow its strategy of the past few years of including promotional products within the ranges alongside carefully curated collections of styled, unique product at prices that represent excellent value for money. This is central to Truworths’ aspirational position in the market and customers continue to respond well to this strategy.

The continued restrictions on international travel, and the limitations on the buying and design teams meeting in person, have made the development and implementation of ranges more challenging.

Truworths faces a perennial challenge in managing the impact of the volatility of the Rand/US dollar exchange rate on product pricing as approximately 55% of merchandise is imported, and US dollar denominated. As a result, Truworths has focused on purchasing a high percentage of merchandise from local South African suppliers. This balance is important as it provides flexibility that enables reaction to consumer demand through quick response and fast fashion. A large percentage of fabric for local production has to be imported and is therefore once again impacted by Rand/US dollar fluctuation.

Gross margin contracted to 54.1% (2020: 55.6%), mainly due to higher levels of sales promotion activity. Gross inventory decreased by 1% to R1.4 billion and the inventory turn increased to 4.9 times (2020: 4.2 times, although impacted by the 5-week hard lockdown).

Expanding brand portfolio and ranges

New brands and ranges are constantly developed to increase customer appeal and create demand. The brand portfolio was expanded with the launch of the Fuel and Primark brands in the second half of the year.

Fuel is a cool, energetic brand targeted at the young male consumer. The range comprises the key casual items of the season with a streetwear edge. Bold branding techniques and colour combinations are used to ensure the brand’s youthful appeal, with the Fuel logo distinct on all garments. Quick response and local production drive a significant portion of this range to enhance speed to market.

Primark is an aspirational value chain, offering key commercial fashion for young women and men. The brand offers great value with good quality at competitive prices, while maintaining reasonable margins.

Fuel and Primark are both in the experimental phases of launch and in the months ahead the merchandise team will test further innovation and ideas to maximise the opportunities to establish these brands.

The Loads for Kids homeware range has been developed for launch early in the 2022 financial period. The range draws on the strength of the LTD Kids, Naartjie and Earthchild kidswear brands to create unique product to enhance the offering in the Loads of Living business. Loads for Kids will offer upmarket, fun bedding and home décor items for children and will be included in a limited number of Kids Emporium and Loads of Living stores.

Technology enhancing customer experience

Ongoing systems enhancements and the development of new technologies are aimed at improving the customer experience and managing the risk of fashion.

A new merchandise financial planning solution was launched shortly after the period-end to replace the merchandise divisions’ planning system used to plan sales as well as manage stock and markdowns across all the divisions. The new financial planning solution has embedded forecasting functionality, reviewing store or category trends over time. Further enhancements include a single application for both pre- and in-season planning, reduced workload and seamless in-application communication with the operations team regarding store feedback.

A new retail customer engagement system will be implemented in the first half of the 2022 financial period, enabling one system to hold up-to-date customer, product and promotion information across stores and online platforms.

The first quarter of the 2022 financial period will see the introduction of a new cloud-based online e‑commerce platform together with the launch of the Identity e-commerce website. The Truworths, Office London and Loads of Living websites will subsequently be migrated onto the new platform. The benefits of this platform include ease and lower cost of maintenance, improved response times to customers and an enhanced customer experience, particularly on mobile devices which represent the majority of website traffic.

A further system development is the new point-of-sale solution with the general store roll-out beginning in the second half of the 2022 financial period. The new point-of-sale solution will enhance the customer experience as it supports both an omni-channel and mobile experience.

The combination of the new customer engagement and e-commerce solutions as well as the new point-of-sale system will enable Truworths to offer a complete omni-channel retail experience to customers.

Accelerating online sales

COVID-19 has accelerated the growth of e-commerce globally as customers chose to stay home and shop online to reduce the risk of contracting the virus. Over the past year, Truworths has experienced a significant increase in the volume of traffic to its website, the number of transactions and the value of sales. There has also been a marked increase in shopping on mobile devices, with users of mobile phones accounting for over 75% of all online traffic.

E-commerce sales grew by 127% off a low base. The Truworths e-commerce business is now larger than the top Truworths store, accounting for 2.0% of total retail sales (2020: 0.9%).