Re-commerce bounces back

Re-commerce franchises like Cash Crusaders and Cash Converters may have taken a hit during the lockdown, but are recovering well with their expansion strategies in full swing.

Since lockdown level 5 was lifted, Cash Crusaders’ revenue in SA rose 16.1% year on year, says CEO Sean Stegmann.

Richard Mukheibir, CEO of Cash Converters, says his business has seen a similar upswing with trading figures recovering as the restrictions have been lifted. As of May 1, when the franchises were able to sell 28% of their stock, it made 78% of the turnover it had in the same month in 2019. In June, as more products were available for sale, 94% of last year’s turnover for June was reached.

Mukheibir and Stegmann share the view that the increase in sales of pre-owned goods can be attributed to bank repayment holidays, pent-up demand due to the inability of consumers to purchase items during lockdown, and their need to set up home offices and make their homes more comfortable while social distancing.

They both say that consumers are more cash-conscious and are more frugal in their spending habits.

While Cash Crusaders has seen an increase in its second-hand goods market, the company’s in-house brand of new products, some under the brand name Dixon, have achieved higher sales growth.

“Our private label offering appears to be doing really well across our store network,” says Stegmann. Sales in June rose 50% year on year and in July increased 42%.

Both franchises offer a lending service against the value of goods that are held as collateral until the amount borrowed is repaid within a certain time limit. Cash Convertors offers payday loans.

According to Prithi Pillay, head of franchising at Nedbank, the surprising trend is that it’s the second-hand goods market that has grown and not the lending services. He says he expects this trend to change.

According to Stegmann, as bank holidays come to an end and retrenchments increase, he expects an increase in its lending business..