Newsletter No 29/05 August 2022
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Adidas debuts collection designed with SA’s Thebe Magugu
Adidas has launched the first of two ranges developed in collaboration with celebrated South African luxury designer, Thebe Magugu. The first Adidas x Thebe Magugu drop is inspired by African heritage, community and kinship and has been designed with inclusivity in mind.
The debut collection for women features the celebratory and joyful artwork of a woman dancing, designed in collaboration with artist Phathu Nembilwi, and influenced by Magugu’s mother, aunt and grandmother, and the theme of femininity, interwoven with Adidas material technology.
Each garment features an abstract selection of bright and punchy colours including, impact orange and yellow, accents of shock pink, backgrounded by pulse lilac. The collection spans across sports including running, swimming, training, tennis, football, and cycling alongside a set of casual lifestyle garments.
United by a shared passion for inclusivity and kinship, the collection includes a three-piece modesty swimwear set made in part with recycled materials and chlorine-resistant fabric that is lightweight and chlorine-resistant swimwear in inclusive sizing (XS-4XL), and gender-neutral pieces with UniteFit – a fit system that is created with a spectrum of sizes, genders and forms in mind.
The high-performance tennis pieces will be premiered during a prominent hardcourt tournament by Adidas’ athletes Dana Mathewson, Stefanos Tsitsipas, Felix Auger Aliassime and Daria Kasatkina, who are passionate about encouraging diversity and inclusivity on and off the court. The tennis collection features the Purple NY UniteFit Tennis Dress, designed to deliver style and functionality and made in part with recycled materials.
Alongside the performance pieces, the statement Originals looks include the Originals Crop T-shirt and the Originals 7/8 Leggings. The collaboration also includes remixes of iconic Adidas footwear silhouettes including the Stan Smith, Nizza Platform, Astir and Forum footwear, which feature design accents from Thebe Magugu’s signature prints.
Merging storytelling, design and performance
Magugu commented: “I’m infinitely inspired by the energy of the women in my life and the heritage of my native land. Bringing together such personal stories through design and blending them with Adidas’ iconic performance and lifestyle pieces has been an amazing process. The collection really celebrates all the positive influences around me, and a sense of community that is so important to me. I hope it inspires the same joyful feeling in those who wear it.
“The tennis pieces will be worn by world-renowned players during one of the sport’s most iconic tournaments this summer – I am proud to play a small part in championing the sport and helping to make it more inclusive.”
The second drop of the season in October 2022, will feature the Thebe Magugu Bird of Paradise plant print that represents the idea of unbridled joy and freedom, which unites with Adidas performance technology such as the boost midsole, in a yoga look alongside the revival of the button-down jogger and statement tee. Bizcommunity
SA research shows the pandemic forever changed fashion retail. Now what?
By Giorgia Lupini
KLA survey provides valuable insight into how fashion retailers can keep consumers interested, online and in-store
The global pandemic has changed consumer buying behaviour and expectations, and fashion isn’t exempt. Today, consumers are slowing down and taking stock of their lives, and their changing needs are reflected in their changing purchasing patterns.
According to the Euromonitor International Top 10 Global Consumer Trends report, 2022 is the time of consumers taking back their power and forging a future built around their passions and values. A report by Flux Trends concurs, pointing out that retail will continue to recover if it pays attention to shifts in consumer behaviour and expectations.
For the fashion industry, this means listening to what consumers want and using these insights to create retail and fashion experiences that connect with the customer and build towards the future.
There will be a return to the confidence and freshness that epitomises the fashion category, and retailers can most definitely take advantage of it.
Just take a look at the trend of “dopamine dressing”. Characterised by bright colours and vibrant fashion, this trend sees consumers shake off the dark pandemic days by opting to wear items that bring them joy.
This is particularly relevant in SA, where a weakening economy and high levels of unemployment, alongside continued load-shedding, are affecting retail growth and consumer delight.
Not only do brick-and-mortar retailers need to be more strategic and revise their offerings, online stores also have to revise and shine. They’ve historically been platforms where customers compare prices; now they have to be agile and engaging, another touchpoint from which to connect with the customer.
The question is, how? The answer lies in creating experiences and environments that meet clear customer needs.
Full-service market research agency KLA recently conducted a survey of more than 250 consumers about what influences their buying behaviour and how digitisation has shifted their shopping expectations.
Here are the key findings:
SA consumers are looking for quality and durability, but without having to pay high prices within this category
Consumers want quality but they also want more value for money, which can be contradictory. The fast fashion trend dominated pre-pandemic with customers buying cheap garments over sustainable ones, but now it’s about clothes that will last.
“Wearability” was the defining factor for 86% of respondents, which suggests that brands need to focus on clothing longevity. Think factors such as washability, classic styles that won’t date and, in the case of children’s fashion, styles that will “grow” with the child.
Beyond this, indicators of quality included clothing with a good fit/cut (53%) and garments that are made from certain fabrics (39%).
Fashion brands should invest in premium fabrics, ensure good craftsmanship and consider the washability of garments to enhance the quality cues for consumers. Online, this attention to quality should be reflected in more detailed item descriptions that outline the type of fabric used, for instance, so consumers can make informed decisions.
Price has little influence on the perception of quality
Only 14% of respondents said that a higher price implies that the clothing’s quality is higher. In addition, branded clothing is now also not seen as a quality metric.
While most consumers were interested in buying local fashion, very few associated it with quality (only 7%) and few felt that the quality of SA fashion equates to that of international brands (only 8%).
Local designers and fashion houses clearly need to consider upweighting their quality by providing insight into handmade or artisanal processes that often directly result in higher quality products.
A different stance to sustainability
While the sample as a whole did not directly link quality to sustainability, 45% of women felt that quality clothing is sustainable, especially the younger age groups (18-24). This strong link between sustainability and quality can be leveraged by fashion brands.
KLA anticipates that sustainability and high quality will be become synonymous with brand stickiness and value. In other words, it feels good to buy a garment that is sustainable as it is aligned to personal beliefs but, at the same time, aligns with personal needs from the category that is something that will last longer, due to its higher quality.
Consumers are looking for value for money and enjoy tried and tested mechanics
The last two years haven’t changed the consumer’s passion for a good deal and a solid discount.
KLA’s research indicates that value for money is about specials, discounts and promotions with 55% of respondents agreeing that promotions such as “buy 3, get 1 free” or “buy 2 and get 20% off” offer good value.
Loyalty programmes remain relevant and enticing and 54% of consumers stated that loyalty programmes offer a sense of value for money. Markdowns on older stock, seasonal sales and instant discounts at the till also communicate value for money.
When it comes to fashion retailers Edgars, Ackermans and Woolworths ranked as the top three brands that offer the best value for money in the category.
While limited, there are some interesting demographic elements at play when it comes to ranking brands around value for money offering. Younger age groups favoured H&M’s value for money offering, whereas, older groups preferred the likes of PEP and Pick n Pay clothing.
The results showed that women thought that Ackermans and Pick n Pay clothing offered more value for money than men.
Moving into the future: How do we keep consumers interested, online and in-store?
Thinking into the future and of ways to create interest and stand-out in the category, consumers are looking for opportunities to customise and personalise their purchases, be part of the brand, as well as exciting in-store experiences.
This extends to the concept of co-creation as, 54% of respondents were looking to have clothing that can be completely customised to fit in their desired fabric and colour, for instance. In addition, 31% wanted to be rewarded for creating media content using clothing, including Tik Tok videos and Instagram posts. This an interesting intersection of social media and fashion as it shows that consumers enjoy playing their part in a brand story.
Regardless of the increase in online shopping, consumers still head to physical stores. We cannot escape the fact that fashion is an interactive and highly tactile category for consumers. But, a tech-based future is foreseen and winning brands will be those that take their clients on this journey in a meaningful way both in-store and online.
Taking one step forward towards customer connections
It is imperative that brands are cognisant of current trends but remain in touch with the advancements of the very near future. And so, the apparent local appetite for a mixture of channels seen in KLA’s research speaks to a potential desire for the next big thing: immersive technology. Brands like Gucci and Balenciaga are pioneering this.
If brands begin to equip themselves to fulfil a seamless omnichannel offering, with a potential value add of such immersive technology, KLA believes that they will be one step closer to the potential future and being at the forefront of fashion consumers post-Covid-19. FM
TFG – Q1 FY23 trading update & acquisition update
The Group had a strong start to the 2023 financial year, despite facing several headwinds. In South Africa there were increased levels of load shedding leading to lost trading hours, and trading was also impacted by the non-payment of the COVID-19 social relief of distress grant. The weakening exchange rate and increased inflationary pressure put further pressure on consumer spending.
Shareholders of TFG (“Shareholders”) are referred to the announcement released by the Company on the JSE Stock Exchange News Service on 7 March 2022 advising that the Company had entered into a sale and purchase agreement (“SPA”) to acquire the entire issued share capital of Tapestry Home Brands (Pty) Ltd. for a purchase consideration, subject to certain adjustments, of R2.35 billion (“Transaction”).
Shareholders are hereby notified that all conditions precedent to the Transaction have either been fulfilled or waived as set out in the SPA, it being noted that the approval from the relevant competition authorities was obtained. Accordingly, the Transaction is now unconditional in accordance with the terms of the SPA and is envisaged to be implemented with an effective date of 1 August 2022.
Outlook
The Group continued to invest in its key strategic initiatives to further strengthen its differentiated business model. It has made progress on its key strategic objectives, especially that of growing the value segment contribution further and its speciality brand business portfolio which remains very well positioned for further organic and inorganic growth, supported by a strong Group balance sheet.
In light of the current macroeconomic conditions, the ongoing rise in input costs, rising interest rates and a weaker exchange rate, we expect the consumer to remain under pressure. There will be a continued focus on further improving gross profit margins during the second half, expense control, working capital management and disciplined capital allocation whilst continuing to invest in growth (growth mindset).
Trade since the end of the quarter has been encouraging across all trading territories. For the first three weeks of the July 2022 trading month TFG Africa had retail turnover growth of 27,3%, TFG London had growth of 5,3% (GBP) and TFG Australia had growth of 72,8% (AUD).
Pepkor – voluntary trading update
Pepkor continued to achieve satisfactory trading performance for the three months ended 30 June 2022 in context of the comparable quarter last year (three months ended 30 June 2021). Group revenue for the nine months ended 30 June 2022 increased by 3.9% to R62.5 billion.
Overall, trading during the third quarter was volatile and included very strong trading in April 2022, a soft May 2022 followed by a decent recovery in trading during the second half of June 2022. This recovery strengthened further into July 2022.
Massmart – trading update
Total group sales for the 26-week period ended 26 June 2022, amounted to R41.3 billion, being broadly in line with the same period last year.
Total South African store sales for the 26-week period, which continue to be impacted by stores damaged in the July 2021 civil unrest remained flat, while comparable stores sales increased by 2.4%. Total sales, measured in Rands, from our Rest of Africa stores for the 26-week period increased by 1.6%, with comparable store sales increasing by 1.3%. When measured in constant currency, total sales for our Rest of Africa stores decreased by 2.6%, with comparable store sales decreasing by 2.9%.
The combination of the aforementioned factors namely; lower margin, once-off lease exit settlement cost and increased finance costs, has negatively impacted earnings. Massmart therefore expects, with a reasonable degree of certainty, that total earnings and headline earnings on a continuing basis, which excludes the Cambridge, Rhino and Massfresh businesses will be within the ranges reflected below:
Total group – expected June 2022
*HEPS (cents) – (420.5) to (450.3)
*Basic EPS (cents) – (483.9) to (534.1)
Continuing operations
*HEPS (cents) – (409.1) to (425.7)
*Basic EPS (cents) – (406.5) to (443.1)
Massmart’s financial results for the 26-week period to 26 June 2022 will be released to the market on 29 August 2022.
HomeChoice – trading statement
Shareholders are advised that, for the six months ended 30 June 2022 (current period), earnings per share is expected to be between 20% and 30% higher (between 137.6 cents and 149.1 cents) than the 114.7 cents reported for the prior comparative period. The current period’s headline earnings per share is expected to differ by less than 20% from the prior comparative period.
The Group’s interim financial results for the six months ended 30 June 2022 will be released on the Stock Exchange News Service on 16 August 2022.
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