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Woolworths plays shy in Australia and finds a new onlin...

Business Maverick

COMPANIES

Woolworths plays shy in Australia and finds a new online partner in South Africa

The Woolworths/MyRunway agreement fits in with at least one e-commerce trend highlighted by executive creative director, Matthew Barnes of OneDayOnly, who says we are likely to see more collaborations in the e-commerce space. (Photo: Halden Krog/Bloomberg via Getty Images)

After burning its fingers in Australia with David Jones and failing to conclude the sale of that business, Woolworths has turned its eyes homewards, entering into a relationship with online platform MyRunway as a clearance partner.

The rumours around Woolworths’ proposed sell-off of David Jones circled the market last month, fuelled by The Australian newspaper and prompting Woolies head office to issue a statement that it was “firmly focused on an operational turnaround of David Jones”. 

Since then, David Jones has invested significantly in a revamp of its Bourke Street outlet, positioning it as a flagship store with the first phase launching at the end of April. The next phase will be launched to the public in mid-July with the final phase opening in October, just in time for the festive shopping rush. 

But despite this investment, the rumours have not died down just yet. 

The Australian reported this week that Woolworths had set up a data room to court suitors — Allegro Funds and Anchorage Capital Partners, which are both Australian private equity funds. 

David Jones certainly fits the criteria that Allegro’s website says the fund looks for in “investment opportunities”, namely mid-market businesses based in Australia with revenues greater than AU$100-million that are in industries experiencing temporary headwinds or businesses with an over-leveraged capital structure, or where there is an opportunity to transform operational performance.

Similarly, Anchorage Capital Partners invests in businesses operating below their full potential or undergoing a significant transformation.

However, unless Woolworths is doing a coy courtship dance Bridgerton-style, it seems the retailer has cold feet again and, according to The Australian, has backed away from a possible sale.

Zweli Mkhize’s race against time and the Special Investigating Unit

Locally, MyRunway seems to be a good clearance partner with an international portfolio of designer brands for which it acts as exclusive suppliers in South Africa, such as Bershka, Primark and Boohoo. Essentially, when these brands have a change of season or are overstocked on a particular line, the excess stock or out of season stock is moved to the clearance partner — in this case, MyRunway, to be sold at discounted prices.

“Woolworths is committed to being an inclusive and agile brand with a concerted and ongoing philosophy to embrace new trends and respond to market needs,” says Manie Maritz, chief executive of Woolworths Fashion Beauty and Home.

Rob Noble, managing director of MyRunway, says Woolworths is likely to shorten its sales periods, with fewer sales in store and using MyRunway as a clearance partner. 

The move ensures that Woolworths’ sales remain an exclusive twice-a-year event rather than the almost continual pervasive sales that marked both Edgars and Stuttafords shop floors before both retailers closed their doors. 

Stuttafords went into business rescue before closing its doors in 2017.  Edcon, which owns Edgars, sputtered along before Covid-19 put the final nail in its coffin, forcing chief executive Grant Pattison to make a widely circulated conference call in which an emotional Pattison could be heard telling suppliers the company only had enough funds to pay salaries. 

MyRunway helps brands clear out end-of-season stock and Woolworths brands will be available on the MyRunway site from the end of May, although premium lines such as Country Road and Witchery will not be on the platform just yet. 

Rob Noble says MyRunway, which turns 10 this month, boasts about 2.5 million customers and in the past two years has seen a 300% growth in township and rural markets. 

“Our core customer base has always been Johannesburg, Cape Town, Durban and Pretoria, but over the last two years, we have seen sales increasing in outlying provinces such as Limpopo, Mpumalanga and North West,” he says.  

The local online e-commerce market is currently estimated at just under R200-billion per annum, up from R90-billion in 2019 and R142-billion in 2020, and has already exceeded pre-pandemic 2025 projections, according to FNB Merchant Services statistics.

According to Thokozani Dlamini, chief executive of FNB Merchant Services, “Key challenges to overcome were consumer trust in the fulfilment of sales where physical products had to be delivered, and logistical solutions to meet spiking demand.”

He says despite the accelerating trend, there is still time for retailers without a digital presence to make the shift, but a lot depends on the industry in which they operate and the nature of their client base. 

“Large-ticket items such as household electronics and décor (televisions, dining room sets, kitchen equipment, living room sets) would likely still see consumers wanting the touch/feel/witness experience before committing to an expensive purchase. This highlights the urgent need for retail companies to focus on their omnichannel retail strategy,” he says. 

The Woolworths/MyRunway agreement fits in with at least one e-commerce trend highlighted by executive creative director, Matthew Barnes of OneDayOnly, who says we are likely to see more collaborations in the e-commerce space. 

Going forward, we will see brands working with other brands to offer ever more value to their combined customer base, and reach new untapped markets,” Barnes says. BM/DM

 

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