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2016 S&V Newsletter No 01, January 11

S&V Footwear and Leather Goods / S&V African Leather

 

Best wishes for the New Year to our readers. We had intended to start our newsletters next Monday, but we are fortunate to have received some comment on trading conditions in December from a number of experienced independent retailers around South Africa, Namibia and Malawi, which provide useful insights.

Back to work has coincided with more exchange rate volatility. Retailers – and importers – are looking at more local manufacturing as part of their strategies for 2016. I would like to make the following comment to local manufacturers: this is your big opportunity, the biggest you’ve had for a long time. Of course you will try to do more business with retailers, but I strongly suggest you ALSO try to do business with importers.

Why? Here are 4 good reasons for working with branded importers, where they are allowed to source locally: Branded importers have good brands. Most of them are in Cape Town or Johannesburg, where most of the big retailers are. Most of you are in Durban or Pietermaritzburg. They are universally good at marketing. And finally, they’re not just going to roll over and die. They’ll find new ways of doing business. Make yourselves part of that solution.

Perhaps working with the unbranded importers who concentrate on chain wholesale and indent business is more of a challenge, but there will be opportunities.

Festive Season trading

We asked the following retailers to comment on Festive Season trading in these terms: how December and January (so far) have compared with the previous year; what factors influenced trading in their own areas and nationally; what sold well and what didn't do as well; and how overall the season has influenced their outlook for the year.

Peter Meinzer, proprietor, Thiel’s Shoes, Windhoek

Against expectations, a very good Christmas, but caution for the year ahead

Namibia experienced a more than exceptionally good retail trading period in all sectors from 2011 up to 2014. Sudden restrictions to the spending and stricter control measures to currency trading between the Angolan and Namibian governments led to an overall turnover drop in all sectors up to 30%.
With our feet back on the ground, 2015 was definitely not what retailers expected.
Christmas trade 2015 spiralled up as from mid-November till end December 2015. By comparison, it was an excellent trading period compared to the past five years.
Men’s high end formal footwear and accessories sold well. Casual sandalised and beach footwear did great. Ladies festive and functional footwear, including handbags and casual holiday footwear, were among the best sellers.
Windhoek (population: 325 000) boasts brand new up-market shopping malls and retail shops galore, which sprang up over the last two years, all with the impression that retail would continue as it did in the past. Time will show how many will survive!
The final two months of the financial year, will hopefully show figures equivalent to that of previous years!
For the year 2016...Expectations not aimed too high, realistic goals set, a definite plan of action, and wise stock purchase, will be the key to survival.

 

Paul Coetsee, Member, Elegant Man, Matatiele

December down on 2014, but there were bright spots

To compare December 2014 with December 2015, I first need to explain something about our business. At the beginning of 2015, we had 3 branches.
In March 2015 we closed a branch in one town as we could no longer afford the rental and out of necessity opened another branch simultaneously in another town (thanks to a very accommodating landlord). Not really knowing how the new branch would perform we approached December 2015 with anticipation. Needless to say it did not disappoint us. So we still have 3 branches. To sum it all up then, business in December 2015 was down on 2014 but on the brighter side, up on 2013.
Sales of branded footwear led the way whilst sell offs of branded clothing was softer than expected. Strangely there was an overall improvement in sales during the last week of December 2015 compared to the same period for the previous year.
I hope that it bodes well for January 2016. As far as January 2016 is concerned, we remain optimistic. However it is too soon to compare January 2016 with January 2015 and we hope to be pleasantly surprised come 01 February 2016.
In my opinion customers in general are more knowledgeable about fashion and trends. They want to create an overall look that fits their image. Hopefully we will be able to meet their expectations in 2016. That gives me something to strive for and a measure of satisfaction once attained.
All the best for 2016 to all my colleagues.

 

Prashill Nagar, Amagents, Nelspruit

Better planning and budgeting led to best December on record

We had a good December, up on last year and one of our best on record. We did well on premium high ticket items (Bass Shoes, Puma Motorsport, Palladium Boots, Jeep Boots). Kiddies was also strong with Nike Air Max and Nike sandals performing best. We didn’t have much that didn't sell well.
We focused on the winners last year, and we budgeted and planned better in 2015.
Going forward, in 2016 we will be cautious in the first 6 months – using my dad’s motto: first half slow second half fast. With the Rand 16 to $1, prices will be a huge factor in 2016.
But we do have a positive outlook on the year and will keep doing what we do best – providing excellent service, taking on the chains with prices, and focusing on our customers’ needs.

 

Kris Karpinski, member, Shoe Stop/Orange, Cape Town

‘Big Spend’ came very late, and basics were the key

Having been in retail for almost 45 years (35 in footwear), one thing is certain – it just gets tougher.
Suppliers let you down, customers get more aggressive and demanding, and exchange rates constantly play havoc with your price points. But we managed to survive another season.
Being in a centre where there are 59 outlets that have a footwear offering, including all the major brands' own retail stores, makes trading really tough, but it was my basics that saw me through.
No real trends were evident other than the fact the ‘Big Spend’ came very late.
Comfort shoes were in demand and Aerosoft did well. Jellies came good in the end as temperatures soared. On the men’s front, the shift continued from traditional leather sandals to the sporty/beach styles like Floaters and Havaianas. Formal men’s shoes were again a disappointment and price points were very definitely a telling factor. R499 for a synthetic style was far more appealing than R700 plus for a branded leather style.
With the continued deterioration of our exchange rate I'm feeling the consumer is reaching that tipping point where it’s a case of ‘I just can't afford it’.

 

Rafiq Hajat, Footwear Centre, Blantyre, Malawi

Festive season could have been a lot worse given the overall situation

If I were asked how was business over the festive season in Malawi, I would answer that it was a mixed bag depending on what area of business one was in, but no one would dispute that it was disappointing – generally speaking.
Malawi is a landlocked country surrounded by Zimbabwe, Mozambique, Tanzania and Zambia. It has a population of 15 million people, 80% of whom live below the poverty line (US$1 per day), 60% are illiterate, 8% have access to electricity and less than 1% have access to university education. Most survive on heavily subsidised smallholder subsistence farming – primarily rain fed. Thus the people are highly vulnerable to weather shocks such as when the rains fail as they seem to be doing at present or, as was the case last year, when we had devastating floods that displaced thousands of people.
With a GDP of $4.26 in 2014, Malawi has historically relied on external support for up to 40% of its national budget to keep the ship afloat. However, this vital support line was temporarily suspended by the emergence of a huge scandal popularly known as ‘Cashgate’ in which civil servants allegedly pillaged huge sums of money from the tax coffers in collusion with some politicians. The development partners have categorically refused to turn the taps back on until the mess has been cleared up and they are satisfied the all the loopholes in the financial system have been success fully plugged. Malawi has thus had to resort to tightening its belt and even cutting down on essential services to the poor. The Malawi Kwacha depreciated from MK450 = US$1 in January 2015 to MK690 = US$1 in December 2015 – a drop of over 50% in one year, with the resultant inflationary spiral that naturally ensues after such a loss of value in the local currency. Prices of all commodities sky rocketed whilst earnings lagged behind miserably.
With the above backdrop, one did not expect record shoe sales over Christmas and the New Year in Malawi, and one was not disappointed. Sales were generally down by about 40% compared to 2014. The ladies primarily went for lower priced pumps and flat sandals, followed by comforts and some high fashion lines, whilst the gents opted for leather ankle boots, formal slip-ons, comforts and sandals. We were pleased to see an increased preference for the higher end brogues and slip-ons from upwardly mobile customers. There is now a discernible brand loyalty and the buying patterns displayed that awareness. By and large, it would be safe to say that it wasn't the best festive season that we've had, but it could've been a lot worse.
As for 2016, it would be safe to opine that we are going to have a very rough ride and it will be a time for caution and prudence. However, it will also be a time for creativity, flexibility and ingenuity in order to spot the opportunities that arise from time to time in such situations. Suffice to say, the wheat will certainly be sorted from the chaff!

 

 


  

Contact us

News & Classifieds: Tony Dickson, +27 (0)31 209 7505, tony@svmag.co.za

Next newsletter: January 18, 2016

 

 

 

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