@home
Howard Godfrey
Sells a comprehensive range of homewares and furniture.
POSITIONING
At the year-end the @home division operated 78 stores throughout the major shopping centres in South Africa. They sell a comprehensive range of homewares and furniture that is aimed at the LSM 8 – 10 groups.
Over the past few years the division has undertaken considerable expansion in the number of its @homelivingspace stores. These comprise larger format stores providing a full range of homewares that includes a wide selection of contemporary furniture.
At the year-end there were 66 @home stores and 12 @homelivingspace stores.
The division has a franchise arrangement in place in the United Arab Emirates and Bahrain with the Al Tayer Group LLC and there are now seven franchised stores in this chain.
REVIEW OF THE YEAR
Turnover in the @home division grew by 15,7% during the past year, spurred by the opening of seven stores during the year. Of the new stores, three were in the @homelivingspace format, while two @home stores were relocated to enlarged premises and converted to @homelivingspace stores.
The new @homelivingspace stores are located in Century City Boulevard (Cape Town), The Grove and Park View (Pretoria), Gateway (Durban) and The Glen (Johannesburg South). They are each approximately 2 000 square metres in floor area. A further store has been added in the new year, bringing the total in the @homelivingspace format to 13.
During the year various measures were implemented to reduce the environmental footprint and increase the energy efficiency of stores. Details on these initiatives are provided in the environmental performance review in the services section.
The recession prevailing in the broader economy affected trading conditions in the division, particularly as homewares and furniture are not perceived as essential purchases. There was also some planned cannibalisation of revenue because of the roll-out of the larger @homelivingspace stores. This combination of factors led to a decline of 6,3% in turnover on a comparable store basis but the overall turnover of the division, enlarged by the additional stores, grew by 15,7%.
| 2010 | % change | 2009 | |
| Turnover (R million) | 587,8 | 15,7 | 508,1 |
| Number of stores | 78 | 8,3 | 72 |
| Floor area (gross m2) | 49 587 | 27,9 | 38 766 |
| Number of employees | 955 | 29,1 | 740 |
| China, | China, | ||
| India, Brazil, | India, Brazil, | ||
| Vietnam, | Vietnam, | ||
| Most significant countries from which merchandise is imported | Europe | Europe | |
| Excludes seven franchised stores in Dubai and Bahrain | |||
Because of the pressure experienced by the homewares sector in the recent recessionary times, special measures were taken to sharpen cost controls and stock levels were kept in line with turnover.
As part of ongoing efforts to ensure responsible supply chain management for all its wooden outdoor furniture, the division endeavours to only source wood from factories that are Forest Stewardship Council (FSC) certified, especially where teak or balua is concerned. An important development this year has been the introduction of a revised supplier auditing process aimed at ensuring that all contractual obligations are being met, including all legal, ethical, environmental, labour, and health and safety compliance. Further details on the nature of the group’s supply chain management and auditing activities are provided in the Supply Chain and Group Merchandise Procurement reviews.
| Mark-down statistics | |||||
| 2006 | 2007 | 2008 | 2009 | 2010 | |
| Mark-down value (Rm) | 27,1 | 39,3 | 47,3 | 46,5 | 72,4 |
| % of sales | 7,5 | 8,3 | 9,0 | 8,0 | 10,7 |
The volume of marked down sales was inevitably higher because of the prevailing recessionary conditions and the opportunity was taken to clear lines of stock unsuitable for future trading.
Trading density for the past year in comparable stores was R16 200 per square metre.
The franchised chain in the United Arab Emirates and Bahrain, now extending to seven stores, has also been affected by the global recession, but it is clear that the @home concept and brand have been well received in the region.
Investing in talent development is an ongoing focus to ensure a supply of talent and skills to meet our business requirements. Details on the group’s human resource activities – including employment equity, skills development, and occupational health and safety – are provided in the Human Resources review.
STRATEGY
The @home division will open fewer stores in the next year. Of the five contemplated, four will be @home stores and one an @homelivingspace store, the latter to be opened in the Northern Province. Because of the quick roll-out of stores over the last few years, the next year will be a year of consolidation in order to improve efficiencies and increase trading densities.
Because of the difficult economic times the division is making a thorough review of its assortment of stock to ensure its attractiveness to customers and to ensure that they receive fair value and good fashion content when making purchases at the division’s stores. This process will engage the division continuously in the next year, when the watchwords of the division will be the retention of margins and tight control of stocks and costs.
| Store statistics | Projection | ||||||
| 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | |
| @home | 39 | 49 | 58 | 65 | 66 | 70 | 74 |
| @homelivingspace | 2 | 2 | 3 | 7 | 12 | 13 | 13 |
| Total No. of stores | 41 | 51 | 61 | 72 | 78 | 83 | 87 |
| Franchise stores | – | – | 2 | 6 | 7 | 10 | 12 |
| Closures | – | – | – | – | 1 | – | – |
| Floor area (m2) | 18 624 | 21 906 | 27 605 | 38 766 | 49 587 | 53 187 | 54 787 |
PROSPECTS
While the interest rate cycle is now at its lowest level for many years, growth in consumer spending in the homewares market is expected to be slow. The Rand has remained strong, giving the division the opportunity to bring further ranges of attractive and affordable homewares to the shop floors. These are seen as positive signs for the next year. The limited programme of store openings in the next year will allow the division to retain its focus on maintaining growth in areas where the division is already well established.
Emphasis will also be placed on achieving maximum efficiency for the division through its participation in the group’s supply chain initiative, where good progress has already been made.
Notwithstanding the poor economy in Dubai, the division’s franchise partner is nonetheless planning to expand its chain of @home stores further across the region.
