TRUWORTHS STRIVES TO CREATE WINNING MERCHANDISE RANGES ACROSS ITS BRAND PORTFOLIO SEASON AFTER SEASON, OFFERING CUSTOMERS INTERNATIONALLY STYLED, ASPIRATIONAL FASHION AND RELATED MERCHANDISE OF SUPERIOR QUALITY. TRUWORTHS' MERCHANDISE PHILOSOPHY FOCUSES ON OFFERING CUSTOMERS AN EXTENSIVE RANGE OF GARMENTS AND STYLES, ACROSS MANY LIFESTYLES, ENSURING A RANGE THAT ACCOMMODATES THE MULTIPLE NEEDS OF CONSUMERS.
The merchandise planning and buying teams manage and mitigate the risk of fashion throughout the product life cycle.
- forecasting and interpreting international fashion trends and tailoring these trends to the South African market;
- designing garments, planning and assorting ranges, and sourcing and engaging suppliers; and
- delivering fast fashion and quickly responding to new trends and popular styles, and managing production across the supply chain until the merchandise reaches stores and, ultimately, the customer.
THE YOUTHFUL FASHIONABLE CUSTOMER
Truworths targets a youthful and fashionable customer and through its exclusive market-leading ladies' value and expect. and men's brands aims to cater for the varied lifestyle needs of this customer, from casualwear to workwear, eveningwear, glamourwear, accessories and footwear.
Fashion is aimed at making customers look and feel attractive and successful. 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 and Loads for Kids 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 and in-house design divisions work in partnership with buyers to track trends and formulate the main 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, together with ongoing insights from various consultants in the major fashion capitals of the world, supplement these seasonal processes.
Similarly, homeware ranges for Loads of Living and Loads for Kids require the buying team to monitor local and international interior and lifestyle trends to meet the needs of discerning homeware customers.
CONSISTENT FASHION FORMULA
A consistent merchandise buying and planning formula is applied to every season. 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. Checks and balances 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 ensure consistency of the merchandise offering and provide structure to the 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.
Refer to Material issues, risks and opportunities for more detail
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.
A number of the virtual quality assurance processes implemented during the COVID-19 pandemic have been retained following the lifting of restrictions 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 IN 2022
Truworths entered the 2022 financial period cautiously optimistic on trade recovering post the COVID-19 lockdown, so the merchandise team was expansive yet prudent in the sales planning process, while ensuring inventory levels were well managed. However, the first half of the financial period was negatively affected by civil unrest and supply chain issues which impacted inventory levels. Certain COVID-19 restrictions were still in place and this affected demand, particularly in the city and town centre locations as many consumers still worked from home.
Performance improved in the second half of the year, with demand for formal, glamourwear and smarter products returning to pre COVID-19 levels as restrictions were gradually lifted and inventory levels improved as supply chain issues were mitigated.
In this uncertain environment, Truworths continued to focus on efficient stock management and took advantage of local production and the quick response model to adjust product in line with demand.
Gross margin increased to 56.7% (2021: 54.1%), mainly due to lower markdown activity. Gross inventory increased by 5% to R1.5 billion and the inventory turn decreased to 4.4 times (2021: 4.9 times).
Approximately 55% of merchandise is sourced offshore with 45% made locally. Exchange rate fluctuations not only affect the cost of importation, but also affect local production as much of the fabric used in local manufacture is imported. Forward cover is always taken to assist the buying team to determine accurate pricing, thereby limiting price surprises due to rapid exchange rate movements.
GROWING NEW BRANDS AND EXPANDING RANGES
New brands and ranges are constantly developed to address the many lifestyle needs of customers. Loads for Kids was launched early in the financial year, offering a kids homeware range with the focus on bedding and soft toys. The range combines the LTD Kids, Naartjie and Earthchild kidswear brands to create unique product to enhance the offering in the Loads of Living business. The strategy of using Loads for Kids as a bridge between Loads of Living and Truworths Kids has worked well and enhanced the brands.
The Fuel menswear brand, launched in 2021, continues to grow in a controlled manner and addresses the lifestyle needs of the youthful male customer. Currently in 25 stores, there are plans to expand this to over 40 stores by year-end.
Sync, also launched in the prior financial period, offers lower priced merchandise in the value segment to consumers. The product offering includes casual fashion ranges and own-brand sneakers and accessories. Stores are located within Identity stores or in stand-alone stores, and during the period five new Sync stores were opened, bringing the footprint to 16.
ENHANCING OMNI-CHANNEL EXPERIENCE
The omni-channel shopping experience was enhanced with the introduction of a new cloud-based website platform together with the launch of the Identity e-commerce website in the first half of the period.
The benefits of this online platform include added functionality with improved customer experience and quicker response times.
Loads of Living online was launched as a component of the Truworths e-commerce site, with customers able to shop with a single basket across the Truworths, Office London and Loads of Living brands. All Truworths products are now available on the Truworths e-commerce site.
Ongoing enhancements to order fulfilment processes have improved the customer experience online, reduced delivery lead times and lowered costs.
E-commerce sales grew by 39% following growth of 127% in the prior period during the peak of the COVID-19 pandemic. The Truworths e-commerce business is more than twice the size of the largest Truworths store, accounting for 2.6% of total retail sales (2021: 2.0%).
TECHNOLOGY ENHANCING CUSTOMER EXPERIENCE
Ongoing systems enhancements and the development of new technologies are aimed at improving the customer experience and managing fashion risk.
A new merchandise planning system was launched early in the reporting period to replace the existing system used to plan sales as well as manage stock and markdowns across all the merchandise divisions. Features of the new planning system include enhanced forecasting functionality, reviewing store or category trends over time, pre- and in-season planning in a single application, reduced workload and seamless communication with the operations team on store feedback.
A significant upgrade is planned for the point-of-sale system, with added functionality, with roll out across most stores expected prior to the end of the 2023 financial year.
Our predictive modelling capability, which is used for the management of our credit portfolio but also in many other areas of our business, was upgraded to the latest release, giving us the ability to improve our planning and forecasting capabilities.