Cash Crusaders sees new goods outperform second-hand

© Mimi Potter - Fotolia.com

The group experienced a somewhat unexpected 19% same-store growth in turnover for December and plans to increase the number of franchises with another 20 outlets this year, bringing the total to 193. With confidence boosted by good results in a generally depressing climate, it is heading for 200 stores in the near future, said Sean Stegmann, CEO for Cash Crusaders Franchising (Pty) Ltd.

The R1 billion and 200-store target may be interpreted as great leaps for a homegrown business that got underway with one store in the Cape Town suburb of Plumstead 19 years ago. It has since grown into one of South Africa's largest dealers in quality second-hand and directly imported goods, with an emphasis on electronics and sound equipment.

Stegmann is pleased with the company's resilience and consequent success in a year of slack trading conditions in other sectors. He credits proper training, sound inventory keeping and its 3-profit-centre model - consisting of new goods retailing, second-hand goods trading and secured lending - as reasons for a buoyant 2014. He also expressed his delight with franchisees taking on more stores. Multiple store franchisees now outnumber the single store ones.

He said it was gratifying to note that sales of new goods had outperformed those of used goods for the first time during the latter part of 2014. "I think much of new goods' share of 57% can be attributed to our success with DJ and musical instruments. Customers seemed to be tolerant of the exchange rate of R11.50 to the Dollar and good inventory control got orders through at exactly the right time."

Strong brand positioning, well-developed private label brand offerings and sound alignment between franchisor and franchisee were other key elements for a successful festive campaign.

E-commerce opportunities are largely untapped market segments in the South African economy and during the year ahead, the company will also be giving these a closer look. Plans include online sales - allowing customers to reserve items online and then collecting or having larger ones delivered - as well as an online lending service.

With the South African economic growth rate in uncertain mode - contracting in the last quarter of 2014, labour not out of its doldrums, reduced buying power and limited electricity - the general economic outlook is far from ideal. Up to the third quarter of last year's retail sales were also dragging along at 3.4% growth, compared to more ideal times such as September 2006 when sales grew to a rate of 15.4%.

A recent study, Retail Trade Sales Forecast for SA 2014, compiled by the Bureau of Market Research, shows that notwithstanding these conditions, dealers in appliances, furniture and electronic equipment appeared to have had a better year than operators have in other lines.

"I think we have every reason to be excited about the year ahead," concludes Stegmann.