RCS lays out plans to revive Edcon’s fortunes
Consumer finance firm will include cash loans and credit cards for customers
The new owner of Edcon’s consumer finance book, RCS, plans to launch new financial products to the retailer’s customers in a bid to boost sales and revive the fortunes of the embattled company.
RCS, which is a subsidiary of BNP Paribas Personal Finance, will analyse buying trends and habits of Edcon’s clients to tailor-make new products to the retailer’s more than 10-million loyalty cardholders.
The announcement comes after the Competition Tribunal approval last week of the transaction that will result in RCS acquiring Edcon’s in-store debtors’ book across all of its retail properties, which include Edgars, Jet and CNA, from Absa.
“This is part and parcel of our core business, and it’s something we know how to assess, manage and market,” says RCS CEO Regan Adams. The company already runs consumer finance books for several national retailers, including Massmart, Pick n Pay and Cape Union Mart.
Edcon’s loyalty programme comprises a cash card which provides members with benefits based on prior purchases, something which RCS says is enormously valuable.
“It will provide us with a large amount of data which you can analyse to see trends and habits which will allow us to better understand the customer,” says Adams.
He sees the transaction, which comprises acquiring a loan book of about R4.8bn servicing 2-million clients, as more of a partnership with Edcon, with RCS becoming the exclusive finance partner of Edcon.
“Besides just managing the existing book, we are looking to broaden the consumer finance offering to include cash loans and credit cards in alignment with Edcon’s financial services strategy under CEO Grant Pattison,” Adams says.
Edcon has been in a perpetual state of emergency since the buyout and delisting of the company by private equity firm, Bain Capital, in 2007. Bain wrote off its investment in 2016, and the company has required additional bailouts from the Public Investment Corporation (PIC) to stay afloat.
Grant Pattison, the former boss of Massmart, was appointed CEO in March 2018 and promised to return Edgars to a “destination department store” capable of competing with the growing number of international retailers entering the local market.
“We are aware of Edcon’s importance in the retail industry, and we think we can help them reclaim some of the lost ground by improving turnover and making the business more sustainable,” says Adams.
Correction: February 4 2020
The original article previously referred to Bain Consulting as the owner of Edcon. This is incorrect, it was in fact Bain Capital. We apologise for the error