PROFILE: Norman Drieselmann, the CEO who bought Edgars
Retailability, which has purchased Edgars, has a track record of turning ailing businesses such as Legit around
Norman Drieselmann is the accountant-turned-retailer running Retailability, the Durban-based company that has just taken over Edgars.
With the acquisition of 130 of the 194 Edgars stores, he has transformed his company’s foothold in the retail space, adding middle-to upper-income stores to a previous focus on lower-to middle-income consumers.
In this sense, Drieselmann’s ability to nab Edgars stores is a game-changer. "I think it’s a great deal for us. It gives us access to customers we don’t service, the mid-to upper market. It helps that it provides Retailability with growth, without cannibalising its existing business," he says.
In May the collapse of holding company Edcon, a 91-year-old business, threatened the jobs of 17,500 permanent employees. The company filed for business rescue after losing R2bn in sales as a result of the Covid-19 lockdown.
Where other retailers have been downsizing or closing stores over the past few years, now made worse by Covid-19, Retailability has opened 30 stores a year for the past two years.
"We’re very fortunate. We’ve had a few good years of solid results that put us in a position to look out for opportunities."
Until now, Retailability has been a low-profile operation, despite having been around for 36 years. The company’s other brands include Legit, Beaver Canoe and entry-level fashion brand Style.
Retailability was founded by Cliff Lines in 1986, and he remains the chair of its board and the majority shareholder, with private equity firm Metier holding a substantial stake.
The business started in SA but really took hold in Namibia, where Lines had his first early success before he began to roll out stores in SA. With 90 stores outside SA, Retailability still has a bigger representation than most of the big listed apparel retailers — with a substantial footprint in Namibia, Botswana and Swaziland, and a small presence in Lesotho. Most of its profits, however, come from SA.
Retailability had 460 stores in the group before it bought the 130 Edgars stores. It has brought across 5,200 store staff, though initial estimates had placed this at about 6,200.
The deal is a big one for Retailability, which made a success of the purchase of Legit from Edcon in 2017 for R637m, and the management team that integrated that transaction is now doing the same with Edgars.
Drieselmann says the Legit purchase has been a good acquisition "and it’s found its niche in the world". He says: "We’re very pleased with its performance. It was loss-making and now it’s profit-generating."
Retailability’s focus is now on integrating the Edgars stores into the rest of the business. It has started working with merchants to develop a retail strategy for the new stores. "We’re not going to be premature and pull too many triggers too early."
But there have already been clear changes. Edgardale, the vast head office in the south of Joburg, was closed by the company’s business rescue practitioners. Today, Retailability has 160 people at its new West Street office in the middle of Sandton.
The management structure has been flattened, allowing it to get closer to the detail to make decisions. "It’s more akin to an entrepreneurial business than a large corporate. That will make Edgars sustainable for the future."
Drieselmann adds: "It’s been painful for everyone through this transaction. When you’re trying to take a business that’s running at a loss and positioning it for sustainability, there’s going to be pain for staff, landlords and customers."
His priority has been to ensure that Edgars is sustainable from day one. He believes it became too niche for the average South African. Now it will need to get the balance right between private labels and international brands. Edgars will no longer sell homeware and will limit its focus to fashion and beauty.
Drieselmann is still optimistic about competing and even growing market share in the retail space.
And he has the right background and experience to make that happen. Drieselmann is a CA who moved straight from articles 18 years ago into retail, and has worked at apparel retailers Mr Price as well as Edcon. He was also the CFO of Massmart’s Game and Makro stores.
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