TFG intends to grow its beauty segment into a R5bn business in five years, says CEO Anthony Thunström. In the year to March, the business generated R1.2bn in sales.
Thunström said this week TFG had “always had a very nice beauty business” but it was limited to Foschini and almost entirely comprised third-party beauty products.
“The customer feedback from the market research that we’ve had over the last couple of years [is that] both men and women were looking for us to have a much broader beauty offering.”
Speaking at the results presentation for the year to end March, he said the company spent two years doing research and developing its own beauty products including perfumes, makeup and skin care products. The products were being rolled out across most of its store brands according to target markets.
“Our beauty customers remain extremely valuable. They shop more frequently and the basket size is large and they spend more with us.”
Our beauty customers remain extremely valuable. They shop more frequently and the basket size is large and they spend more with us.
Thunström said beauty is becoming an increasingly profitable segment for the group. Over the past six weeks, TFG has introduced its own value beauty products at Jet stores. “We are rolling out unbelievably well priced and good value products. We have a comprehensive beauty offering at Jet.”
Asked if TFG will open a stand-alone beauty store in future, Thunström said: “We may get there. But I think right now, the real opportunity is we’ve got stores, and just over 500-million customers walk into our stores a year, and if we can put a beauty offering into the majority of those stores, it’s kind of a no-brainer.”
Rival Woolworths is also eyeing major growth in beauty. It has opened its first stand-alone beauty store as well as a research & development centre.
According to Statista, the beauty & personal care market in South Africa is projected to generate revenue of about R80bn this year, and to hit an annual growth rate of 3.24% by 2030. The largest segment, personal care, is expected to be worth nearly R43bn this year.
Statista said the sector was influenced by factors such as growing consumer preference for sustainability and the impact of social media on beauty trends and purchasing behaviour.
Consumers are gravitating towards natural and organic beauty products, driven by a growing awareness of health and environmental issues. The demand for inclusive beauty products catering to diverse skin tones and types is gaining momentum, reflecting South Africa’s rich cultural tapestry, it said.
In the year to March, TFG reported group revenue was up 4.1% to a record R62.6bn.
In South Africa, revenue grew to R37.6bn from R36.7bn. With the rest of Africa added in, turnover grew 3.7% to R40.6bn. Group profit after tax rose 5.2% to R3.1bn
Credit sales grew 5.6% and now contribute 25.9% of total TFG Africa sales from 25.4% last year. The debtors book grew 7.3% to R8.9bn.
“Our Africa business led the charge with exceptional results in the second half. Online sales surged, driven by the continued success of our Bash platform, which has reached profitability two years ahead of schedule — very likely a unique achievement in the South African retail space,” said Thunström.
Online sales grew 43.5% and now contribute 5.8%, up from 4.2%, to total TFG Africa sales, driven by the continued strong performance of Bash, said Thunström.
Asked if the new tariffs on such online retailers as Shein and Temu had helped TFG’s sales, Thunström said: “[It’s quite hard to get the official numbers... but talking to the banks, who’ve obviously got an analysis of credit card spend data, we have seen that there’s been a very strong slowdown in all of directly imported online fashion clothing imports into the country.”
On this point, Mr Price Group CEO Mark Blair said: “It’s hard to say. All of us have seen social media outrage because of high prices, it does make us feel comfortable that the new legislation has been applied correctly... But I look at our own e-commerce sales, it grew slightly ahead of store sales so there must be positive impact.”
During the year, TFG opened 181 stores and a further 169 stores were added through the acquisition of White Stuff in the UK. About 193 stores were closed. The group now trades out of 4,923 stores across 23 countries, including Australia.
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