VERIMARK: But wait, is there more?
Times have changed since you called a number on the TV to order something, but Verimark is still in the business
The curtain has not closed on direct-response television if Verimark’s latest results are anything to go by.
Believe it or not, but the 1980s jingles — "If you call now!" and "As seen on TV!" — still have a place in today’s fast-paced and competitive retail landscape.
After a dismal showing last year, the company reported a 200% jump in full-year headline earnings, to R25.9m.
"About 20 years ago, we would flight a commercial and the only way to get the product would be to call the number on the screen at the end of the ad," says CE Michael van Straaten.
"Now it’s totally the opposite. Less than 1% of our sales are through a call centre and we are tenfold to a hundredfold bigger than we were then."
Though the call centre concept may be dated, the group’s marketing strategy remains the same: at the end of an ad consumers are directed to visit their nearest store, or the company’s website and order.
Additionally, Verimark has in-store demonstrations at retailers such as Massmart’s Game and Makro, taking the adverts to the stores.
"People love our products and we’ve built the brands up. Floorwiz was one of our top-selling items two decades ago and it’s still a top seller now. People associate our sort of industry with gimmicky and tacky products, but that’s not the case for us. We pursue quality brands and products," says Van Straaten.
In 2006, the top-selling product was the Twista Pro. In 2016, it was the Genesis Hydrovac Plus vacuum cleaner with water filtration.
So what is it that makes a Verimark product?
"It must be unique, demonstratable, with the widest possible demand, and priced right," says Van Straaten. "That as seen on TV must hold once the consumer has the product in hand."
While the current trend is for short-form infomercials, Verimark still makes long-form infomercials for kykNET on DStv.
"These are brand building. We like to flight the 30-seconders only after the brand has been established. We are in the top 20 in terms of TV adspend in SA, according to Nielsen," says Van Straaten.
International trends point to people in the lower LSM categories buying the kind of products Verimark sells (DIY, fitness, cooking), but in SA, the company says, it’s people in LSM 7-10.
The industry in SA is dominated by Verimark and Homemark. Lesser-known Tevo is also in the game.
Glomail shut up shop in SA two years ago but some stores remain, importing goods straight from Glomail International. Verimark is the biggest player, followed by Homemark.
Homemark MD Dino Hadjipaschalis says competition has become fierce with the introduction of online retailers and social media, "but sales are pretty stable".
To compete in the current environment, Hadjipaschalis says Homemark is sensitive about its pricing and puts extra care into its customer service.
"We deliver the goods directly to the customer’s door and we make sure we have unique and exciting products that they haven’t seen in other retail stores. We have experienced a downward trend in direct-response sales through our call centre in recent years, but that shortfall has been made up through sales growth via our online website channels."
Hadjipaschalis says despite that, direct-response sales through Homemark’s call
centre have recently stabilised "and the odds
are in our favour for some growth, at least in the short term".
Like Verimark, Homemark imports the majority of its goods.
"It is a tough environment. We do better when the economy is growing and when consumers have increasing disposable income. Being at the discretionary end of the spending scale, we are under pressure. But now that the exchange rate has stabilised, we have reason to be optimistic as we can offer our consumers more competitive pricing," says Hadjipaschalis.
Verimark, which has been listed on the JSE since 2005, has produced some hit-and-miss results. While the share price is up 77.55% over the past two years, this is far off its record high of R4.20, reached on April 11 2006. The shares now trade at about 87c.
Van Straaten says there are still benefits to staying publicly listed.
"As an entrepreneur, you always want to go to the next level. If we ever want to grow or expand our business, being listed will allow us to get funding. But there aren’t any plans in the works now that would require that."