Markham

    2008 % change 2007
Turnover  Markham 1 190,9 6,6 1 117,6
(R million) RJL – (100,0) 20,8
  Total 1 190,9 4,6 1 138,4
Number        
of stores Markham 201 5,2 191
Floor area        
(gross m2) Markham 61 298 5,3 58 230
Number of        
employees Markham 1 364 (12,6) 1 560

Positioning

Markham is the largest men’s fashion retail chain in southern Africa. Markham stores are located in most major shopping centres and towns in this territory. In its endeavour to make its customers “feel great, look good, and share our passion for style”, Markham provides up-to-date, internationally-inspired menswear of good quality and value, suitable for all occasions and daily experiences. This is done from conveniently accessible stores, most of which offer a full range of menswear, and others, like the recently-introduced smaller-format Markham Relay stores, offering fashion casualwear only.

The smaller Markham Relay format is an answer to expansion into secondary, smaller shopping malls that do not warrant a fully-fledged Markham offering. They will be placed in new malls that are proliferating on the outskirts of large towns, in second or third stores in city CBDs, and second stores in large malls where it is not possible to expand an existing Markham store.

During the next year Markham intends to open a few stores on a pilot basis stocking only formalwear and smartwear. They are likely to be named Markham Cignal stores.

Whilst the division targets the LSM 6 – 10 range, the LSM 3 – 5 categories are also buyers of its stylish apparel.

Review of the year

Despite the sluggishness which prevailed in the economy in the latter half of the year, total sales in the Markham stores improved by 6,6% for the year, with same store sales growth of 3,4%. Although prices effectively remained constant, changes in the product mix resulted in 6% product inflation. Cellphones again performed well, sales growing by 6,4% to represent 16,9% of turnover.

Continued close control of markdowns and of expenses resulted in a further increase in profitability.

Markdowns made up 9,8% of sales. From trends known at this stage it seems that an acceptable level of markdowns will be sustainable into the future, although the rate may well rise marginally in the near future. The table below sets out the apparel markdown history.

  2004 2005 2006 2007 2008
Markdown value (Rm) 83,1 95,0 106,6 99,2 97,1
% to sales 12,0 12,4 11,7 10,5 9,8

The fruits of the division’s brand repositioning, which commenced in the second half of 2005, have handsomely exceeded expectations. The fashion and quality expectations of customers visiting the division’s stores have been raised and turnover levels and profitably have improved significantly.

During the year 81 stores with the old Markham logo were rebranded with the new Markham logo but did not receive a complete store renovation. Ten new stores were added and a further five were relocated or enlarged. Of the new stores, four are in the new Markham Relay format.

Strategy

The major repositioning of the Markham brand mentioned above has the objective of ensuring that Markham remains a relevant, aspirational brand, recognised for delivering fashion and style in a sophisticated shopping environment. This is a continuing exercise since it involves an extensive refurbishment of stores and this process must be spread over a number of years.

Space availability is one of the factors that set a ceiling on the growth of the division in the past. A full-line Markham store requires a substantial floor area and this has been unavailable in some malls in which the division would have liked to have stores. The Markham Relay concept is in part an attempt to deal with this problem since its smaller store format is easier to accommodate. The current slower economic conditions should provide opportunities to open full-line Markham stores where there are prospects of good sales, as well as to take opportunities to right-size and open smaller stores where this is justified. More than 20 stores will be opened in the next year.

Alongside the roll-out of new stores in both the Markham and Markham Relay formats there will be strong emphasis on cost controls in a drive to enhance profitability. Training programmes for all staff members will be continued in order to ensure that customers receive insightful and efficient service and that the Markham reputation is enhanced.

Store statistics 2004 2005 2006 2007 2008
Markham 173 177 180 191 201
RJL 37 38 28 – –
Total No. of stores 210 215 208 191 201
Closures 1 3 13 29 –
Floor area (m2) 56 956 58 538 58 764 58 230 61 298
         
                   Projection
Store statistics       2009 2010
Markham       224 242
RJL       – –
Total No. of stores       224 242
Closures       – –
Floor area (m2)       67 047 70 826

In addition to the activities described above, the division will continue to investigate options to reduce lead times for merchandise procurement with the objective of enhancing the division’s ability to react quickly to changing trends. There will also be emphasis on better fulfilment of customers’ size requirements, utilising the group’s newly-implemented size-management software which is designed to ensure that the size ranges of stock arriving at a store will correspond to historical records of the sizes of stock sold at that store.

The men’s fashion arena has extremely limited local manufacturing capability. However, the division will continue to strive to develop closer relationships with domestic suppliers in order to redress this deficiency over time, thus lowering reliance on imported product.

Prospects

The further roll-out of new Markham and Markham Relay stores, combined with better fulfilment of customers’ size requirements, will underpin the performance of this division in the next and later years.

The target is to have more than 240 stores, including at least 30 of the new Markham Relay format.

The pilot project mentioned above of standalone “formalwear-only” stores may also lead to some extension of trading activity in a high-margin area.