annual report
2007

information and communications technology

Lewis maintains a balance between centralised head office systems and decentralised systems supporting stores, while key service functions are outsourced.

Most transactions are initiated in the store environment and the system automatically updates on a daily basis via satellite. Both the debtor and inventory databases are located at store and head office levels.

The Lewis Group operates a distributed network that allows branches to operate independently of each other and head office. However, the credit vetting process for new applications requires real time connectivity to the credit bureau, which is achieved through Transact. To prevent downtime, an off-site disaster recovery server for the Transact system has been set up. This disaster recovery site connects to the branch satellite network infrastructure and the credit bureau independently of the live environment. The whole Transact system is replicated at the disaster recovery site on a daily basis and can be activated within minutes of a disaster. A generator has been installed at head office to ensure that key systems are maintained.

During the year, the group has focused on investing in the maintenance of the infrastructure, while also adapting systems for compliance with new credit legislation. This included the installation of 2 050 new computer terminals for clerical branch staff, the phasing out of dated analogue voice telephony and the consolidation of data and voice technologies on to a single operating platform. These enhancements will improve service delivery to stores and create capacity for growth.

Lewis operates on a stable satellite network within South Africa and continues to use local infrastructure for data communications in neighbouring countries. During the year, operations in Botswana, Lesotho and Swaziland joined the satellite network.

The Lewis Communication System (LCS), an intranet-based system, links head office with the branch network, providing an online product knowledge training and assessment facility and enabling easy communication between branches and head office. It also facilitates several automated functions which eliminates administrative costs.

Lewis continues to evaluate the most modern and cost-effective IT solutions. Outsourced contracts ensure the continuity of technical resources for critical centralised systems while at the same time simplifying store technology.

Following the finalisation of the provisions of the National Credit Act, work commenced on the system enhancements required to ensure compliance by 1 June 2007. System changes have been minimised as the group has in the past applied industry-leading credit risk management techniques which are closely aligned with the requirements of the Act.

group property and development

The group opened 22 new stores during the year as well as relocating 10 stores to improved trading sites.

Store siting is key to trading performance and the three retail chains in the group have distinctive trading formats and store location strategies:

• Lewis outlets are generally situated in main streets and town centres, with some presence in shopping centres;
• Best Electric stores adopt a smaller format with high trading densities, and are generally located in shopping areas with higher footfall; and
• Lifestyle Living stores are mainly located in urban shopping malls.

The group’s property procurement and development is managed centrally to maximise operational efficiencies. This includes the administration of the property portfolio, negotiation of lease agreements and renewals, sourcing new sites, managing store openings and refurbishments, co-ordinating store security and handling lease administration.

The majority of premises are leased and the group currently occupies over 450 rented sites in southern Africa.

The store revamp programme has continued, with selected stores being upgraded during the year. Each renovation includes new carpeting, tiles and repainting. The costs of upgrading and maintenance of stores are controlled through the use of dedicated upgrading teams and contractual relationships with strategic BEE partners.