Seeing Edgars’ retail ability

Three names – Retailability, Norman Drieselmann and Clifford Lines – are set to become more familiar in South Africa’s boardrooms, especially among retail landlords and competing retailers.

Durban-based Retailability, which finalised its purchase of the 91-year-old Edgars chain from beleaguered Edcon earlier this month, is led by Drieselmann as chief executive officer (CEO).

Lines is the group’s founder and current chair. Its history goes back some 36 years, but many still wondered “who is Retailability?” when it first emerged as the buyer of Edgars in July.

In fact, the group purchased the Legit chain from Edcon back in 2017.

The R637 million, 217-store acquisition was announced in 2016 as part of Edcon’s initial restructuring, following US-based Bain Capital’s exit from the group.

Retailability, which has financial backing by local private equity firm Metier, has returned to the limelight with the Edgars deal.

Drieselmann, who became CEO in 2015 when Metier came on board, said Retailability has historically “flown below the radar” and shied away from the spotlight.

While agreeing to the interview, he was loath to have his photo published with this feature, saying the focus has always been on the business itself.

The group also has a modest head office building in Mount Edgecombe near Umhlanga, north of Durban.

Good grounding

As it turns out, Drieselmann has been in the retail game for over 18 years, having worked at JSE-listed retail giants Massmart and Mr Price – and even at Edcon itself at one point.

He was a planning executive at Edcon back in 2007 during the group’s heydays under Steve Ross. Before that Drieselmann was a planning and financial manager at Durban-headquartered Mr Price Group.

Following his Edcon stint and prior to joining Retailability as CEO, he was a financial director at Massmart’s Makro division and CFO at the old Massdiscounters (which housed Game and DionWired stores) during the time Grant Pattison was CEO.

Coincidently, Pattison led Edcon’s latest turnaround plan as CEO until a few months ago, when the group was forced into a business rescue process due to a major blow from the Covid-19 economic fallout.

As part of the business rescue, Edcon is being broken up and sold.

“I joined Retailability five years ago when Metier became involved as a private equity backer,” says Drieselmann. “Since then the group has expanded significantly with around 460 stores in South Africa and southern Africa, which includes the Legit acquisition.”

Besides his financial experience, he notes his merchandising planning positions at both Mr Price and Edcon.

He will have to tap into this, with the Edgars deal taking the group’s scale to almost 600 stores and making it a sizeable player in South Africa’s clothing retail sector.

“I worked at Edcon when Steve Ross was still there, but before the various transitions since then.… I am not going to be critical of what happened to Edcon, but I believe Edgars is a great acquisition for Retailability,” says Drieselmann.

He did not want to divulge the investment value of the acquisition, as Retailability is privately owned and operated.

However, as reported by Moneyweb previously, the group probably also secured a bargain like JSE-listed TFG, which has acquired the value-retail Jet chain for R480 million as part of Edcon’s business rescue.

TFG’s deal includes taking over 425 Jet stores in southern Africa (382 in SA and the balance in neighbouring countries), 4,800 staff and around R800 million in stock.

Retailability’s Edgars acquisition includes 130 stores in southern Africa, 120 of which are in South Africa.

It is worth nothing that Edgars outlets have traditionally been department stores, which are anchor tenants in shopping centres and take up much more space than the average Jet or Legit store.

“With Retailability taking on around 5,200 Edgars staff, our overall business will effectively be doubling in size,” says Drieselmann.

“Edgars presents a wonderful growth prospect for the group as it gives us a new customer base.”

Besides Legit, the group owns the Beaver Canoe men’s chain of around 150 stores as well as the Style chain, which targets the lower end of the market with around 90 stores.

The group’s stores are located across South Africa, Namibia, Botswana, Lesotho, and eSwatini.

“With the Edgars acquisition, Retailability will now account for around 600,000m2 of retail space across southern Africa. Edgars accounts for 475,000m2 of this space,” says Drieselmann.

He notes that while the women-focused Legit chain targets the mid-market and can be found in many malls, Retailability’s Beaver Canoe and Style chains are targeted toward townships, CBDs and rural areas.

“Our business overall is made up of mostly cash sales … You will find a Beaver Canoe store in a mall like Bridge City [KwaMashu, KZN] and our value discount Style stores are often found in strip malls next to a Pep or Shoprite store,” he says.

“Edgars gives us access to more of the mass market, particularly the middle to upper end of the market.

“We have taken on only the most sustainable stores [130 of around 190 Edgars stores] and have restructured rental deals with landlords as part of our purchase of the chain.”

This article first appeared on Moneyweb and was republished with permission.

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