Africa’s largest retailer Shoprite’s Uniq clothing store promises quality at lower prices, and is letting go of some margin to deliver that promise to consumers.

This strategy, it says, will allow it to undercut the Woolworths Group on price for clothing of similar – or better – quality.



“We think we are going to be, price-wise, similar to or just below Woolworths but with better quality … we think we will be selling the same level of quality as a Country Road but priced a little bit similar to Woolworths, so that’s kind of how we are pitching our price-points,” clothing specialist for Uniq, Michael Coles, tells Moneyweb.

Read: Shoprite opens its first apparel store, with one eye on PnP Clothing

“We are giving up a little bit of margin. But that’s how we do things. The whole idea here is for our business to be margin accretive. We are not looking to [achieve] the margins that Woolworths is doing or Mr Price is doing. We’ve got a [more] conservative approach as long as it’s margin accretive,” adds Coles.

This strategy, he says, will benefit all stakeholders, including the customer and the shareholder.

The Shoprite Group ventured into the clothing business earlier this year with the launch of its first Uniq store in Canal Walk, Cape Town.

Since then, nine more stores have been rolled out across the country, including Ballito Junction Mall and Galleria in KwaZulu-Natal, Table Bay Mall in Cape Town, Secunda Mall in Mpumalanga, as well as Dainfern Square and Menlyn Park in Gauteng.

The latest opening at The Zone @ Rosebank in Gauteng brings the store count to 10, with the group announcing plans to open eight more stores by the end of the year.

‘Solid strategy’

Sasfin senior equity analyst Alec Abraham tells Moneyweb the strategy Shoprite has set out with the Uniq brand is solid. This is especially true considering the range it offers that is anchored in quality essential and functional wear – a segment of the market that may be underserved as other retailers pursue trends.

He adds that with consumers under pressure, many, like those in the wealthier income groups, are being forced to buy down. Uniq fills that gap by being the next landing spot for shoppers priced out of more expensive branded clothing but who still like quality.

Read: How mighty Shein is hurting TFG, Mr Price, others

“I think Woolworths, in their machinations of trying to move upmarket and maybe trying to be more fashionable to try and contend with the threat from Zara and H&M, they have muddied up that space a little bit, and I think they’ve actually created a gap for a quality player that can come in and possibly fill that gap. I think that’s probably what Shoprite has identified, and is trying to fill it.”

See also  Missiles fired from Chinese coast amid Taiwan tensions | News

Man behind the brand

Coles, the main man behind the new clothing segment, has a long history in the clothing business, specifically businesses that leverage grocery retail dominance.

He has worked for the group’s main competitors, and credits himself with growing the Pick n Pay Clothing business, having started as general manager in 1995 when clothes were only offered in Pick n Pay Hyper stores. Later, in 2002, he led the charge in opening clothing stores across the country. Today, Pick n Pay has about 300 standalone clothing stores.

Coles later joined Woolworths, as GM of the Fashion, Beauty and Home division between 2019 and 2021. He steered the division through the challenging pandemic period, which saw a drain of consumer spending on office wear at the height of the work-from-home phenomenon.

Shoprite’s R215bn sales boom
Pick n Pay’s secret weapon
Woolies delivers record earnings after Australian disaster

With all this history in the business, he tells Moneyweb it was important for him to deliver something different for the group.

This difference has come with a strong emphasis on technological innovations in stores, such as the self-service-only checkout, sleek and luxury-leaning store design, and creating a brand identity separate from the group’s core grocery business.



“We are differentiating ourselves by virtue of the fabrics that we pick and by virtue of the fact that we will offer only core shapes but with an acknowledgement of fashion.

“But the most important thing is we’ve got technology that tells us what the customer likes and what the customer doesn’t like,” says Coles.

He Coles notes that Uniq stores will continue to grow as standalone stores – targeting about 500m2 of space – with no overlap planned with the grocery offering.

“No department store, but if we find bigger sites, we will take them. For example, if we can get 700m2 at Sandton, we won’t say no, and then we’ll find some additional categories just for Sandton to make it unique to other brands. But we will approach that as we go.”

Competitors like Pick n Pay and Woolworths have merged their different divisions – food, clothing and appliances – into large format hyper/supermarket stores over the years. Retailers like Makro and Game have also used this department store layout, which sought to give consumers the one-stop shop benefit.

See also  Ukraine’s defence ministry in turmoil as Russia readies offensive By Reuters

Apparel, grocery retailers boost trading density growth at malls
Could Woolworths’s fashion turnaround strategy finally be taking shape?
Traditionally cash-based Mr Price sees rise in credit purchases

Although still offering this version of shopping convenience to consumers, Woolworths has recently begun creating more distance between divisions with the opening of smaller W.Edit stores.


According to Coles, existing store sales have largely met the group’s expectations, falling mostly within or above target, with only a few still building momentum.

The first three years of Uniq’s existence will be about pursuing growth and establishing its position in the “value luxury” market. After that, says Coles, the business will focus on pursuing profit.

He adds that the business saw relatively high setup costs and it should take about 18 months to two years to recover these.

“We are in the fortunate position now of not having comparative sales, so unlike the other retailers, they are comparing themselves to how they did before … and are taking action accordingly. We are fortunate that we don’t have to worry about last year’s sales because there are none, so everything for us is new and free turnover if you like.

“I think our ‘managing’ issues will start probably two to three years down the track when we start getting proper traction in terms of sales densities, turnover and stocking up the stores to a certain level. I think we will start worrying about those metrics in due course,” Coles says.

For Abraham, the three-years-til-profit target Uniq has set for itself leans a little too much on the ambitious side, more so in light of the current poor economic conditions, which find consumers’ discretionary income wanting.

“It seems a little ambitious given the fact that we are in such a tough economy. Maybe that would’ve been realistic when we had decent growth in the economy,” he says.

“Three years could be done, but you’re going to need to build up scale very quickly, very efficiently, and you’re going to take market share. I think a lot has to go right for them to achieve profitability within three years.”


Source link

(This article is generated through the syndicated feed sources, Financetin doesn’t own any part of this article)

Leave a Reply

Your email address will not be published. Required fields are marked *