As a senior executive in five countries during his 38-year career, Jennings is accustomed to change and he’s bringing that sensibility to his latest assignment as group managing director of Woolworths South Africa, based in Cape Town.
Since taking the job in December 2006, the self-described “agent of change” has been shifting the corporate mentality from product-focused to consumer-centric. He has injected a handful of modern and contemporary fashion labels into the predominantly moderate-priced private label to meet the demand for brands from South Africa’s emerging black middle class.
The buttoned-down, London native with an Old World demeanor also established a customer-relations management department, with a database of more than two million customers, including details such as where they shop, dine and spend holidays.
In overseeing the buying, selling, marketing, planning and real estate divisions, Jennings has sought to elevate women’s and men’s apparel and accessories to a level closer to the chain’s high-end food offering. Women’s, men’s and accessories is almost entirely private label and represents 55 percent of the chain’s total volume. Food is 45 percent of the business and is 90 percent private label, 10 percent brands. Woolworths, known as “Woolies,” is considered a mass merchant for middle and upper incomes.
“The food business would be at the top end of the marketplace, and the clothing at the middle of the marketplace, but we have been trying to get a consistency across the entire business,” Jennings said. “We are always going to sell a more aspirant food business in the South African marketplace.”
Jennings split the buying and planning functions and created two groups with a total complement of 150. He also established a 10-day “buying academy” for buyers, associate buyers and planners to train in the basics of gross margin calculations.
Regarding the merchandise mix, he’s added Sisley, BeneFit, La Prairie and Frédéric Fekkai in cosmetics, as well as Country Road, an Australian apparel brand the company owns but didn’t stock in the stores. Jennings said the sourcing has been honed by consolidating the supplier base. A product design studio with 35 designers was formed to elevate the private label offering, which includes the Twist, Re and Studio W lines.
He’s implemented a merchandising matrix with good, better, best pricing on one side of the grid, and classic, modern and contemporary styling on the other — to guide the buying and distribution decisions for different doors.
“We are now clustering our stores on a lifestyle basis,” Jennings said.
Everything from store layouts to merchandising and marketing is determined by customer profiles in communities where Woolworths operates. It’s the same grid Jennings helped implement at Saks Inc., where he spent a turbulent two-and-a-half years as president just before joining Woolworths.
Last year, the World Retail Congress in Barcelona cited Woolworths as “responsible retailer of the year” for reducing electricity and packaging, recycling efforts and evaluating the carbon footprint of products sold on its shelves.
“Organics is a big focus,” Jennings said. “We have a 10 percent market share, and are looking to expand that to 15 percent over the next two to three years.” Woolworths has made large investments in organic cotton farming in South Africa and committed to planting 17,000 trees (one for each employee) to help offset the company’s own carbon footprint.
The chain was founded in 1931 by Max Sonnenberg, a German immigrant, who registered the Woolworths name in South Africa and opened the first store in the closed Royal Hotel on Plein Street in Cape Town. There is no connection to the former Woolworths in the U.S. Woolworths SA is often compared with the U.K.’s Marks and Spencer Group plc for its similar business model emphasizing food, private label and sustainability efforts.
Jennings opened the chain’s 400th store in the fall, but has slowed expansion and tightened inventory controls. The company has 408 units operating in three formats: food stores, sometimes referred to convenience stores or mini Whole Foods; stores that sell clothing and home, and full-line stores for fashion, home and food. Units range from 2,000 square feet to 100,000 square feet. About 15 store openings are seen for the year ahead.
“There is no hiding place from this retail recession,” Jennings said. “It’s no different in South Africa. Many of our customers have lost a lot of their wealth. We appeal to the top 20 percent of the population. These people are not spending as freely. I don’t think we are taking the same kind of brunt as the U.S. or the U.K. We are still seeing sales growth and profit growth this year compared to last, but it has slowed down dramatically.”
Tourism is down and products are more expensive because of inflation and decreases in South Africa’s currency against the euro and the dollar.
In the first half of the current fiscal year, ended Dec. 31, 2008, Woolworths’ net income rose 90.5 percent to 894 million rand, or $103.1 million, from 469.2 million rand, or $67.9 million, in the prior-year period, largely because of lower finance costs and exceptional items. Operating income rose 6.1 percent to 1.05 billion rand, or $121.1 million, from 986 million rand, or $121.1 million. Revenues rose 5 percent to 11.1 billion rand, or $1.28 billion, from 10.6 billion rand, or $1.53 billion. Dollar figures have been converted from the South African rand at average exchange rates for the periods to which they refer.
The company generated revenues of 21.8 billion rand, or $3 billion, and net profits of 952 million rand, or $131 million, in the fiscal year ended June 30.
Prior to Woolworths and Saks, Jennings was president of Holt Renfrew in Canada, deputy chairman of Brown Thomas in Ireland, managing director of House of Fraser and general manager of Harrods, both in London. In the early part of his career, he worked at retailers in South Africa. His three-year contract at Woolworths expires in December.
“It’s not appropriate to talk about my contract at this stage,” Jennings said. “I am very focused on the success of my business in the months ahead.”
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