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Marketing is a strategic discipline within the group, spearheading the sales drive to attract new customers by creating awareness and affinity with the brands, as well as entrenching customer loyalty to generate repeat sales.
The group’s success in raising awareness levels saw Lewis ranked second for the fourth successive year among furniture retailers in the authoritative Markinor Top Brands survey, narrowing the gap significantly on the first placed competitor over this period.
The loyalty created with customers over many years has led to 58% of sales in the past financial year being generated from current and settled customers. Through a “re-serve” programme customers are identified for further credit extension based on their payment history and current level of indebtedness to the group. Direct mailings and promotional offers are then targeted at these customers. Targeted segmentation of the customer base was further refined this year, with our top-rated customers receiving a variety of special promotional offers, depending on their credit record with Lewis.
Lewis’ merchandise-driven advertising strategy focuses on:
Brochures are also distributed using the “knock and drop” method into catchment areas with the highest potential for attracting new customers, eliminating areas which attract a low sales return. Leaflets supporting each brochure campaign are also distributed in high traffic areas during peak commuting times.
Local promotions at store level are used to regain settled and retain current customers. Personalised promotions have also been introduced to expose customers to the unique Lewis experience. Joint promotions with corporate partners are also used to attract new customers.
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The marketing strategy adopted for Lifestyle Living reflects its positioning in a higher income market to the two other chains. Advertising in monthly magazines and weekly regional press is supplemented by seasonal catalogues featuring new merchandise ranges which are inserted into targeted magazines.
All promotional material, print advertisements and television commercials are produced by our in-house advertising studio. The media buying function, which was previously outsourced, has now been integrated into the advertising studio to better align with the marketing strategies and to realise cost-efficiencies.
The Lewis Club is a customer loyalty programme offering free membership to any customer taking out insurance when purchasing merchandise at Lewis.
The Lewis Club is a powerful marketing mechanism as all members receive a magazine each month. The magazine has a readership of over two million people and includes special offers, discount coupons and competitions. The editorial content focuses on general interest and topical lifestyle issues relevant to the Lewis customer profile.
The merchandising strategy is aimed at driving sales and top-line gross profit through exclusive, differentiated merchandise offerings and attracting customers into stores through quality promotional lines. This was achieved by sourcing new, exclusive lines locally and internationally that offer both quality and value.
The procurement strategy has enabled Lewis to create a distinctive merchandise range and avoid the lack of variation which is common in the middle income furniture market.
Sourcing products from a diverse range of suppliers domestically and offshore has not only ensured exclusivity but has also afforded margin opportunities. Direct imports accounted for 26.6% of the group’s total purchases in the year.
Imported merchandise is balanced with locally manufactured furniture, where the group sources a large proportion of furniture from suppliers that can offer product differentiation. Products are also sourced from regional manufacturers which improves inventory levels in stores, reduces delivery lead times and lowers costs.
An objective of the merchandising function is to grow the proportion of furniture sales, as furniture generally has a higher margin than appliances and audiovisual products. The furniture import programme has contributed to a positive shift in the product mix with furniture sales growing from 47% of total sales in 2004 to 52% this year. Electrical appliances accounted for 26% (2007: 25%) and audiovisual products 22% (2007: 25%). While audiovisual sales have slowed markedly over the past year, the group has still performed well relative to the overall trend in the audiovisual sector and this can be attributed to the range of exclusive, aspirational brands sold by the group.
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Merchandise innovation remains a competitive advantage of Lewis, and new designs, manufacturing techniques, fashion trends, alternate wood and other materials are constantly being sourced to offer our customers attractive and exclusive merchandise at affordable prices. |
As part of the group’s commitment to quality, all products are supported by local after-sales service. Quality control on imports is contracted to a Hong Kong-based supply specialist that manages and supports all imports.
In the year ahead the merchandising team will focus on expanding the range of exclusive brands available to the group’s target market and further strengthening strategic relationships with suppliers both locally and offshore.
The Lewis distribution model is based on merchandise being delivered directly by suppliers to stores which increases efficiency and eliminates costly distribution centres and warehouses. Stores are responsible for their own deliveries to customers, with an average of 90% of deliveries being completed within 24 hours of the sale.
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From left to right: Petros Zitha, Derek Loudon, Rob Jacobs, Ivan King, Johan Steenkamp, Chris Heiberg. Absent: Rowan Hunt |
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