MARKHAM
Manie Maritz
Internationally inspired menswear of good quality and value.
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, while others offer fashion casualwear only.
While the division targets the LSM 6 – 10 range, the LSM 3 – 5 categories are also buyers of its stylish apparel. Increasingly, shoppers tend to be younger men, often in the age group 19 – 25.
REVIEW OF THE YEAR
The weakness which prevailed in the economy for most of the year inevitably had a dampening effect on sales, but overall turnover nevertheless grew by 3,7%. In comparable stores there was a reduction in turnover of 0,8%. Results in the first two months of the year were promising, but from July 2009 a marked downturn set in, particularly in towns where large-scale retrenchments had occurred in the mining and manufacturing industries. A symptom of the difficulties which customers faced was a trend in purchases to basic denim garments.
Although the price of product remained effectively constant, changes in the product mix resulted in a modest degree of product inflation.
Performance in cellphones and other cellular products was disappointing because of continued supply difficulties at MTN. A second service provider, Vodacom, was introduced to selected stores in October 2009. Although this was followed by a rapid rise in sales there was nevertheless a drop of 5,1% in turnover for the year in these products, which accounted for 14,5% of the division’s turnover.
Continued close control of mark-downs and costs assisted the profitability for the year.
Mark-downs made up 7,9% of sales. From trends known at this stage this level of mark-downs is likely to be sustainable into the future. The table below sets out the apparel mark-down history.
| 2010 | % change | 2009 | |
| Turnover (R million) | 1 359,6 | 3,7 | 1 311,7 |
| Number of stores | 234 | 4,9 | 223 |
| Floor area (gross m2) | 71 303 | 5,0 | 67 889 |
| Number of employees | 1 511 | 3,0 | 1 467 |
| Most significant countries from which merchandise is imported | China, Mauritius, | China, Mauritius, | |
| Bangladesh | Bangladesh |
| Mark-down statistics | |||||
| 2006 | 2007 | 2008 | 2009 | 2010 | |
| Mark-down value (Rm) | 106,6 | 99,2 | 97,1 | 94,3 | 101,8 |
| % of sales | 11,7 | 10,5 | 9,8 | 7,5 | 7,9 |
Repositioning of the Markham brand, a process which commenced in 2005, was continued and is clearly producing benefits. In the next year the process will be completed as regards the naming of the division’s smaller stores, which originally traded as Markham Relay, stocking only casualwear. They will all be branded as Markham stores and will include in their offerings a selected range of formalwear.
A process known as “brand wrap”, amounting to a modernisation and rationalisation of visual display elements, is under way and is proving popular with customers. It eases the process of “customer navigation” which leads shoppers to the items which they are seeking when entering the stores. Completion of the brand wrap at one of the division’s leading stores, in the Canal Walk centre outside Cape Town, has been followed by an immediate rise in turnover at that store. The brand wrap process dispenses with the notion that visual presentation in all of the division’s stores should be identical, and is flexible and economical in its application. Financial pressures which customers are experiencing will, however, limit the immediate gains to be achieved from this initiative.
A range of products in the Guess brand was introduced selectively in the second half of the year and it is proving popular with customers. Guess is widely seen as an aspirational brand.
Another trend detected in spending patterns was the re-emergence of jackets as favoured garments both for formal and informal occasions.
During the year 12 new stores were opened and a further nine were relocated or enlarged.
STRATEGY
The 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 process will continue for some years.
Formalwear is now well positioned in the division and continuing growth in this area is being targeted.
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 current slower economic conditions should provide opportunities to open full-line Markham stores in centres where there are prospects of good turnover. The current conditions also present opportunities to right-size some over-sized stores and to open a number of smaller stores where this is justified. The number of new stores which are planned for the next year is upwards of 12.
During the year various measures were implemented to reduce the environmental footprint and increase the energy efficiency of stores. These are described in the environmental performance review in the services section.
Alongside the roll-out of new stores 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. Further 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.
| Store statistics | |||||||
| Projection | |||||||
| 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | |
| Markham | 180 | 191 | 201 | 223 | 234 | 248 | 262 |
| RJL | 28 | – | – | – | – | – | – |
| Total No. of stores | 208 | 191 | 201 | 223 | 234 | 248 | 262 |
| Closures | 13 | 29 | – | – | – | – | – |
| Floor area (m2) | 58 764 | 58 230 | 61 298 | 67 889 | 71 303 | 75 176 | 79 053 |
The division will implement the next phase of the group’s supply chain initiative to reduce lead times for merchandise procurement and enhance the efficiency of distribution, hence ultimately improving stock turn. One of the elements which will be taken further in the next year is the concept of “hold-back” in the dedicated Markham distribution centre.
There will also be emphasis on better fulfilment of customers’ size requirements, utilising for the second year the group’s size-management software which is designed to ensure that the size ranges of stock arriving at a store will correspond to historical sales.
The men’s fashion arena has limited local manufacturing capability but there are fortunately a few sizeable companies in the Western Cape with whom good relationships exist and from whom good volumes of the division’s supplies can be obtained.
The division’s efforts to develop closer relationships with domestic suppliers in order to increase the level of local production will continue. Greater reliance on local manufacture implies reduced vulnerability to adverse changes in the exchange rate of the Rand, and this is a longer-term goal.
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. The aim of these activities is to ensure reliability, speed, quality, value and flexibility in the group’s supplier relationships, while also maintaining appropriate ethical, labour and environmental performance standards amongst suppliers.
Replenishment stock, replacing items recently sold, accounts for 19% of the division’s turnover and emphasis is being increasingly placed on replenishment as a strategy.
PROSPECTS
Menswear has been a victim of the current poor economic conditions, particularly in smaller towns where there has been much retrenchment and is likely to continue to feel the pinch. However with the strategic steps outlined above in this report, together with the continuing roll-out of Markham stores, performance in the next year is expected to be better as consumer spending improves.
Markham will open its first store in Zambia in the next year.
