The Foschini Group says the initial decline in demand caused by the lockdown has now started to reverse.
The Foschini Group’s CEO Anthony Thunström has said the group bought Jet to improve its access to the lower-income market in particular.
Thunström was speaking at the retailer’s annual general meeting on Wednesday.
TFG acquired Jet in July from Edcon for R480 million. This came after Edcon announced on April 29 that it would file for voluntary business rescue after the nationwide lockdown exacerbated its already dire financial position, causing the group to lose about R2 billion in sales.
Thunström said that given the poor economic conditions in SA, there are going to be a lot of consumers “shopping down out of necessity”.
“The reality is we have a very strong DNA internally around quality and we’ve found it quite difficult to really get into the true value space which is represented by Jet,” said Thunström.
TFG currently comprises Foschini, Donna, and Fabiani, among others, with its brand Exact designed for the lower income market.
According to Thunström even this offering was not achieving their aims, and that is why they decided to acquire Jet.
“In our own terms Exact would be mid to lower ‘LSM’ but it is not really true value. If you do an absolute price comparison of some of the articles between Exact and Jet, there is still quite a substantial difference in pricing,” he said.
Thunström said Jet would not be a competitor for Exact as the group sees them in different segments.
“Strategically we are comfortable with where they sit, they are a different market. And if we did not own Jet somebody else would have owned it and would have been competing with us in any event. Jet is a very strong brand with very strong brand equity in SA, we’ve done a lot of market research on the value sector and we believe Jet will be very relevant going forward,” he said.
The group published a trading update for the 22 weeks to 29 August on Tuesday which showed a 29.7% decline in the group’s retail turnover over that period.