Buyers broke Edcon
I read your cover story on Edcon with no surprise at all ( Cover Story July 16-22). As a supplier to the group for over 30 years I’ve seen the business go through the ups and downs of retailing and manage its difficult times well.
But I noted the cracks in the dam wall years ago. It was when Steve Ross took over the company. He did make a lot of good changes, but I believe he was the architect of its demise.
Ross was the investors’ and shareholders’ dream man — he pulled the business up and steered it on a profitable course for years, but he was American and not familiar with the territory. He did not understand human resources and nepotism.
He forgot to focus on the buyers and merchandisers and soon there were buyers and new buyers and more buyers! Those in new positions knew nothing of the category or the company. The good, reliable buyers were moved out or given packages to go and in many cases to further the BEE status of the company, which is fine if the replacement staff are competent. But the company landed up with buyers who bought goods at a premium from friends, had absolutely no idea of the ranges and were poorly equipped to do the job.
We were one of the best-performing suppliers in the group and grew our category. Some years ago the competent buyer was moved over to another category and our range was reduced by half. Hence the category was reduced to, I am told, 15% of what profits we were raking in for the group.
Another company going through this type of fiasco is Pick n Pay. However, the owners are sharp enough to be trying to rectify this debilitating process. The only problem they have is they are not sure what lines to stock to keep customers coming back. They are also trying to attract the low-end consumer, which is known to be the most expensive to profit from because those goods have a minuscule margin.
Without a complete overhaul at the buyers’ level, one can see the sales and revenues dropping further at Edcon.