INTEGRATED REPORT 2023

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Office has a proud London heritage. Strongly influenced by the iconic London fashion culture ...

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OFFICE ASPIRATIONAL FASHION

OPERATIONAL REVIEW: TRUWORTHS

TRUWORTHS

ASPIRATIONAL FASHION

TRUWORTHS IS COMMITTED TO CREATING ASPIRATIONAL, BETTER-END AND AUTHENTIC MERCHANDISE RANGES ACROSS ITS BRAND PORTFOLIO SEASON AFTER SEASON, OFFERING CUSTOMERS INTERNATIONALLY INSPIRED FASHION TRENDS OF SUPERIOR QUALITY. THIS IS SUPPORTED BY TRUWORTHS’ MERCHANDISE PHILOSOPHY OF CREATING AN EXTENSIVE RANGE OF FASHION APPAREL AND RELATED ACCESSORIES, ACROSS MANY LIFESTYLES, TO OFFER A RANGE THAT MEETS THE MULTIPLE NEEDS OF CUSTOMERS.

The merchandise planning and buying teams manage and mitigate the risk of fashion through the following processes:

  • forecasting and interpreting international fashion trends and tailoring these trends to the South African market;
  • originating product designs through in-house fashion design specialists and selected supplier teams working together with experienced buyers;
  • using world class systems in planning and assorting ranges;
  • using a preferred supplier approach to ensure consistency in the supply chain, with many suppliers being exclusive to Truworths; and
  • utilising fast fashion and quick response capability to capitalise on new trends and popular styles through local manufacture and careful investment in strategic fabric.

THE YOUTHFUL, FASHIONABLE CUSTOMER

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

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 catwalk collections, 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 centres 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 style, colour, fabric, print and trim in line with the latest emerging trends. Season-ahead travel to the northern hemisphere confirms and supports these seasonal processes.

Similarly, homeware ranges for Loads of Living 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 methodology is applied 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.

Collections are carefully curated and designed with the DNA and end use of each brand in mind so that they come together to create a broad and exciting range of ever-changing products to entice the customer. Leading edge systems and technology are applied to enable detailed planning and balancing of ranges to 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.

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.

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

MANAGING FASHION IN 2023

After relatively buoyant merchandise sales in the first half of the financial period, deteriorating economic conditions compounded by persistent load shedding resulted in slower sales in the second half. Even in this challenging consumer spending environment, Truworths’ merchandise strategy continues to be led by the Business Philosophy, which guides our decision making in good and bad times.

While ensuring that Truworths continues to deliver wide ranges of curated and aspirational fashion, the merchandise teams have focused on offering product that presents real intrinsic value, without compromising on quality or level of fashion and without changing strategy to compete in the ‘value segment’.

In the slowing sales environment, Truworths heightened its focus on efficient stock management to manage markdowns, taking advantage of local production and the quick response model to adjust the product, in line with demand.

A key merchandise objective has been to focus on driving sales growth where we see opportunity to grow market share, including in specific product categories which are underrepresented in stores. While initial gains have been made in certain key categories, this process will be ongoing.

As a fashion retailer, it is essential that Truworths’ merchandise in stores and online remains fresh and reflects the latest fashion trends. Truworths applies strict end-of-season terminal stock levels which guide the planning and implementation of markdowns or promotional activity. In the current constrained trading environment Truworths increased the level of promotional activity to meet the terminal stock objectives. This weighed negatively on the gross margin which reduced from 56.7% in the prior period to 55.4%.

As approximately 55% of merchandise is sourced offshore, with 45% made locally, managing the impact of exchange rate volatility is a perennial challenge. During the financial period the value of the Rand depreciated by approximately 15% against the US dollar. Exchange rate fluctuations not only affect the cost of imported product, but also affect local production as much of the fabric used in local manufacture is imported. Forward cover contracts are taken to mitigate risks thereby assisting the buying team to accurately determine pricing and input margins, over periods of rapid exchange rate movements.

ENTRENCHING RECENTLY LAUNCHED BRANDS

New brands and ranges are constantly developed to address the many lifestyle needs of customers. While no new brands were introduced into the portfolio during the year, the merchandise and operations teams focused on entrenching the most recently developed brands.

Menswear brand Fuel, which was launched in 2021, offers highly fashionable lifestyle product to the trendy, youthful male customer. Following the inclusion of Fuel in 16 emporium stores and the opening of one further stand-alone store, the brand’s store footprint increased to 49. A further seven stores are planned for the 2024 financial year.

Sync is positioned in the value segment of fashion retail and offers lower priced fashion merchandise to consumers who choose to spend less. The product offering includes casual fashion ranges and own-brand sneakers and accessories. Sync has grown its presence to 19 stand-alone stores.

Ladieswear brand Context is being expanded into retail environments that are suitable for its sophisticated, curated ranges. The brand offers a range of exclusive Truworths fashion, including Earthaddict, LTD, lingerie, beauty products and homeware for discerning female customers. Eight Context stores were opened during the year, with six in Truworths Emporium stores and two within Loads of Living stores.

ENHANCING OMNI-CHANNEL CUSTOMER EXPERIENCE

The omni-channel shopping experience for Truworths customers continued to be enhanced across all stages of the online purchasing process. This includes visual updates to the website, the addition of merchandise size guides, a feature for product recommendations based on user behaviour as well as the introduction of an advanced e‑commerce payment gateway.

Online order fulfilment was further improved with an increased focus on picking e‑commerce orders from stores and a new ‘last mile’ delivery service.

All Truworths products are offered on the e-commerce site and customers can shop with a single basket across the Truworths, Office London and Loads of Living brands.

Ongoing enhancements to order fulfilment processes have improved the customer experience online, reduced delivery lead times and lowered costs.
INTEGRATED REPORT 2023