Empty mall parking lots mean fewer customers and staff retrenchments.  Picture:  Getty Images
Empty mall parking lots mean fewer customers and staff retrenchments. Picture: Getty Images

When Jakes Willis, CEO of entry-level recruitment company Lulaway, was looking for a T-shirt at a Stuttafords outlet in Sandton, he noticed that all the department store's sections had very little stock left, as it prepared for the closure of all its shops.

"Every other customer coming in was asking employees: 'What's next?' And they don't really know what's next," said Willis.

"We know that a big issue in South Africa is the lack of a streamlined process for matching skills with the right people.

"There was an outpouring of sympathy from all the clients coming into the store and I was wondering, how do we capitalise on this?"

This is why Willis, along with other retailers, including Mr Price Group, Truworths, discount apparel retailer PQ Clothing and Dischem, have offered to place 15% of about 800 people who will lose their jobs when Stuttafords closes its doors at the end of this month.

Dire straits

While Lulaway will take on 50 people to create a call centre, the other retailers have committed to placing 76 people.

"It's not that there are no jobs in the economy, it's just that some centres are growing. Among the retailers that we have spoken to, some have vacancies, and they could take on a few people," said Willis.

In the process of recreating retail jobs, employees who earn between R2500 and R5000 would be considered.

Stuttafords CEO Robert Amoils said this week: "Assuming all stores close [Sandton and Eastgate will be the last to close], 950 jobs will be lost, including those in Namibia and Botswana."

All head-office positions would become redundant and be subject to a retrenchment process, he said.

"A large percentage of head-office staff have already become redundant and therefore rationalised to align head-office infra-structure with the remaining store base," Amoils said.

He added that all employees had been notified of store closures where appropriate and all had been dealt with in terms of the Labour Relations Act.

But it is not just Stuttafords that has been hurt.

The retail sector is in dire straits as discretionary spending narrows and consumers feel the pinch.

The pressure will be transferred to retailers, and those who fail to adapt to the evolving needs of the market will struggle to stay afloat in the new retail environment.

With unemployment in South Africa at 27.7%, pending job losses in the retail sector signal an economy in crisis. According to Bloomberg data, unemployment in South Africa is expected to rise to 28.3% by 2019, and a number of these job losses will be in the retail sector.

Confidence dipping

This week, the FNB/BER reported its consumer confidence index had dropped to -9 in the second quarter compared to -5 in the previous quarter, well below the long-term average of +4.

Many retailers remain silent on the proposed losses in the sector. Truworths and Mr Price did not respond to requests for comment.

But a Foschini (TFG) spokesman said while the company was "not in a position to comment on whether there may or may not be cause for retrenchments in the coming two years, we remain optimistic despite prevailing challenges both economically in general, and in the retail sector in particular."

The group was continuing its investment in local manufacturing and production - a move that "demonstrates confidence in our ongoing growth strategy", the spokesman added.

TFG is regarded as one of the retailers that has been protected from the economic headwinds by its diversified portfolio.

It has 27 brands across apparel, shoes, and homeware and is increasing its exposure in menswear - a segment that tends to fare better than the highly competitive market in womenswear.

Atiyyah Vawda, a retail analyst at Avoir Capital Markets, said retailers were planning for slower growth and muted employment: "Retailers are not going to increase trading space, they are trying to cut back on that.

"The rates of salary increases will be lower, bonuses will be lower, and the retail sector will shed further jobs due to store closures."

Vawda added that with lower growth, retailers would be able to adapt to their business model to ensure costs were controlled, while providing shareholder value.

"The valuations of all the retailers have come off significantly as they've been hit hard. The strengthening rand has negatively affected retailers who invested offshore."

More efficient

Alec Abraham, a senior equity analyst at Sasfin Wealth, said: "Retailers have been trying to get a lot more efficient with their labour", and as they opened new stores, "they don't necessarily gear up in terms of employees as much as they have in the past".

But there was some consolation for retail staff who were being laid off, he said.

"I would imagine that the preference for other retailers looking for new employees for new stores will fall on retailers who have been retrenching," he said.

Lulaway's Willis is also optimistic about job creation in the retail sector despite the current economic environment.

"Companies don't think creatively enough about how to structure the workforce, switching employees from an area not performing well to one that is performing better.

"What's very clear is that there are many ways of increasing employment," Willis said.

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