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Truworths aims to produce winning ranges across its brand portfolio season after season, offering customers internationally-styled fashion of superior quality at competitive prices.

Truworths’ proven merchandise philosophy of buying ‘wide not deep’ on the majority of its ranges offers customers an extensive range of garments and styles, while a limited quantity of each item and size ensures exclusivity.

Consistent processes are followed by the merchandise and buying teams to manage and mitigate the risk of fashion throughout the product life cycle. This includes forecasting and interpreting international fashion trends, tailoring these trends to the unique South African market, designing garments, planning and assorting ranges, sourcing and engaging suppliers, and managing production across the supply chain until the merchandise reaches stores and, finally, the customer.

Success and failure is ultimately measured by what sells and what does not.

THE YOUTHFUL FASHIONABLE CUSTOMER

Truworths targets ‘one customer’ who is youthful and fashionable and, through its exclusive market-leading brands, aims to cater to the varied lifestyle needs of this customer, from leisure to work, to eveningwear, and in every aspect of her or his life.

In addition, the business also targets the kidswear market and has an expanding presence through its multiple exclusive aspirational kidswear brands.

Fashion is aimed at making customers look attractive and successful and feel enthused with confidence, regardless of their age or size. This single customer view eliminates the risk of segmenting the market that arises from targeting different customer profiles, 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 trade fairs, online subscriptions and social media, as well as by following global and local street trends.

Merchandise designers work in partnership with buyers to track trends and formulate the main fashion directions 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 consultants in the major fashion capitals of the world and online fashion intelligence, supplement these seasonal processes.

ROBUST FASHION FORMULA

A consistent merchandise buying and planning formula is applied for every six-month season. Developed over many years, 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 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 ensures consistency of the merchandise offering and provides 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. Through each step in the process there is a focus on maintaining exacting quality standards that customers both value and expect.

TECHNOLOGY DRIVING EFFICIENCY

Merchandise processes are supported by leading-edge systems and technology.

A new style performance measurement tool has been implemented across the merchandise departments which enables merchants to quickly and efficiently identify the sales performance of individual styles as well as trends across styles.

SUPERIOR QUALITY FASHION

Truworths’ quality standards are recognised as being among the best in the fashion industry. Central to the quality assurance process is an in-house fabric and garment testing laboratory. The quality assurance laboratory is accredited by South Africa’s Council for Scientific and Industrial Research (CSIR), providing assurance that the laboratory’s methods and results are aligned with international standards.

The quality assurance team partners with local and international suppliers to ensure merchandise is manufactured to consistent quality and prescribed standards. Quality assurance workshops are held with both local and international suppliers to ensure alignment with Truworths’ expectations and standards. All quality standards and manuals are made available on the web-based supplier portal.

The international quality assurance team works closely with offshore suppliers to ensure these exacting quality standards are achieved. During the reporting period a small quality assurance function was established in Mauritius to manage quality standards and processes with manufacturers in that country.

MANAGING FASHION RISK IN 2017

While merchandise strategies and processes are implemented to reduce fashion risk, each year presents new challenges in the macro environment that need to be managed and mitigated.

One of the major challenges during the 2017 financial period was managing the impact of high product inflation on imported merchandise as a result of the sharp devaluation of the Rand during the prior period and subsequent currency volatility, which also impacted the cost of imported fabric used by local manufacturers. As Truworths imports approximately 65% of all merchandise, managing the volatility of the Rand against the US dollar is a challenge. However, the impact of high product inflation has been compounded this year as consumers are under extreme financial pressure.

The new Truworths and Identity loyalty programmes have created the opportunity to launch value offerings without any material impact on margins while at the same time providing insight into customer preferences, behaviour and creating the opportunity for targeted marketing.

Management has adopted a strategy to consolidate fabric purchases across departments to achieve better prices while maintaining quality standards. The benefits of this strategy should gain momentum in the 2018 financial period.

International apparel retailers continue to expand their presence in South Africa. Management closely monitors the impact of those retailers targeting the Truworths mass middle to upper-market customer. While Truworths respects its fashion peers and will never become complacent to the threat of local or international competition, the ongoing success of the chain will always be based on strategies that focus on its own business philosophy.

Owing to the increasingly tough trading conditions and deteriorating consumer economy, Truworths had to carefully manage its levels of stock in an environment of lower-than-expected sales.

Despite these challenges during the reporting period Truworths again proved its ability to manage the risk of fashion, with the gross profit margin being stable at 55.2% (2016: 55.3%) and stock well managed with the inventory turn improving to 5.2 times from 4.7 times in the prior period.

INTEGRATION OF OFFICE

The integration of Office into Truworths’ retail processes is starting to reap rewards. Truworths has applied its extensive stock management experience and in-house developed tools to set targets for inventory levels and turn for Office. A planning tool was implemented in Office to assist with sales planning as well as inventory and markdown management. This working relationship has contributed to better inventory turn and improved sales in Office.

The Truworths merchandise and buying team has collaborated closely with its counterparts at Office in the United Kingdom in developing the Office London brand which launched its first stores in South Africa in August 2017.