MARKHAM

While the general economy is still at a delicate stage in its recovery from the trough of the recent past, the Markham division had a successful trading year, particularly in the latter half, and annual turnover was 20,2% higher than in the previous year. In apparel the rise was 18,8% and in cellphones 28,8%. In comparable stores growth was 16,9%. Turnover growth in the first half of the year was 16,4% and in the second half 23,7%.

Cellphones and related accessories and services are a smaller but significant part of the division’s business. Cellphones accounted for 15,5% of the division’s turnover.

Performance exceeded expectations in all product categories. Casualwear, denim (Relay) and smartwear (Cignal) all performed well, and a strategic decision to focus on men’s fashion accessories was vindicated.

Branded denim had a good year and there was good growth from the Guess and Levi’s ranges of branded denim products. Guess is widely seen as an aspirational brand with considerable appeal to the division’s target market.

From the in-house brands, Relay (jeanswear) and Cignal (smartwear), there was excellent performance.

Although the price of merchandise remained effectively constant, changes in the product mix resulted in a modest degree of product inflation.

Several factors contributed to the success of the year’s operations. Among them was the process started some two years ago of introducing a distinctly modern "look and feel" in the division’s stores. This format is now well known to customers and has been favourably received by them. At the year-end, 27 stores had received the overall "new look" renovation within a period of some 18 months. The parallel "brand wrap" process, which is also a form of visual restatement discussed in more detail below, has been applied to 30 stores within an 18-month period.

A recent innovation is the "store navigation" factor, which incorporates a process of rationalisation of the layout and visual indicators of a store. This enables a customer entering the store to readily and quickly find the items which he is seeking and depart in the knowledge that he has seen all that was relevant to his search.

These processes are continuing.

The 2010 FIFA World CupTM football event received wide participation from the South African public and there was a modest spin-off for Markham.

A fashion trend that was noted is for men to wear a combination of smart and casual clothes, such as denim jeans with a blazer or sports jacket. In all these categories sales were pleasing. Denim jeans are clearly an acceptable item of workwear even in relatively formal professional environments and the division is making the most of this trend.

Close control of mark-downs and of costs was maintained, with encouraging gains in profitability.

Mark-downs made up 7,5% of sales, reflecting a small improvement on the previous year. The current level, considering a five-year history, represents substantial progress towards a stable and optimal target.

The five-year process of repositioning the Markham brand has been completed. There is now a pleasing modernity and coherence about the visual features of the division’s stores and its online persona, and the impact of this process is already yielding positive results. This should be sustained well into the future. The Markham Relay stores, a small-format model which stocked only casualwear, have now been converted into Markham stores which include a selected range of smartwear in their offerings.
The "brand wrap" process, amounting to a modernisation and rationalisation of visual display elements, has been extended from the initial test site in the Canal Walk centre outside Cape Town to 30 stores located throughout South Africa, and its popularity with customers has been established. It has been the key to easing customer navigation in directing shoppers to the items which they are seeking when they enter the stores. The brand wrap process furthermore maximises the inherent characteristics of the space in which the store operates, and is flexible and economical in its application.

During the year 12 new stores were opened and a further nine were relocated or enlarged. One of the new stores is in Zambia, where trading results were satisfactory and where two further stores will be opened in the next year.

Markham already has a digital element to its operations and this is gaining in importance. A Facebook page which customers can consult for product information is being increasingly utilised, and feedback from their usage can be incorporated into the planning of the division’s strategy. Clearly, rapidly growing numbers of customers now go online before buying their apparel in order to check out what is available and what they find appealing. This greatly enhances the efficiency and pleasurability of their shopping experience when they arrive at a Markham store.