Industry news

What has Edgars been doing right?

October 2004

Sponky Lentsoe and Tony Dearling discuss the merits of a new active footwear model.

 

Sports Trader (ST) – Is the success of the sports goods section of Edgars due to a general improvement in the sports retail market or are you doing something special?

Tony Dearling (TD) – It is a bit of both. We have definitely seen an upswing in retail. We have seen good figures from all the major retail chains over the last few years. Edgars as a chain is also performing well, as we are getting more feet into the stores. The sports goods side is doing particularly well. Interest generated by major global sports events like the Olympics and Rugby World Cup have helped a great deal.

 

ST – Are there any other factors to which you ascribe your good results in sports goods?

TD – As the leading national retailer of international brands, we are a destination for brands. The division includes sports clothes, footwear, cosmetics and accessories. We are continuing to dominate that section of the market.

When it comes to the actual business side, we obviously have excellent relations with the major brands — they play a large part in our lives and we play a large part in theirs; it is critical that we work with our vendors to grow their business.

We feel that we have the edge in the volume-value business with our sports division, Starting Block (the divisional title for the sports section). We have the value equation right in our stores. We offer good value across the brands.

 

ST – Do you allocate a certain percentage of floor space to sports goods?

TD – That depends on the store and the location itself. When a product performs well in a store, we will increase the percentage. If it is a new store we will allocate space based on the department’s contribution to the chain.

We have a particularly good computer system on which we spent over R200-m and we can tell you by size, by colour, by store, by day, exactly what is selling well. We are able to profile the stores accurately. Our Retek system is phenomenal and it has given us the edge in a number of aspects, for instance, to monitor what is working and what is not.

We also have one of the best national distributions. We are in every town in one form or another. In the old days people had the perception that we were a high margin, high price credit store. That is definitely not the case any more — we are very competitive and we have got our value equation right. In particular, our footwear sells at the same prices as the cash retailers.

 

ST – Could you explain the value equation?

TD – For me the value equation is supplying product at a price that is competitive in the market, mainly because we are the major players in the volume business. It was a major strategic decision some years back to reduce the margins across the brands so as not be overpriced and not to be undersold by competition.

 

ST – What led you to the decision to use Mr. Lentsoe in your TV campaign?

TD – Its due to a number of things. Firstly, Sponky has been with the company for nine years and he has had a particularly distinguished career. He came up through the ranks and he has proven himself with exceptional results. In our business you get promoted on the basis of performance.

He was in the men’s formal division and it performed particularly well. Then he fixed our men’s casual and men’s junior divisions. We transferred him to active footwear and apparel as a career advancement.

It has definitely not been a token appointment — he has just won our Golden Hearts award for performance, a Recognition awards programme. He is now a member of the senior management team and he has a good future in the company.

By using Sponky, we hoped that he would serve as an inspiration to the majority of the population to want to follow in his footsteps.

Sponky epitomizes what it takes to be successful — hard work, dedication, passion and humility.

 

ST – What sort of feedback are you getting from your TV ad campaign?

Sponky Lentsoe (SL) – It has been very flattering. People are curious as to whether I am acting, or if it is a true story. For me personally, it is a good feeling that I am being recognised by my company.

 

ST – How do you rate Mr. Lentsoe’s performance in the sports section?

TD – When you move people from one section to another, they bring with them different experiences and different best practices. I can already see where he has applied those best practices towards improving the business in Starting Block.

In men’s formal footwear, where he came from, there are a lot of lay-downs of new product and analysis of good or bad styles, requiring month by month reaction. They constantly ask: what works, what doesn’t work, what are we going to do next, where is the next opportunity?.

Sponky has brought that type of thing with him into the active side of the business.

 

ST – What was your impression of the ispo Summer show?

SL – It was my first visit to the ispo show. I have been to other shows, but I found that ispo was more relaxed and informal, with no red-tape required to get into the stands. I also found that we, in SA, are not behind in what is happening internationally.
TD – You always watch what happens elsewhere. It is impossible for us to stock everything. There are brands that are reinventing themselves and are coming back into fashion.

Just take a brand like Puma: a couple of years back we didn’t need Puma in our stores. Now, because of its global re-emergence, we had to pick up on those trends. There are also a number of smaller brands that are doing particularly well overseas, either on the fashion side or the more technical side, that we need to watch.

Shows, such as ispo, that Sponky recently attended, gives us that direction.

 

ST – Do you attend any other shows?

TD – ispo is the main show that we attend, but we also go to GDS in Düsseldorf and the Las Vegas show, which are more footwear, rather than primarily sporting goods shows. We need to cover those bases as well, because there is a cross-over from fashion to sport and sport to fashion.
SL – Apart from attending the shows, it also gives us the opportunity to look at stores and shop windows and what people actually wear overseas. That gives us an overview of styles and colours that are popular overseas and an indication of trends.
TD – We are a season behind and that gives us an opportunity to test colour, style and fashion. It therefore makes sense to attend these shows.

 

ST – It seems that the fashion trend In Europe is towards pastel colours and fancy patterns. Do you think that SA will follow this trend in style and colour in sports clothes and footwear?

SL – Our consumers do not always follow the trend immediately. SA tends to lag behind somewhat, but when they catch on, it becomes big very fast.
TD – The major sports brands launch their products worldwide at the same time. Also, the colour and styling is dictated by the brand. It is very difficult to ask for a special make-up, either because of volume, or the manufacturer’s policy. If they decide on the colour and style that is a winner for them, we are almost obligated to tie in with that.
SL – To add to what Tony just said, although they launch their new funky colours, they usually continue with their basic ranges.
TD – We buy into the riskier colours but profile them into top fashion stores.

 

ST – If I understand correctly, the SA market is still very brand orientated?
TD – Oh absolutely! I doubt if there is a country in the world as branded as ours.

 

ST – What are the current buying trends — do consumers prefer brands with a sports heritage, or are the surfing brands more popular?
TD – In the sports division we do not buy into the surfing styles. We place them in the other side of the business, namely non-sporting apparel or footwear. But surf brands have a big following and they are growing.

 

ST – Do you also cater for the sports supporter?
TD – Certainly, we are growing our replica ranges in soccer, rugby and cricket. There is a big opportunity to sell replica, provided the priving of items is correct.

 

ST – What are your fastest moving lines at present?
SL – NIKE is by far the biggest in footwear and apparel, and even accessories.
TD – I think we have been lucky in that we have seen major growth in the premier brands across the business — and for different reasons. We have seen good growth in NIKE and adidas in the higher price points, but also growth in brands like Reebok, Hi-Tec and our own brand Pro-Action. The brands have positioned themselves very well as good-better-best and we are doing very well across the whole spectrum.

 

ST – Do you see black buying power coming through in your sports goods?
SL – I think it has always been good. Sports goods have always done very well in our CBD stores and we find that they attract both black and white consumers.

TD – We find that especially our black customers aspire to wear brands. In the past, before they had the disposable income, they bought on credit.

Now that they have the disposable income, we find that our top stores for sports goods, such as our Church Street Pretoria, are experiencing strong growth.

 

ST – Who do you consider as your main competitors in the sports business?
TD – There are a number of big competitors. In terms of the mall retail chains there are three — TotalSports, Sports Scene and Cross Trainer. On the more sport specific, there is Sportsman’s Warehouse and the specialist independents. And then there are the wholesalers/discounters like Mass Mart, who are more into the equipment side, but also sell clothing and footwear.