Note: This report is Truworths specific as Office is dealt with in the Office Operational Report. All references in this report are therefore to ‘Truworths' rather than to ‘the Group'.
A total of 40 stores were opened across all brands, including 11 Truworths emporium stores and 16 Identity stores. In the current economic environment Truworths has rationalised the store portfolio and closed 13 underperforming stores in South Africa and four in Nigeria owing to the restrictions relating to clothing imports.
The growth in total trading space for the reporting period slowed in line with expectations, increasing by 4.0% (2015: 6.1% excluding Earthchild and Naartjie) to 363 000 m².
Truworths continues to capitalise on opportunities in new malls being developed in previously under-serviced residential suburbs and previously under-developed areas of rural South Africa.
Securing space in prime locations in top-performing malls is more challenging than in regular malls due to the demand for prime space. Truworths already has a presence in prime locations in all the top-performing malls and continues to secure prime space in new malls without compromising its demanding space requirements.
During the period 13 stores were either expanded or relocated to positions with improved trading prospects. A further 17 stores were renovated and upgraded in their current locations.
Management continues to increase store productivity by reducing space in selected stores when leases fall due for renewal, with 12 stores being reconfigured by decreasing leased space to grow trading densities. In addition, seven stores were partly reconfigured in their existing space to grow trading densities, with one or more of Earthaddict, Earthchild and Naartjie added to the existing footprint in some stores.
In the 2017 reporting period trading space is projected to increase by approximately 3% with the planned net opening of 25 new stores. Average rental escalations are anticipated to remain at the current 7% level. Capital expenditure in Truworths of R301 million has been committed to the store expansion, renovation and upgrading programme.
The emporium stores offer customers an exciting fashion retail experience in ideal positions in the centre of the fashion court where they can shop for an innovative and adventurous blend of colour, fabric and fashion styling of international standard.
The Truworths emporium store allows customers to shop for multiple fashion brands in a single store and encourages cross-shopping between these brands. The mainstream brands such as Truworths, Truworths Man, Uzzi, Daniel Hechter, Ginger Mary, Inwear and LTD, and their sub-brands, retain their unique identity and fashion styling within the emporium.
Enticing stores and internationally styled merchandise position Truworths as an aspirational destination for quality fashion apparel. Creative merchandise displays in long window frontages, often with multiple entrances, showcase the latest looks and the breadth of fashion on offer, and are designed to attract customers and encourage them to purchase.
The brands on offer in each emporium depend on the size and location of the store. Following the expansion of the Truworths brand portfolio in recent years, four specialist emporiums are now offered within the greater emporium store: Truworths Ladieswear, Truworths Menswear, Truworths Designer and Truworths Kids. Refer to the Truworths: Market-leading Brand Portfolio report for detail on the brands housed in each of the emporium formats.
The first Truworths Kids Emporium store housing LTD Kids, Earthchild and Naartjie was launched in October 2015 and a further 13 stores opened within existing Truworths emporiums during the period. These three aspirational kidswear brands offer significant growth potential and management is targeting to open 100 kidswear emporiums over the next five years.
All four specialist emporiums have been included in the Mall of Africa, South Africa's largest single-phase shopping centre development which opened in April 2016. Truworths has trading space of over 3 300 m² in this mall.
Identity and YDE stores
As the Identity and YDE brands are targeted at a different customer profile to Truworths' shoppers, these brands are not included in Truworths emporium stores but are marketed through independent chains operating from stand-alone stores.
Identity caters for the fashion-forward and value-conscious youth market, offering high fashion merchandise at affordable prices. Stores are therefore vibrant, edgy and fun to appeal to these younger customers.
YDE showcases the fashion of emerging South African designers, and targets young fashionable customers wanting designer labels and styling. The store design creates a strong point of differentiation from competitors.
|Number of stores||Trading space (m² 000's)|
|Corporate stores||Projected 2017||2016||2015||Projected 2017||2016||2015|
|* Trading space less than 1 000 m².|
|Earthchild and Earthaddict||45||44||41||3||3||3|
|Truworths Menswear Emporium||36||34||34||12||11||10|
Truworths currently has a limited online store offering for account customers only, generating sales equivalent to a small retail store.
A new e-commerce platform is being developed to expand Truworths' omni-channel retail capability to allow cash and credit customers to shop effortlessly across a range of digital devices.
The first phase is the design of a new shop front website. This will offer a broader online product catalogue, ultimately providing access to the full range of merchandise available in flagship stores as well as unique online-only product. Other initiatives to improve the customer experience include the development of new order fulfilment and payment solutions.
The new e-commerce platform and online shop is expected to launch in the second half of the 2017 reporting period.
Presence in the rest of Africa
Truworths continued to follow its strategy of incremental expansion into the rest of Africa while gaining further insight into local trading conditions and continuing to assess market potential.
During the period Truworths and Identity stores were opened in Zambia (Lusaka), Kenya (Nairobi) and Nigeria (Warri), and an Identity store in Namibia (Swakopmund). Regulatory changes in Nigeria resulted in trading no longer being viable and the four stores in the country were closed. The store footprint in the rest of Africa totalled 47 at the end of the period.
Trading conditions across the continent were impacted by lower commodity prices and weakening currencies in most countries in which Truworths trades. Despite the continued economic slowdown, stores in Botswana, Kenya and Mauritius performed well.
The focus for the 2017 reporting period will mainly be on increasing the store footprint in established territories such as Namibia, Botswana and Kenya. Zambia also has potential for further expansion while Truworths is evaluating entering Tanzania, Mozambique and Angola for the first time.