Exact!

  2008 % change 2007
Turnover (R million) 707,2 3,6 682,6
Number of stores 182 1,1 180
Floor area (gross m2) 52 831 2,8 51 386
Number of employees 1 063 (1,6) 1 080

Positioning

Exact! offers a focused range of fashionable women’s, men’s and children’s apparel to the growing group of middle income South African shoppers in the LSM 5 – 8 groups. It targets shoppers seeking products in the smart-casual category. Footwear and accessories complete the range, with cellphones providing a useful additional product line.

The products stocked offer clear value to customers in terms of both quality and price, and are easy to fit into combinations with other apparel on a “dress up or down” basis.

Customers respond to the division’s limited but consistent styles of apparel, for which care is taken to provide appropriate displays which highlight the features of the garments offered while avoiding profusion.

The Exact! stores are located in city shopping malls, high streets and rural areas, and provide their customers with a consistent experience wherever they choose to shop.

Store location % of turnover % of m2
Shopping malls 44,1 41,3
High streets 30,3 27,4
Rural areas 25,6 31,3
A breakdown of sales by product category in the Exact! stores in the 2008 year is set out in the following table.
Womenswear 24,8%
Menswear 21,0%
Footwear (for men, women and children) 20,3%
Childrenswear 10,1%
Accessories 2,9%
Smalls 3,1%
Cellular 17,8%

Review of the year

The Exact! division started to experience tough trading conditions in the second quarter and these conditions went on to prevail throughout the rest of the year. Consumers in the division’s target category were negatively affected by the implementation of the National Credit Act in June 2007, which reduced their ability to obtain credit. In addition, several interest rate hikes had a dampening effect on consumer confidence. The result was that turnover for the year grew by 3,6%, with same store sales up by 1,7%. Customers with reduced disposable income bought less than expected in the summer season and it was necessary to take more markdowns than had been planned.

  2004 2005 2006 2007 2008
Markdown value (Rm) 53,9 66,2 84,6 91,0 104,3
% of sales 12,9 13,7 14,6 14,3 15,8

The performance of menswear and footwear was reasonable, with footwear coming off an extremely high base in the previous year. Womenswear performed below expectation as some fashion lines proved to be less popular than had been hoped. This area was subjected to research in an attempt to reach a better understanding of customers’ wants and needs.

The response to childrenswear was extremely pleasing, with sales of boyswear growing by 27,2% and girlswear by 15,8%. This is attributed to offering differentiated ranges and the fact that, despite tough economic times, consumers will invest in their children’s clothing.

In line with the overall trend in clothing, there was reduced demand for cellular products and this was evidenced by a decline in sales of 0,3%. Cellular products nevertheless made up 17,8% of divisional turnover.

The volume of sales in shopping malls and high streets relative to rural areas continued to increase, confirming that there is a strong trend towards urbanisation.

Sales in the division’s two “megastores” namely a larger, multilevel format in Church Street, Pretoria, and in West Street, Durban, were adversely affected by the start of the government workers’ strike in June 2007. Despite this, turnover in these stores grew by more than 22% and 24% respectively.

Store windows have proved to be the division’s biggest marketing medium, customers being attracted by varied and visually interesting displays of merchandise. Feedback from customers confirms that the attention which is devoted to these displays is recognised in the market as one of its strengths. This is a source of great pride and encouragement to the division.

Exact! continued to support local clothing manufacturing through a strong collaborative effort between its buying teams and the group’s in-house design and manufacturing arm, TFGA.

Speed-to-market became a key strategic initiative in the division, as elsewhere in the group, and a number of projects have been initiated to improve stock turns and optimise lead times in the Exact! stores.

The division’s personnel development activities in the past year were focused on training programmes for store managers and middle management. Performance measurement, succession planning and talent retention are now firmly entrenched in the culture of Exact!

Exact!’s main corporate social responsibility initiative remains Monkeybiz, a non-profit organisation that employs and empowers more than 450 women who suffer social disadvantages or are HIV-positive, and who hand-make a range of attractive bead products. Exact! continues to subsidise the Monkeybiz soup kitchen, as well as giving support through donations. In addition, Exact! supported the Attie van Wyk School.

Strategy

The foundation of Exact!’s strategy and the six pillars of its business are people, fashion, value, stores, service and profit. These concepts remain firmly embedded in the division’s collective thinking and planning. For the year ahead, action plans and success criteria have been developed under each of these headings in order to drive the business forward. All projects will be managed holistically and clearly-communicated common goals will ensure that all departments work synergistically.

After conducting research on the factors which cause people to shop and having made an intense examination of the needs and wants of its target market, Exact! has designed a strategy to attract the fashion-aware customer who seeks value, has multiple roles and has little time to shop.

Ranges of products will remain limited and focused, with an emphasis on fashion at moderate prices. Stylish, easy-to-combine and comfortable garments will be the basis for making Exact! the preferred destination for the target market.

Emphasis will once again be placed on boosting turnover while maintaining a balanced approach to stock control. Further steps will be taken in bringing to fruition the supply chain projects which were initiated last year. In support of local initiatives the division will aim to procure at least 70% of its apparel purchases locally.

A total of ten new stores will be opened and four stores will be relocated and enlarged. This sizeable expansion programme, focusing on sites where mass shopping takes place, indicates the confidence which prevails in the future of the business.

Store statistics 2004 2005 2006 2007 2008
Number of stores 185 170 170 180 182
Closures 1 4 – 1 1
Floor area (m2) 54 408 46 862 47 855 51 386 52 831
         
                    Projection
Store statistics       2009 2010
Number of stores       190 200
Closures       2 1
Floor area (m2)       56 671 58 591

The succession plans that were implemented last year are already showing benefits and will continue to play a key role in developing strength, stability and capacity in the division in the future. There is ongoing emphasis on people development, particularly in store management, through centralised training programmes. The objective remains to provide good careers to people from previously disadvantaged communities.

The division’s current corporate responsibility initiatives will again be supported in the next year, and some innovative educational projects will also be launched.

Prospects

The retail sector is expected to be under pressure throughout the year ahead and the division has adjusted its budgets to be in line with predictable consumer spending patterns. The division is also positioning itself to take advantage of the economic upturn as soon as it occurs through unflagging attention to customers’ needs and by extending the reach of its stores into areas of high density.