Edgars bets big on eCommerce

Retailability – the company that took over Edgars when it went into business rescue during the Covid-19 pandemic – is betting on the retailer’s eCommerce offerings to bring the company back to life.

Retailability CEO Norman Drieselmann told Business Day TV that the Edgars transaction was a unique opportunity for the company. 

BusinessDay reported that Edgars had been struggling with large stores, high costs and a limited credit book for years and has undergone two failed internal rescue attempts in 2017 and 2019. 

When the pandemic hit in 2020, Edgars became one of the first major casualties.

Edcon – which previously owned Jet, Edgars and CNA – went into business rescue in 2020 after multiple attempts to restructure the company, which never recovered after Bain Capital borrowed R25 billion in foreign debt to delist it in 2007, BusinessDay reported.

While in business rescue, Edgars was sold to Retailability and its private-equity partner, Metier.

Drieselmann said the business rescue process gave his company a unique opportunity to evaluate “what would work and what wouldn’t work” for the retailer.

“Despite the challenges and tough environments, such as the Covid-19 pandemic, unrest in July 2021, and flooding in KwaZulu-Natal, there are still opportunities in the retail space,” he said.

“The Edgars transaction was an example of this, as it showed that even in dark times, there are opportunities to be found.”

Drieselmann believes the Edgars brand still has significant resonance in the African market, so Retailability invested heavily in putting value back into the product for consumers. 

“We filled the stores, re-energised the brand, and gave consumers the security of knowing that they were supporting a sustainable business,” he said.

“A combination of factors helped us get back on the right track, including hitting the culture hard, putting value into the product through deflation, increasing our investment in private labels, making ourselves more fashionable, opening up the stores, and improving visibility.” 

BusinessDay reported that Retailability’s efforts resulted in 5.5% comparable sales growth and a 12.5% revenue growth in the most recent financial year, leading to increased profitability.

Drieselmann said that, in particular, the company is looking at eCommerce as a key platform for Edgars’ future success.

He said this is partly because Covid-19 ramped up the appetite and engagement in eCommerce.

In addition, “consumers want choice, and […] we need to be able to turn that on from an omnichannel experience”.

He acknowledged that Edgars “got into the journey a little bit late” and is, therefore, on the backfoot compared to its competitors. 

However, Drieselmann said the company wanted to focus on stabilising Edgars’ business before driving an eCommerce strategy.

“We don’t see pure online eCommerce as the end goal. We believe the end goal is choice for consumers, and that’s how we built our eCommerce platform in Edgars.”

Notably, Retailability decided to build Edgars’ eCommerce platform from scratch rather than using the company’s existing platform.

Drieselmann said this is because the company wanted to leverage its investment into the “behind-the-scenes” of its eCommerce offerings – including fulfilling orders, making deliveries, and supply chain pieces.

He explained that “this is where the economies and cost control comes for us, and it’s that leverage that allows eCommerce to be a profitable business centre as opposed to a cost centre”.

“By building from scratch, we were able to differentiate that front-end more effectively while leveraging our back-end investment,” he said.