Retailers seek boost from back to school
Cash-strapped parents shop around for deals in uniforms, stationery
We see uplift in volumes across stationery and school luggage in this period, so we drive the best deals Nazim Cassim Category director for Game
● Retailers have cut margins on school wear, offered cash back and extended their ranges to score in the lucrative back-toschool merchandise market.
And while hard-pressed consumers have been offered relief on generic school clothing, schools that in the past few years have been in the crosshairs of the Competition Commission over uniforms this week were given a reprieve in terms of an agreement that will avoid litigation.
With the schools starting earlier this year than in previous years, retailers have gone all out to boost sales in a month that is traditionally quiet. However, slow economic growth and high unemployment mean parents under pressure are seeking affordable deals as their children head back to school.
Casparus Treurnicht, a portfolio manager at Gryphon Asset Management, said muted employment growth means that cashstrapped middle-class shoppers will add pressure on sales.
“But retailers must sell and the one with the best deal for a depressed consumer will win,” Treurnicht said.
Among the deals are Pep’s school jerseys for R59.99, short-sleeved shirts for R16.99 and grey trousers at R39.99.
At Ackermans a pack of two pairs of shorts is priced from R69.95, and at Jet laceup school shoes are priced from R79.99. CNA’s back-to-school promotion includes a 96-page hardcover book for R9.90 and a pack of five exam pads for R44.90.
Back-to-school sales make a significant contribution to companies’ January sales, and retailers are running specials to drive foot traffic to their stores.
Nazim Cassim, category director for Game, said: “We see uplift in volumes across these categories [stationery and school luggage] in this period, so we drive the best deals over this period to cater to our customers who are looking for a breadth of assortment at the best prices. Back-to-school contributes to a large percentage of our business during January. It is a key period of trade for the business.”
Game has kept its prices at last year’s levels and offers to beat advertised prices by giving customers 10% of the difference back.
Pep, one of the leading shopping destinations for school uniforms, said according to its latest market data, it has about 65% of market share on back-to-school sales.
Communication manager Mariki Schwiebus said: “Pep takes a reduced margin on school uniforms, as we want to make it possible for all our customers, and especially our schoolchildren, to look and feel good.”
Lower prices also get more feet through the door and hopefully boost sales of other merchandise.
Alec Abraham, a senior equity analyst at Sasfin Securities, said Pep dominates backto-school sales because of its presence in rural areas and a strategy that prioritises functionality over fashion.
“The whole Pep strategy has always been functional clothing at very competitive pricing, and the big market for functional, wellpriced, cost-effective clothing is in the rural areas where fashion is not as big a thing.”
Ephraim Mamabolo, marketing director at Ackermans, said the retailer this year was offering a wider range of uniform colours to accommodate the specifications of a larger number of schools.
It has also extended its offering to include more sizes, as well as a new offering in slimfitting trousers.
Grant Walker, director of uniform supplier McCullagh & Bothwell, said he didn’t have figures on shopping behaviour for this year’s back-to-school week, but so far parents were buying less.
“We are definitely off the highs of years when the economy was buoyant … people used to buy five shirts or five pairs of socks, they are now buying … two or three.”
An Edcon spokesperson said its Jet stores have not seen any significant shifts with regard to uniform preferences, but the retailer will be in a better position to gauge full demand at the end of January.
Jet’s school-wear sales make up 5% of Jet’s annual sales and 75% of turnover in the January back-to-school period.
“Jet has been able to maintain its selling prices for three consecutive years, which is due to improved sourcing practices and good supplier relationships,” said the spokesperson.
Stationery shop CNA, also owned by Edcon, saw an increase in demand for core items such as books, adhesives and pencils at the end of 2018 and the beginning of this year. A spokesperson said the demand is higher than last year because schools opened earlier this year.
Edcon attributed the increase in December sales to parents making their purchases before going on holiday to avoid the January rush.
At CNA “early signs indicate that parents are buying more as the average basket size has increased and January sales volumes are already indicating an improvement on previous years’ sales. On an average basket of the key back-to-school items the average retail selling price is down 1% on last year, despite factors such as the impact of exchange rates and paper price increases internationally,” the spokesperson said.
The Competition Commission probe into price-fixing in the school uniform industry in 2017 followed complaints from parents and service providers.
SA’s school uniform industry was thrust into the spotlight after complaints that some school supply contracts with speciality school wear suppliers and stationers led to stockists pushing up prices, causing anticompetitive behaviour by schools.
On Wednesday the commission urged schools to adhere to the government’s uniform guidelines that school wear should be as generic as possible to make it easily accessible across as many suppliers as possible.
It urged that exclusivity be limited to items such as badges, that the schools regard as necessary to obtain from pre-selected suppliers. It said schools should follow a competitive bidding process when appointing suppliers and appoint more than one supplier to give parents options. Also, contracts with suppliers should be short-term.
Competition Commission spokesperson Sipho Ngwema said: “The investigation was concluded early last year. However, the commission felt that it must focus on trying to change the behaviour of schools. It wanted schools to focus on their primary function, which is to educate rather than be involved in litigation.”
Ngwema said the commission found that a majority of schools did not have exclusive contracts and about a third of former Model C and private schools had exclusive contracts. About 90% of private schools and 53% of former model C schools had one exclusive contract.
Most of the contracts had not gone through a competitive bidding process, a trend that was also picked up in public schools, said Ngwema.
The Competition Tribunal will hear the terms of an agreement that has been struck over uniform supply on February 6.
“On February 6 we will be presenting the outcome of our investigation before the tribunal. It is likely that there will be a regime that is going to govern schools in terms of school uniforms. There might be a formalisation of the guidelines,” Ngwema said.