Retail in twenty twenty…..

It’s not really complicated if you grasp the basic theory of what retail is about. It’s a business of buying product at the best price you can negotiate. Display the merchandise in an environment your client enjoys shopping in and assist them by offering service above what the consumer would expect. Sell the product at the best price you can command in the current economic landscape and produce the maximum profit you can achieve from doing the above. Add to this a business phylophosy of spending as little cash as possible to make the process work and you will have a positive retail business.

I understand in twenty twenty with on line purchases, poor traffic flow and low house hold income things are more challenging for the retail businesses. I still believe if your key outputs all come back to be measured against this basic retail concept, your business will stay on the right path.

Lets look at a few examples……..


H&M are arguably one of the top fashion clothing brands in the world. Most of its product come from the east buying massive volume to secure the best prices in today’s market. The H&M stores all over the world are very appealing and show off the product to its best advantage. If you look closely at the store design, it is very basic. Natural colour tile floors, white walls with a simple rail hanging system, little complicated design features, basically a neutral box with the focus on the product. Selling prices are very affordable when compared to the market which results in greater clearances of stock before markdowns are implemented. Very little external money spent on advertising, when did you last see a H&M advert on TV.

This business can be measured against the points in my first paragraph and the result is a extremely successful retail business.

The opposite example and I’m sorry to single out Edgars but it’s such a classic.

Started to buy exclusive brand product from overseas, mainly European and USA brands which are very expensive to source. With the poor Rand exchange rate, SA duties on importing clothing, royalties to the brand etc etc. the buying of merchandise was expensive. The stores looked old and unpleasant and no service was available anywhere in the store especially at the POS when the customer wanted to pay. The product on the floor was very expensive in relation to the market as all the input costs pushed up the retail price. This resulted in a reduction of customers in a position to buy from Edgars.

Instead of spending as little as possible to implement the process Edgars opened duplicate stores all over South Africa and incurred unnecessary expenses on extra rentals, staff, capex etc etc. Stores were replicas of what you would find in Europe costing top dollar to fit.

With Edgars not sticking to the basic principles of retail they put the business in a serious position very close to closure.

A lesson to take note off. Time to go back to basics, buy cheap, sell at best price and make a profit while controlling the expenses.

Enjoy your shopping

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