Pepkor, which is the parent company of global retail brands like Best & Less, Harris Scarfe and Mozi, acquired Postie Plus from voluntary administration in 2014.
Pepkor is also a subsidiary of Steinhoff International, which is listed on the Frankfurt stock exchange and is the owner of furniture company Freedom NZ.
Its purchase of Postie Plus marks Pepkor’s first venture onto New Zealand soil.
Pepkor has spent the last year or two crafting a platform for Postie Plus to relaunch off. At the time of acquisition, the discount clothing company was in trouble due to market pressure, trading losses and supply chain disruptions after it outsourced its distribution centre to a third party. Pepkor’s initial strategy was to use its purchasing power to reduce stock costs and fatten margins.
Out of the 82 remaining Postie Plus stores, 65 were kept, while Henry Lee replaced Richard Binns as CEO in April 2015. Lee has previously worked with Australian fashion labels Witchery, Country Road and Nine West.
Pepkor South East Asia managing director Jason Murray says “quite a lot” of changes have been made since the purchase. Postie Plus has a new IT system, a new distribution partner, new management and 50 percent more stock in stores, including new ranges from Jockey and Bonds.
Murray says the aim of the changes is to make Postie Plus a great local retailer backed by a great global retailer.
“We’ve had a real focus on bringing the kids offer in line with the rest of the offer, so it’s now a family store for all Kiwis built on the back offering that a modern retailer has to have.”
Murray says Postie’s new ad campaign is a bricks-and-mortar led campaign that’s trying to touch as many Kiwis in-store as possible.
A new advertisement was released on TV earlier this week which focuses on Postie’s new prices and the savings consumers will get from them.
The brand’s overall look, catalogue and stores have also been “refreshed” by Saatchi & Saatchi, while the phrase “Look good. Every day.” is the call-to-action.
Postie's new catalogue.
These changes tie into Postie’s adoption of what it’s dubbed a “responsible retailing” model, which will see over one million of its clothes’ prices cut by 30 percent.
Examples it gave included kids’ winter thermals dropping from $12 to $6, 100 percent merino cardigans for $25, which is 36 percent cheaper than last winter, and kids’ flannel pajamas down from $20 to $10.
Murray says it’s a decision to price for affordability and adopt a lower profit margin, knowing what the average Kiwi spends a week on clothing.
“It’s particularly true for kids as trying to clothe a family is increasingly difficult, so getting quality garments at a great price is really important to our customer. We saw it in how they shopped with us, what prices triggered behaviour and to a certain extent we’re simply responding to that. We’ve looked at our customers and where the demand and the volume is and we want to provide it all the time to every Kiwi consumer.
“We think we’ll get a great customer reaction to this through more customers coming in and buying more items every time they come. There’s less money spent on individual garments, but we think it’s a good business decision and great for Kiwi consumers.”
Pepkor says its retail expertise, global buying power and financial resources have allowed the retailer to cut prices by such a large amount, but quality has been maintained.
Although an ethical supply chain is often the first to go when prices are cut, Murray says Postie’s ethics are “absolutely” still sound.
Nothing has changed with Postie’s process – not the products, the sourcing or the quality of the garments, he says. Instead, it’s the retailer choosing to price for affordability and accepting a lower margin on its products.
Pepkor has a strict code of conduct it adheres to for its supply chains, which can be viewed on parent company Steinhoff International's website.
Postie’s responsible retailing model puts the consumer “firmly back in the driver’s seat”, Pepkor says, where they no longer are forced to compromise quality or value.
Pepkor says it also allows Postie to compete in New Zealand’s highly competitive retail market, which is facing pressures from online shopping and overseas retailers’ arrivals.
When asked if Postie Plus considers the likes of impeding arrivals Zara and H&M to be competitors, Murray says retail is now a “global” business and that is now part of Postie’s story.
“We want Postie to be a relevant, competitive local retailer, but leveraging a massive global group,” he says. “Postie can compete with the global players that you mention because its part of a similar-sized group [Pepkor and Steinhoff] but we want it to remain a true community-led New Zealand retailer. Hence we kept the name, we’re pricing it to a Kiwi consumers and staff are obviously locals, so we’re competing with the new guys and competing with the incumbents we run into in all of the regional areas we’re in.
“The local and global combination is a strong one and quite unique in the market.”
- This story was originally published on our sister publication The Register.