Edgars – A sinking ship!

For Edgars the sharks are circulating! Poor executive management decisions and too many CEO changes have contributed to the retailers demise.

Although still the biggest player in the SA market with 7% to 8% of retail space, Edgars is slowly losing market share at 6% over the last four years. New CEO Bernie Brooke’s, another non South African, has stated he will turn the business around in two years. His predecessor bailed after four years of a five year contract, leaving behind many of the consequences of his blunders which have weakened the already wounded  business.

Twenty years ago Edgars was a thriving retailer offering the SA consumer good value no name brand merchandise at affordable prices which could be bought on credit using its six months interest free accounts. Slowly over time brands were introduced which were sought after by the local consumer such as Guess and Levi. This was a move in the right direction as it gave its customers the opportunity to own a pair of premium denims and pay over six months.

Unfortunately the previous CEO and executive team brought in far too many International brands that were not familiar to the local SA consumer. (Tom Taylor, Lucky Brand, Salsa, River Island, Express, etc etc ) These brands dominated the offer on the floor with price points way above the affordability of the loyal Edgars follower. Inventory started to build as consumers were not voting for unknown brands at expensive price points with too many similar product styles to choose from.
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Most retailers like to see product being sold in the first 50 to 60 days of hitting the floor. Edgars were taking 110 days on average as the brands and price points were unwanted. This forced Edgars to continually run discount and sale activity to try and liquidate some inventory resulting in reduced margins from 52% in 2012 to 42% in 2015.

In many malls across South Africa, Edgars also opened stand alone stores for Tom Taylor, Lucky Brand, etc. This resulted in Edgars having a brand featured on the Edgars trading floor not selling at exceptable rates, and next door in the mall you have a stand alone store offering the same range as in Edgars also not selling. The major downside to this is the business has to pay capex to fit the stand alone store along with rental, staff costs, and invest in duplicate inventory. A recipe for disaster and another nail in the coffin if trying to reduce expenses.

You may have noticed when you shop in an Edgars store you can’t find a sales associate on the floor. That is because the lack of sales and margin has resulted in Edgars having to cut costs therefore reducing staff in all stores. You will find an abundance of staff in the cosmetic area, that is because these consultants are provided and paid for by the cosmetic houses.

I walked through Edgars Canal Walk at 3pm on a Friday afternoon and stayed in the footwear department for 15 minutes and never once saw a sales associate in the department to assist a customer.



This situation is not going to help Edgars go after sales to generate sorely needed profits as I witnessed two customers walk out in frustration as they could not find a sales associate to fetch a pair of shoes for them.

As sales and margins reduce, the next step is already in progress, reducing the head count at head office. A major retrenchment will send negative waves through the companies staff and reduce productivity with the remaining core staff who are not retrenched.

Just as things look like they cannot get any worse for Edgars along come H&M in mega sized stores offering brilliant product at very affordable prices.

A really sad state of affairs for a South African company which once was a legend on the local retail scene.

enjoy your shopping

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