Many consumers are still opting to shop online due to the Covid-19 pandemic, with goods delivered to their door. Digital shopping and delivery startup Quench knows something about adapting to change, as it is one of the liquor delivery services that turned to on-demand groceries and other essential products during lockdowns when liquor was prohibited.
And now South African fashion retailer The Foschini Group (TFG), through its Labs division, the owner of retail chains such as Foschini and Totalsports, has now acquired Quench, which already has partnerships with Woolworths and Dis-Chem, for an undisclosed sum. In a Thursday statement, TFG acquired Quench through its Labs division as part of its ambition to become an SA “e-commerce powerhouse.”
The Quench acquisition, TFGLabs said, will enhance the company’s existing capabilities across the fulfillment network through proprietary software and engineering, “bringing a scientific approach to planning, least-cost routing, and asset utilization”.
“Additionally, TFG plans to leverage the acquisition to tactically improve overall stock turn and store density,” the group added.
Claude Hannan, Co-Head of TFGLabs, commented: “With this acquisition, we gain access to fast, reliable delivery across South Africa, whilst achieving superior delivery unit economics. With 75% of orders currently fulfilled from stores, Quench’s network of micro-carriers will become an essential enabler for our ‘ship-from-store strategy. All international market data shows that delivery price, reliability, and speed is highly correlated to e-commerce penetration and purchase frequency.”
TFG is a leading retail group in South Africa with 29 retail brands that trade in fashion, value, jewelry, accessories, sporting apparel, cellular, homeware, and furniture. the group has over 4,300 outlets in 26 countries and employs more than 34,800 people with over 26.4 million customers.
TFG Financial results
In November, TFG reported a headline loss for the six months ended September 2020, citing store closures as a result of the Covid-19 pandemic. The group reported a headline loss per share of 91 cents, down 117.1% from headline earnings per share of 531.2 cents per share previously.
It also highlighted the dilution impact of its R3.95 billion rights offer, and the acquisition of 382 stores, and selected assets of Jet from Edcon as reasons for its earnings drag. The big shift to online shopping and the growth of its mobile sector were among the few highlights for TFG.
It said that while trading conditions remain uncertain during the Covid-19 pandemic, it is able to leverage growing demand in e-commerce and is continuing to invest in that segment. Online turnover, it said, now contributes 14.4% to group retail turnover.
“Our continued investment in our brands, digital transformation initiatives, e-commerce platforms, and vertical quick response supply chain capacity, will continue to benefit the group.”
