By Olivia Hosken for Town & Country 

In 1995 e-mail went mainstream. In 2009, Paperless Post, one of the first leading digital “stationery” brands, was founded. And for nearly 30 years each new innovation has left us asking—is this the end of stationery?

Then, in January, the formerly ubiquitous card store Papyrus declared bankruptcy followed by sweeping layoffs at Crane & Co. in March. However, with everyone sheltering in place, stationery is more popular than it has been in a long time.

Andrea Bell, director of insights at trend forecasting company WGSN, says that she and her colleagues began tracking the rise of stationery in 2018, and have been following it closely in the past few weeks. Stationery brand Papier experienced a 300% increase of online sales, and Google Trends reported that there was a 180% increase in the search term “what to write in a ‘thinking of you’ card?”

“Everyone is experiencing digital fatigue—which is real—so we are turning to tangible things.” Bell says. “And we have more time on our hands than ever before. We are experiencing moments of self-reflection and quiet, and for many, using that time to send a card or letter feels like the right thing to do.”

According to Dr. Priya Raghubir, a professor of business at New York University, the reason why it feels “right” boils down to simple psychology—and the hierarchy of human needs. “At the bottom are very basic needs: food, water, sleep. The next level is safety, then social needs, followed by esteem and self-actualization,” she says. “In most advanced Western economies, the basic needs of most people are met. But when anything unsettles, like the pandemic, we obsess over the basics and tend to do things like stockpile food and toilet paper. After the immediate threat is assuaged, we begin to ascend the hierarchy again. Now we want to socialize—sending cards and letters help us form connections.”

Along with sending cards and letters, journaling has become a major pastime over the past few months, across all age groups and demographics. Notebooks and pens are considered part of the stationery category and sales for those items can explain some of the sales. People are also returning to paper calendars. “Work-life balance is being expressed by paper,” Bell says. “Work is digital and personal affairs are put on paper, it helps create a boundary between the two while giving us a feeling of certainty in uncertain times.”

These new habits are likely to stay with us, Dr. Raghubir predicts, even as life resumes normalcy. “We’ve experienced the joys in things like dressing more comfortably and working from home, I would expect that we will see these things continue.”

In May, shop-sa conducted a survey to gauge the impact of Covid-19, and the current state of our industry. The response was excellent and we hope that both resellers and suppliers get some valuable pointers from the survey.

Needless to say we, like most industries, are in survival mode – and one can only hope that as the economy gradually opens up, turnover and profitability will improve.

Most respondents would like to see a follow-up survey, which we will issue shortly.

Here are a few key results:

  • 65% of employers managed to pay their employees, with some using TERS funding
  • The drop in turnover for most companies reflects the overall “Covid economy”
  • Online presence and sales need focus to take advantage of the opportunity this presents

We at shop-sa will keep you informed – and we expect an even bigger response to the next survey!

Remember, this is a long haul – we are all in this together and “none of us is as smart as all of us”.

Hans Servas

Chairman

By Tania Broughton for Fin24 

Fees charged by liquidators and business rescue practitioners, and the impact they can have on bottom line payouts to affected employees, came under the spotlight at Monday’s meeting to consider a business rescue model for Edcon.

The retailing giant owns Edgars, Jet and others stores, and its employees have already taken pay cuts.

At least 22 000 jobs are on the line, with these employees already served with Section 189 notices. Almost all these jobs will be lost if a deal proposed by business rescue practitioners to sell off “certain divisions” to as yet unnamed potential buyers fails.

Either way, the ripple effect on the clothing industry in South Africa will be massive. Clothing suppliers, who form part of the concurrent creditors’ group, whose claims are not secured, are owed collectively R4.3 billion and are only being offered between four and six cents on the rand.

At the “virtual meeting”, where the business plan was eventually adopted, these companies said they too could go out of business or, at the very least, have to shed jobs.

Questions were raised in the three-hour discussion about the business rescue practitioners seeking an increase in their fees – more than doubling the R1 750 an hour, with a daily maximum rate of R25 000, as laid down in the Companies Act.

In terms of the law, liquidator and business rescue practitioner fees are paid first, before any other creditor or affected person.

Because of the “complexity” and scale of the matter, and the need for speed in securing buyers because orders needed to be placed for the summer season, Piers Marsden asked for approval for a rate of R4 500 an hour, with a daily rate capped at R45 000, backdated to the end of April when the process began.

A representative of the South African Clothing Commercial and Allied Workers Union said “this fee issue came to us very late”.

While the union supported the rescue plan and any chance to save jobs, “our view is that it is extremely unfair for those agitating for this process to bring the quantum of the fee they must get at this late hour,” he said.

“We will go to the Ministry of Trade and Industry and raise this and call for a debate. The law should be clear that when you appoint business rescue practitioners everything is known up front and people are not taken by surprise,” he said.

Marsden told the meeting that he could not state at this stage how much the fees could ultimately amount to. But, in the bigger picture, he doubted they would have an impact on packages for affected employees.

He said business rescue costs were much cheaper than liquidation costs, because they were based on an hourly tariff, whereas liquidators charged a percentage based on gross value of realisations.

A report from auditors Deloitte estimated that should the group go into liquidation, the costs would be between R96 million and R191 million.

Liquidation would also mean an immediate shutting of all shops, retrenchment of all staff, empty stores in malls, a protracted wind down period, which could ultimately result in zero returns to suppliers, Marsden said.

Ultimately there would be less money and more creditors to share in whatever assets could be realised.

He said he hoped the sale of divisions would be finalised by the end of July and the winding up of unsold assets would begin in August.

There was money available to pay staff for June and hopefully into July.

Source: Trade Tatler

Massmart has approached Walmart to request a R4-billion inter-company loan.

This as it announced that sales for the 23-week period through 7 June totalled R34.8-billion, -10.3% down from last year, with like-store sales down a similar amount, and sales in South Africa down -11.5%.

The loan, says Massmart, will “provide additional headroom in the event of unforeseen circumstances as we navigate through the lockdown period and beyond.”

The cash will help Massmart through a period of presumably temporary illiquidity, caused by the hit it has taken in sales during the pandemic. This hit included R2.3-billion in liquor sales lost during the lockdown in April and May.

The company projects that profits for the six months through June will be -50% down from the same period last year.

Visual merchandising 101 

AcknowledgementHumayun Khan, content crafter at Shopify 

When you’re diving into the world of retail either through a pop-up shop or your own boutique retail store, one of the key sales metrics you’re going to want to focus on is “sales per square footage, which is the average revenue a retail business generates for every square foot of sales space. 
Essentially, your “retail space” has to be your most productive and most efficient salesperson, and how you go about optimising your sales space for maximum revenue is to employ the art and science of visual merchandising.  
The word “visual” may cause a few grimaces; people think that they’re not creative, artistic, or stylish enough to make a retail space look good enough to lure customers in and persuade them to hand over their money for products.  

Yes, the discipline requires a sense of aesthetic – but remember that it’s also a science, which means that it’s a tried and true method that has been studied with results to show for it, results that you can replicate and recreate for your own store.  

However, it’s also important to recognise that the field of visual merchandising encompasses a lot of distinctive retail design topics and covers everything from creating the window display a prospective customer first sees, to the signage you put up and the layout you decide on to direct your traffic and a whole lot more. 

Begin with your target customer in mind
Knowing your target customer inside and out will help you tremendously when it comes creating effective merchandising displays. I’m not just talking about being familiar with demographic data like their age, income, and education level, but digging a little deeper into their psychographics and behaviours. In other words, target not just individual customers but their lifestyles too.

Find some inspiration
Thanks to the Internet you no longer have to wait around for that brilliant idea to hit you when you’re thinking about putting together your next merchandising display. Instead, there are a number of invaluable resources available in the form of blogs and boards on Pinterest.
It can be really easy to focus on just creating visually stimulating displays and forget about the other four senses, but the secret to creating an engaging and immersive experience is to create a multi-sensory experience or what’s known in the industry as “sensory branding. 
Let’s take a closer look at how you could go about doing just that: 

  • Sight – there is an endless array of visual cues you can play around with to communicate your message. From using colours for their psychological triggers, to leveraging lighting, symmetry, balance, contrast and focus to direct and control where a customer looks and for how long, it’s one of the most fascinating components of merchandising.  
  • Sound – the music you play in your store has such a profound yet subtle effect on how your customers behave. Depending on who you’re trying to target and bring in, you can slow people down by playing more mellow music and causing them to browse, or playing Top 40 to communicate that you want teenagers in your store 
  • Touch – this one’s probably the easiest to get right in that you need to simply remember to put your best foot forward and give customers the ability to touch, feel, and try out whatever it is you’re looking to sell.  
  • Smell – believe it or not, there’s an entire science to what’s referred to as “scent marketing, with several studies and real-world case studies of global brands like Samsung, Sony, and Verizon applying it to their advantage. The reason being that smell is considered to be a fast track to the system in your brain that controls both emotion and memory – two very prominent factors behind why we choose one brand over another.
  • Taste – this can work magic if you happen to be in the business of selling consumables, giving people the ability to taste and sample before they buy is the equivalent of letting people try on clothes, a general and effective best practice. 

Show, don’t tell
Before people purchase something they typically want an idea of what it will look and feel like. To accommodate this need you can set up your merchandise display in a way people identify with and could envision in their own home or on themselves. 
For example, the sales floor in furniture stores are set-up with displays that make it easy for people to envision how the same products could be set-up in their own homes, or kitchenware stores having their merchandise displayed like how it might look in a given kitchen and so on. 
Another prominent way apparel retailers do this is by creating policies that require their sales staff to wear the clothing they’re selling. And of course, the most tried and true example of this would be the mannequin, who you could style according to your latest releases and style. 
This tactic gives prospective customers an immediate point of reference and as soon as they can envision your product on themselves or in their homes, you can consider it as good as sold. 

Group like with like
Grouping like products with like products will give your customers additional reasons to buy more items from you, but it also has a more utilitarian reasoning behind it, namely saving them time from looking around and trying to mix and match things. 
It’s one of the reasons grocery stores will put dips right beside their chips, or peanut butter with jams. 
You can also think of it as creating categories, but you don’t need to limit your creativity there, you can also create “groupings” within categories. That means having merchandise that might be the same colour, price, size, or type together. 

The rule of three
In creating displays, most visual merchandisers will often refer to the rule of three, which means that when creating a display, try to work in sets of three. This means that based on how you’re arranging your products, you’ll want to have three of them side by side, instead of just one. For example, if you were arranging things by height, you’d have items that were short, medium, and tall.  

The reason behind this thinking is that our eyes are most likely to keep moving and looking around when we’re looking at something asymmetrical, because when we see some symmetrical or balanced they stop dead in their track. 
This also alludes to the “Pyramid Principle, where if you have one item at the top and all other items “one step down”, it forces the eye to look at the focal point and then work its way down. 

Use light to dictate mood and attention 
This ties into engaging your customer’s senses and guiding them to experience different moods and emotions based on your store’s lighting. Whether they feel like they’re in a nightclub, a fashion runway, or right at home will depend largely on how you decide to use lighting. 
Using spotlights to highlight certain products is also a sure-fire way to direct attention and make sure people pay attention to your top products.   

Change it up
Remember that when trying to optimise your square footage for the most sales, a scientific approach of formulating a hypothesis, executing on your idea, and then testing for results will put you in the routine of trying out new ideas and sticking with what works.  
With these tips in mind, go out and give them a shot on one of your merchandising display to see for yourself how you can increase sales through the way you display your products and create a more engaging experience. 

SA moves to alert level 3

Source: SA News

President Cyril Ramaphosa has announced that South Africa will move to alert level 3 with effect from 1 June – with more sectors of the economy opening and the removal of a number of restrictions on the movement of people.

Addressing the nation on Sunday evening on the developments in South Africa’s risk-adjusted strategy to manage the spread of COVID-19, the President said the country will have a differentiated approach to deal with areas that have far higher levels of infection and transmission.

COVID-19 hotspots
These areas have been declared as Coronavirus hotspots. They include the following metros: Tshwane, Johannesburg, Ekurhuleni, eThekwini, Nelson Mandela Bay, Buffalo City and Cape Town.

Other areas that have been identified as hotspots are West Coast, Overberg and Cape Winelands district municipalities in the Western Cape, Chris Hani district in the Eastern Cape, and iLembe district in KwaZulu-Natal.

A hotspot is defined as an area that has more than five infected people per every 100 000 people or where new infections are increasing at a fast pace.

To deal with the virus in these areas, government will implement intensive interventions aimed at decreasing the number of new infections.

“We are putting in place enhanced measures of surveillance, infection control and management. We will assign a full-time team of experienced personnel to each hotspot,” the President said.

This team will include epidemiologists, family practitioners, nurses, community health workers, public health experts and emergency medical services, to be supported by Cuban experts.

“We will link each hotspot to testing services, isolation facilities, quarantine facilities, treatment, hospital beds and contact tracing.

“Should it be necessary, any part of the country could be returned to alert levels 4 or 5 if the spread of infection is not contained despite our interventions and there is a risk of our health facilities being overwhelmed,” he said.

The list of hotspot areas will be reviewed every two weeks depending on the progression of the virus.

Opening the economy
“The implementation of alert level 3 from the beginning of June will involve the return to operation of most sectors of the economy, subject to observance of strict health protocols and social distancing rules. The opening of the economy and other activities means that more public servants will be called back to work,” President Ramaphosa said.

This will be done in accordance with provisions of the Occupational Health and Safety Act and as guided by the Department of Public Service and Administration, working together with all other departments in government.

The President’s address follows recent meetings of Cabinet, the National Coronavirus Command Council and the President’s Coordinating Council, which considered the prospects for the country’s progression from alert level 4 to alert level 3 of the national lockdown.

The President also held consultative meetings with the business, labour and community constituencies of the National Economic Development and Labour Council; leaders of political parties represented in Parliament; traditional leaders; leadership of interfaith communities; the South African Council of Churches and the tourism industry, which is the single largest source of employment in the private sector.

These consultations formed government’s efforts to explore possible prospects and assess the continuing health, social and economic impacts of the pandemic.

Protocols and workplace plans
As more sectors of the economy open, government will rely on social compacts with all key role players to address the key risk factors at the workplace and in the interface between employees and the public.

“We will therefore be finalising a number of sector protocols and will require every company to develop a workplace plan before they re-open,” he said.

According to these plans, companies will need to put in place sanitary and social distancing measures and facilities; they will need to screen workers on arrival each day, quarantine those who may be infected and make arrangements for them to be tested.

“They also need to assist with contact tracing if employees test positive. Because of their vulnerability, all staff who are older than 60 years of age and those who suffer from underlying conditions such as heart disease, diabetes, chronic respiratory disease and cancer should ideally stay at home,” the President said.

Employees who can work from home should be allowed to do so.

Subject to these measures, all manufacturing, mining, construction, financial services, professional and business services, information technology, communications, government services and media services, will commence full reopening from 1 June.

The appropriate restart and phasing in arrangements will need to be put in place for every workplace.

“Wholesale and retail trade will be fully opened, including stores, spaza shops and informal traders. E-commerce will continue to remain open. Other sectors that opened previously, such as agriculture and forestry, utilities, medical services, food production and manufacture of hygiene products, will remain fully opened,” he said.

High-risk economic activities prohibited
High-risk economic activities will remain prohibited. These include:

  • Restaurants, bars and taverns, except for delivery or collection of food
  • Accommodation and domestic air travel, except for business travel, which will be phased in on dates to be announced
  • Conferences, events, entertainment and sporting activities
  • Personal care services, including hairdressing and beauty services
  • Movement of people and sale of alcohol
  • People will be able to exercise at any time during the day, provided this is not done in groups
  • The curfew on the movement of people will be lifted

“Alcohol may be sold for home consumption only under strict conditions, on specified days and for limited hours. Announcements in this regard will be made once we have concluded discussions with the sector on the various conditions,” the President said.

The sale of tobacco products will remain prohibited in alert level 3, due to the health risks associated with smoking.

“All gatherings will remain prohibited, except for funerals with no more than 50 people or meetings in the workplace for work purposes,” he said.

COVID-19 stats
South Africa has recorded a total of 22 583 COVID-19 cases, with 11 000 active cases and 429 deaths.

“Of these [11 000 active cases] 842 patients are in hospital and 128 of these are in intensive care. The number of infected people could have been much higher had we not acted when we did to impose drastic containment measures,” the President said.

He expressed concern for the City of Cape Town in the Western Cape which now has more than half the total infections in the country.

“We are attending to this as a matter of urgency,” he said.

More than 580 000 Coronavirus tests have been conducted and more than 12 million screenings have been done to date.

“There are nearly 60 000 community health workers who have been going door-to-door across the country to identify possible cases of Coronavirus.

“In preparation for the expected increase in infections, around 20 000 hospital beds have been, and are being, repurposed for COVID-19 cases, and 27 field hospitals are being built around the country. A number of these hospitals are ready to receive Coronavirus patients,” said the President.

Safety first
He said government appreciates the work that continues to be done by public servants, especially those in the front line in the fight against COVID-19.

“The safety of all workers, including public servants, is a matter of concern to us. We will continue to make all efforts for the adequate provision of personal protection equipment to ensure safety for everyone while at work.

“Our priority is to reduce the opportunities for the transmission of the virus and create a safe environment for everyone,” he said.

 

Message from the chairman – May

Even though the country moved to Level 4 during the month of May, I am sure that the challenges your businesses face are still huge – with survival topping the list.
We hope, however, that information published in our newsflashes have been helpful when navigating what I would call a minefield of rules and regulations.

shop-sa will continue to find accurate and relevant tips for our members, especially now that Level 3 is around the corner.

Good luck – and watch this space for the latest up-dates.

Most of all, to you and your staff: stay safe!

Hans Servas

Chairman

On 14 May 2020, Spicers entered administration and R H Kelly, and C G J King were appointed as joint administrators. The appointment was made by the Spicers Limited’s Board of Directors under the provisions of paragraph 22(2) of Schedule B1 to the Insolvency Act 1986.

Smethwick- and Telford-based OfficeTeam has been bought by Paragon Group, after its parent company Spicers Office Team (SPOT) went into administration.

SPOT appointed administrators last month, when its private equity owner Better Capital announced it was looking to find a buyer for the business.

Paragon, a provider of customer communications, identification, graphics and business services, announced the deal, alongside the acquisition of Oldham-based ZenOffice.

OfficeTeam is a leading provider of business services and workplace solutions with a customer base of blue chip companies. London-based Paragon said the purchase of the businesses will further strengthen its business services capabilities.

Paragon Group chief executive Sean Shine said: “We are delighted to welcome OfficeTeam and ZenOffice to the Paragon Group, adding their expertise to our growing range of workplace solutions and business services.

“Paragon continues to assess markets to ensure we align our service offering with our customer demands and this acquisition addresses existing customer requirements.

“Operationally and financially, Paragon is a strong, disciplined and ambitious company and prides itself on being customer-focused. Together, we deliver the future of workplace solutions and business services.

“The acquisitions underline Paragon Group’s ongoing commitment to being the market-leading service provider for businesses in the UK.”

By Norbert Herzog for GfK

The coronavirus’ impact on retail has become a hard reality.

The following hits came from outside of China: Samsung had to close a mobile device factory in South Korea due to an outbreak, and in Vietnam, the Ministry of Trade warns about supply chain issues delaying smartphone production. And on February 21st, the outbreak in Northern Italy led to a shutdown of “red zones” one day later.

“The consequences of the Italian shutdowns and further spread across multiple countries already affect supply chains and distribution markets heavily,” says Tatjana Wismeth, GfK expert on Global Distribution providing supply chain insights. GfK’s Distribution Panel is evaluating these effects by tracking the sell-through of distributors to retailers and resellers on a weekly level.

Italy, as one of the most affected countries in Europe, is currently showing one of the highest declines in volumes. In the last 4 weeks, distribution markets in Italy decreased by –9% on average which results in over 828,600 sales less compared to the previous year period. Other European countries like Great Britain and France are following this trend – however, at a weaker pace with –4%, respectively –2%. Sector-wise, the IT industry is currently contributing most to this picture. For Telecom, the downward trend is not yet clearly visible as stocks at the distributors level currently seem to be cleared since the demand of retailers and resellers is even higher given the fact that shortages are expected to reach markets soon.

Although stock levels might still mitigate effects, production halts and logistics restrictions (e.g. vessels unable to onboard/deboard goods, cargos cancelling flights) are leading to the first signs of downsizing for the Tech and Durables markets and rising prices on the other side. Consequently, distribution markets on the global level have already declined by –5% in the last four weeks compared to the previous year period. This is especially supported by decreasing volume shipped by distributors in Western Europe where volumes dropped by –8% in the same weeks. In absolute figures, this means that around 10.4 million units have been shipped less in calendar week 5-8/2020. At the same time, prices have increased by around 19% on average.

Despite the first visible signs and downward tendencies in distribution markets, the COVID-19 impact on retail markets is still yet to be seen. Looking at our weekly retail sales data in the largest European markets over the last weeks, there is no indication of any general change in dynamics yet.

An oscillation from +1.6% to -3.5% for the past 6 weeks is within the usual norm originating from seasonal promotions, launches, price changes, etc. The more realistic question is: When and how will the drying supply chain hit these markets?

When the Wuhan shutdown was initiated in the week of January 20th, people immediately stopped moving freely and the footfall for physical retailers collapsed. In the following three weeks, the decline of sales in physical stores even exceeded 80% in some cases of our analysis in a product basket of smartphones, notebooks, TVs and fridges. Basically, this implies that no sales were made at stationary retailers in the seriously affected areas in China—and retailers probably opened their stores only in regions where the virus had not broken out.

In our blog on the coronavirus impact on tech markets, we flagged that a key area to watch for are the effects of e-commerce vs. traditional retail. Here are a few, very relevant insights based on the COVID-19 impact on retail sales we’re seeing in China right now:

  • Online sales are not being cut by consumers generally which means consumers are not in a state of panic. They are continuing to purchase tech goods but are avoiding leaving their homes while they do so.
  • Consumers are still engaged in tech launches: New products coming to the market in the past weeks led to significant sales jumps for the notebooks category in China—via e-commerce. This means that the usual market dynamics are still in place and consumers still want to get their hands on newly launched products even in times of COVID-19.
  • Categories like fridges are suffering more. The ‘fan club’ and ‘exciting new features’ factor is lower so purchases which are not urgent (such as replacing a broken appliance) are being postponed even via e-commerce. The need to research or purchase offline—to touch and feel the product—makes all the difference.
  • Are consumers postponing big-ticket purchases and what does this mean for the rest of 2020?
    Based on our analysis of the very latest data, we expect the COVID-19 outbreak to impact all sectors across the TCG market in China. The Major Domestic Appliances, Photo and Telecom sectors are projected to see the sharpest decline in the first half of the year as consumers are postponing or minimising their total spending (offline and online combined), especially on consumer electronics and appliances.

Looking further ahead, after a projected decline of -18% in the first half of 2020, we expect to see a rebound effect, resulting in a +6% growth in the second half of the year.

Overall, we are currently forecasting an overall decline of -6% in turnover for 2020, depicting the severity of the impact on tech markets in China. Still, we should keep in mind that this is only a temporary downswing that does not change the overall growth expectations for China in the mid- and long-terms (more information about it here).

Once the supply of products or parts starts to dry (or seems likely to collapse), retailers will take action. When they do, it will almost undoubtedly lead to an increase in prices to live off the stock longer or cut in promotions to increase margins and offset the expected loss of revenue for 2020. As supply dependency differs so much by product segment and manufacturer, quick decisions are needed to optimise the assortment and product mix.

There are early signs that this may have started on a small scale already—and these will become more visible each week.

NEASA TERS fund via UIF toolkit

While the Unemployment Insurance Fund (UIF) has now paid out some R9.5-billion in special Covid-19 benefits – which should reach 1.9 million workers – some companies are still experiencing a raft of problems when attempting to apply. Use this handy toolkit from NEAS (National Employers Association of South Africa).

View the toolkit here.

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