Takealot’s online clothing division, Superbalist, has started a section 189 process to reduce staff as it battles a weak economy and increased competition from clothing retailers.
Parent company Naspers does not disclose the Takealot, Superbalist and Mr D food delivery results individually. Collectively, they made a loss of $22m (R417m) in the year to end-March. Takealot has never recorded a profit since it started trading in 2011 as a result of a merger.
Naspers said Superbalist grew revenue 11% in rand in the year to end-March and noted it is facing “increasing competition and softening consumer demand”. It also said peers are dropping prices aggressively, putting its profit margin under pressure.
TFG has launched its Bash website, which sells clothing and home brands including Foschini, Markham, Fabiani, Jet, Exact, Sterns, Relay, @home, Sneaker Factory and Coricraft, with in-store pick up and online delivery.
Brick and mortar clothing retailers that also sell online allow consumers to collect or return unwanted items in-store, saving on delivery fees and benefiting from a large footprint.
Superbalist both delivers clothes and collects unwanted items.
TFG’s Anthony Thunström has previously said it is difficult for “pure” online players to make money and he believes as a hybrid retailer it can win in the online space.
Superbalist is also likely facing competition from Chinese fast fashion retailer Shein, one of the largest clothing chains in the world. Believed to be worth at least $100bn, Shein manufactures clothing cheaply and exports cheaply to SA. It doesn’t pay taxes like retailers do because it sends small parcels directly to consumers, which have lower tax. Anecdotal evidence suggests Shein goods are growing in popularity in SA.
As consumers come under more pressure, other apparel retailers, including Ackermans and Mr Price, have seen sales fall year on year.
On top of declining sales in SA as online penetration grows, retailers’ profits shrink because delivery is expensive, according to the World Retail Congress and global management consulting firm AlixPartners, which released a report in April.
Their analysis of 50 US retailers in clothing and speciality goods found that while their average online penetration has skyrocketed from 9.4% in 2012 to 25.6% of sales in 2022, their earnings before interest, tax, depreciation and amortisation in that same period declined from 13.8% to just 8.3%.
On Friday, Superbalist said in an emailed response that its job cuts are not due to TFG’s Bash site.
“Business planning is in no way linked to competitor activity. Superbalist has embarked on a process to restructure its business as part of a deliberate shift in its efficiencies and in response to actual business realities.
“We remain conscious of the need to ensure relevance with the current consumer realities and a generally poor economic outlook.”
Superbalist said it is trying to balance the conflicting realities of saving jobs, while also ensuring it is sustainable.
Economic growth after Covid “has not reached the levels that had been forecast. As such we need to re-evaluate our structures to ensure that the business operates effectively in this current economic environment.
“We are deeply conscious of the impact a change in business operations may have on our people. Our first and most important focus is on doing what is right for them, while still being conscious of the decisions we must make to deliver a business geared for a long-term future.”
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