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Merchandise strategy

Innovative product sourcing both locally and off shore, together with the strength of long-term supplier relationships, ensures that the group off ers customers distinctive ranges. Added-value features and components ensure diff erentiation and enhance the value of the merchandise.

New ranges are launched twice each year to introduce newness to the merchandise off ering and thereby attract customers.

In the traditional retail brands, which target the lower to middle income groups, the focus is on off ering quality, value-for-money merchandise ranges. Products are sourced to meet the specifi c needs of this customer base.

UFO off ers luxury exclusive furniture to cash customers in the higher income market. In the current constrained economic environment, sales are increasingly promotionally driven as customers seek value. All the group’s brands expanded their participation in Black Friday in November 2019 and achieved strong sales growth over this promotional period.

Merchandise offering

The merchandise off ering covers three core product categories:

Furniture: Bedroom suites, beds, base sets, mattresses, lounge and dining room suites, wall units and kitchen units. Lounge suites and base sets account for approximately 62% of sales in this category.

Appliances: Refrigerators, freezers, stoves, washing machines, microwave ovens and small electrical appliances, including well-known brands such as Defy, Russell Hobbs, KIC, Whirlpool and Kelvinator.

Audiovisual: Mainly television sets, audio equipment and laptop computers from leading brands Samsung, Hisense, Sinotec and LG.

In each category the group follows a sell-up strategy of “good”, “better”, “best” or “more for less”.

The focus has remained on increasing sales of the higher margin furniture and appliance product categories, while more contemporary lines are off ered in each furniture sub-category to attract younger customers.

An electronic merchandise catalogue is utilised in all traditional retail stores, providing the customer access to the complete merchandise range despite space limitations. The full product range, including all available colour and fabric options, are displayed on a large touch screen.

Merchandise sourcing

Products are sourced from a wide range of local and international suppliers to ensure that customers are off ered exclusive merchandise ranges. Imported merchandise accounted for 28.9% of stock purchases in the reporting period.

As a member of the Proudly South African Association, we share a commitment to an uplifting ethos that promotes social and economic change.

We endeavour to source locally by investing and partnering with local manufacturers, making a meaningful contribution to building a better South African economy, alleviating unemployment and retaining existing employment opportunities.

Products are supported by local and overseas after-sales service to ensure quality standards are maintained. Prior to consignments being dispatched from international suppliers, samples of all imported products are assembled and tested for quality purposes.

Supply chain and distribution

The group’s supply chain model is based on locally sourced merchandise being delivered directly to stores, supported by leading shipping and logistics providers for imported stock.

As the group does not operate distribution centres or centralised warehouses for the traditional retail brands, each store has a storage facility which is located close to the store, generally in areas with lower rentals than retail space. This strategy limits the build-up of obsolete stock and reduces markdowns.

Traditional retail stores have dedicated delivery vehicles which enables an average of 90% of deliveries to be completed within 24 hours of the product being sold.