#AfricaLeads: TFGLabs aims to disrupt omnichannel retailing in Africa
by Louise Burgers. The Superbalist founders on how TFGLabs will drive TFG’s omnichannel transformation.Wednesday, 07 Jul 2021
by Louise Burgers. With the founders of Superbalist, Claude Hanan and Luke Jedeikin, at the helm of the newly-launched TFGLabs, an “ecommerce startup” within the group which will lead the omnichannel transformation of TFG, the retailer aims to disrupt retailing on the continent. Hanan and Jedeikin are now co-chief omni officers at TFG Group, heading up TFGLabs. The retailer shared its strategy to “revolutionise the omnichannel experience and transform into Africa’s leading high-tech omnichannel retailer” when presenting its annual financial results last month. Retailing Africa caught up with Hanan to unpack their plans.
Hanan and Jedeikin’s brief from TFG is to move the group from a multichannel to an omnichannel retailer. As Hanan shared at the time: “We are laying the foundations to become the largest, most reliable and most profitable ecommerce destination on the continent; via a simplified, customer-centric approach, aimed at maximising group scale, minimising duplication and cost, and leveraging our incredible assets.”
Hanan and Jedeikin sold Superbalist to Takealot in 2014 and were part of their executive, before leaving to take 2020 off and consider their next move in the market. “The TFG option was the most attractive: to run ecommerce for the group and move the group from a multichannel retailer to true omnichannel. Most retailers are still multichannel, with a bricks and mortar store and an online platform. They are not omnichannel even if they claim to be. Omnichannel retail is full integration. For example, if you can’t find your shoe size in a particular model in store, the retailer should find it for you in the group and deliver it to your house or nearest store for collection. It really is all about inventory management and logistics, which is easier said than done, especially for these legacy businesses with old school systems that are not hosted in the cloud. Change takes time,” says Hanan, speaking to Retailing Africa.
The appeal of TFG to the two entrepreneurs is the unique assets that TFG has: its strong brand equity with brands that are household names in fashion retail in South Africa. That brand equity counts online. The group already has a lot of online traffic as well as good margins, explains Hanan. “You can’t take that for granted with all these pureplay businesses. It takes time to build product margin and ecommerce is expensive.” TFG have that retail piece solved, Hanan states. “Then there is the TFG store footprint that is massive for click & collect. The next point is credit. Having access to a credit customer base when selling fashion in South Africa is important to achieve true scale. That is where the pureplayers in SA will always struggle. The last point is management that are alive to change. We were not interested in entering some bureaucratic dead end.”
Owning the ‘last mile’
TFG has 4,300 retail outlets in 26 countries; with 31 retail brands that trade in fashion, value, jewellery, accessories, sporting apparel, cellular, homeware and furniture, with such well-known brands as Foschini, Sportscene, Galaxy & Co, American Swiss, The Fix, Sterns, @home, Markham, Total Sports, etc. It’s brand presence stretches from South Africa into Africa (Botswana, Zambia, Namibia, Lesotho, Eswatini); to Australia and the UK. TFG’s large network of stores – over 3,000 with ‘buy-online-pickup-in-store’ (BOPIS) locations, to bring product closer to the customer and lower delivery times and fulfilment costs – allow cash payment and faster refunds, so the retailer is well-positioned to offer a superior click & collect experience.
It is all about owning that ‘last mile experience’ that enables the retailer to prioritise efficiency and cost-effectiveness; providing customers with better product selection; and increasing basket sizes, sales growth and higher conversion rates in store. “The opportunity now exists to unleash this considerable brand portfolio online, taking advantage of the many omni-channel opportunities, and further enhance its brand loyalty. The simplicity of shopping [for customers] when they want and how they want to, will create an incredible strategic advantage for TFG,” said Hanan in the group’s earlier press release.
Hanan and Jedeikin are entrepreneurs at heart. Hanan says the support from the TFG Board was critical, “because you have to culturally change the business”. He goes on, “It has to move to a faster pace, be digitally savvy, in a product-led environment, with (digital) product management. The threat of international retailers now in South Africa is very real. You can order from Nike.com direct and it will be here in four to 10 days, and you can’t beat their selection. Amazon is shipping to South Africa. So, you have to beat all sorts of threats now, and one of them is international retailers, which historically, wasn’t the case. And we believe we can beat them. You have to execute really well, you have to have better customer service, you have to have faster shipping, better product, better value, all the basics.”
Hanan says ecommerce penetration is so low in South Africa because the major bricks players have never moved online in a meaningful way. The bricks players hold the customer accounts and hold these credit facilities. Hanan believes it will quickly scale. “People ask us why TFG. Corporates are places were entrepreneurs go to die, usually. The attraction for us, if you think about what entrepreneurship is, is about reinvention.” Hanan explains that corporates are a microcosm of society with their own culture and rules, and establishing TFG as a major omnichannel player on the continent is a challenge they relish. And the vehicle to do this is TFGLabs, a division within TFG that will operate more like a software business in terms of being product-led, data-led, fast, nimble, without the typical bureaucratic processes that exist within big businesses.
“We are eking out an environment where we can move fast and build digital products and attract the digital talent to future proof the business. This is the stumbling block for so many of these businesses, they can’t attract the right digital talent because they are not using leading edge technology and they are hierarchical. TFGLabs is a startup environment within TFG.”
Hanan is blunt when he says other South African retailers can’t do what they are doing. “We will build the product, we won’t outsource it to other countries or consultants. Technology is a core competency. You don’t outsource the running of your bricks stores, so why would you do that with your online store? We will be vision and value led. We take that stuff very seriously. It’s not just some random poster on the wall. We live it daily. You make decisions using values. The one thing is speed, we have to move very fast as new companies come up and disrupt industry sectors overnight. Simplicity is a core value. Complexity is easy, simplicity is actually pretty hard.
“Speed, simplicity, customer-centricity, that’s really it, not how many orders did you do or how much revenue you made. It is about how many customers bought today; how many customers got deliveries today; how many customers called today to complain? It is about customer obsession. Everyone says it. But we will get that right. Through data we make it real. It sounds trite, but the customer is the North Star. We don’t let internal processes impact customer experience. We can do good things here, given a bit of time,” Hanan reiterates.
Louise Burgers is the Publisher and Editor and Co-Founder of RetailingAfrica.com. She has spent over 20 years writing about the FMCG retailing, marketing, media and advertising industry in South Africa and on the African continent. She has specialised in local and Africa consumer trends and is a passionate Afro-optimist who believes it is Africa’s time to rise again and that the Africa Continental Free Trade Agreement (AfCFTA) will be a global gamechanger in the next decade.
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