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Stuttafords saga: A Hail Mary to save 159 years of shopping

Jul 25 2017 07:51
Lameez Omarjee

Johannesburg – In its glory days, Stuttafords emulated some of London's best department stories. But after almost 160 years, the department store is set to take its last bow if a last-minute bid this week does not succeed. 

Given an insurmountable downturn on sales since February 2016, Stuttafords will probably close its doors at the end of the month. But a last-minute bid, which emerged last week, may keep the dream alive. 

Known as the shop where you buy that exclusive dress off the rack or meet fellow socialites for lunch, Stuttafords' history fuses closely with the rise of Johannesburg.

Fin24 spoke to chief executive Robert Amoils, who reminisced about the retailer’s glory days before it had to file for business rescue on October 28 2016.

The retailer’s thinly capitalised balance sheet was unable to weather the economic shocks facing the country following President Jacob Zuma’s surprise removal of former finance minister Nhlanhla Nene. The devaluation of the rand that followed pushed up prices of stock, which Stuttafords had committed to buying up to a year in advance.

The company eventually entered into a winding down process, after Ellerine Brothers pulled out of its funding commitment according to the agreed business rescue plan.

Last-minute saviour?

A final bid for the last two stores, Eastgate and Sandton, was concluded at 12:00 on Friday. On Monday Amoils told Fin24 that three bids had been received, and that meetings were being held with Liberty, the landlord of both stores, to determine if the bidders were acceptable. 

This process would probably conclude on Wednesday. If successful, the last two Stuttafords stores could continue operating under new ownership.

READ: Silver lining for Stuttafords staff

Prior to business rescue, the group followed the right path in terms of its strategy, Amoils told Fin24.

“I believe the path we set was correct," he said.“We ran out of time. The market downturn was so swift, so severe."

In its 159-year history, Stuttafords employed over 1 000 people at various stages, including a flexible workforce employed during the busy seasons. “Certainly, as a business we contributed positively to the employment rate of this country.”

The group targeted the market between LSM 6 and 10, and later focused on offering affordable luxury through an interest-free credit offering.  

“I believe as a company we were responsible in terms of how we went about things. We were ethical. We were moral and we tried to handle a very difficult environment in the best possible manner.”

Stuttafords as we know it

Stuttafords was first started in 1858 by Samson Rickard Stuttafford, who controlled the business until he stepped down early in the twentieth century. Stuttaford wanted to create the South African equivalent of the popular London department stores, and his vision saw the store grow into a family empire.

In 1916 Stuttaford's son Richard took over, according to an archive compiled by John Marwood entitled ‘The history and evolution of Stuttafords’. In 1945, his son Richard Bawden Stuttaford took over.

The first suburban store was opened in Rosebank in the 1960s. Later, in 1972, a new branch was opened in Claremont and in 1973, the department store in Pritchard Street in the Johannesburg CBD was closed. Its operations were to move to Sandton City.

Stuttafords department store located in the Johannesburg CBD. The store was closed in 1973 and moved to Sandton City. (‘The history and evolution of Stuttafords’, 2015)

In the 1970s the store’s turnover took a dip, with competitors like Edgars in the market. In 1978 the store was bought by Kangra Holdings after Richard Bawden Stuttaford died. In 1979 the company delisted from the JSE.

After going through various ownership changes, Stuttafords was eventually bought out by its management in the early 2000s. It evolved from a department store to a fashion store. In 2005 a consortium made up of Vestacor, Retail Ventures Group and Ellerine Brothers took over the group with hopes to revitalise the store, which at the time had been heavily indebted, Marwood wrote.

The new owners would then reposition the group as an upmarket retailer, with a focus on customer service and a better experience, and an offering of international brands.

“When we started to delve into the future of our business three to four years ago and where we wanted to position our business, it was very clear that the history of Stuttafords was both a positive and negative,” said Amoils.

“It was a positive that we had stature and we had credibility. But it was negative in that there was a stigma we were expensive, unaffordable and predominantly focused on the white market.

“We set about changing that, so much so that at the time we went into rescue, we had become far more reflective of the South African consumer.”

Over 60% of Stuttafords' market constituted black clientele, with the white clientele making up less than 20%. The group also started focusing on targeting younger, tech-savvy consumers. “We implemented various technologically innovative solutions into our retail skills sets including a royalty rewards app and linked database, where we were able to communicate far more effectively with younger consumers.

“We perpetually evolved and I think we did a good job in the last five years,” said Amoils. The group worked to stay at the cutting edge of fashion and focused on branded luxury people could afford.

Before entering business rescue, the group had explored online retail as an option. After conducting research Amoils said they found online retail only really picked up in South Africa in 2016. The group had planned to launch an e-commerce platform in 2017, before business rescue.

Future of department stores

Amoils is of the view there is still room for large-box retailers in the South African market, as it is still mall-dominated. It all comes down to how the large-box retailer is presented and managed to attract customers. “I do believe that the department store has a longer lifespan in South Africa than it does internationally, purely because of the nature of the consumer.”

Derek Engelbrecht, partner at EY Africa and consumer products and retail sector leader, said that department stores generally try to be all things to all people. But with time that has become unsustainable with people’s changing demands. Department stores have slowly fallen behind while competing with niche offerings in the market.

Engelbrecht also recognised the importance of online retail, but said that retailers need to consider creating a shopping experience online similar to that of consumers walking into a shop. “I think the quintessential South African shopper still prefers to frequent bricks and mortar stores, rather than necessarily making a substantial change to online.”

“But digital is a very important part of creating an alternative channel that you can engage with customers in.”

Corniel Van Niekerk, Deloitte consulting senior manager of strategy and operations, said department stores are closing down globally. Consumers’ expectations are constantly changing, he explained. The “winners” in retail will be those which respond more quickly and innovate constantly. "Retailers really have to understand the customer,” said Van Niekerk.

He added that digital is a key part of the shopping experience. Some loyalty programmes can be costly to run and retailers need to make sure they get the most out of them by using the data captured in analytics appropriately to personalise the consumer’s shopping experience. 

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