Key
resources

  • Financial capital
  • Physical footprint and infrastructure
  • Intangible and intellectual resources
  • Human capital
  • Relationships and society
  • Natural resources

We access and use our resources responsibly in order to deliver our products and services. These resources have evolved over the years as the Group expanded and diversified.

Resource and stakeholder trade-offs

In our strategic and tactical business decisions, we have to prioritise some resources and some stakeholder outcomes above others. Examples of these decisions include:

  • We have more than one brand offering in each market segment – each with a different investment requirement. Due to stringent capital allocation disciplines, financial support will be directed in favour of the brand that is able to generate the greatest returns for the Group. The trade-off will create value for the brand and its customers, but might reduce financial resources available for other brands in the short term.
  • When we aim to attract, retain and develop the best talent, there is a trade-off between hiring less experienced employees at a lower employment cost and the impact of their lower experience levels and additional training costs required.
  • The financial capital invested by the Group in training our employees reduces our financial capital, but increases the skills of our employees and ultimately improves our customer service and our customers’ experience.
  • While corporate social investment reduces the Group’s financial capital, it increases social and relationship capital by uplifting communities and improving youth education, which is ultimately an investment in the leaders of our future.
  • The investment in local supply chain development reduces financial capital but increases manufactured capital while improving our customers’ experience by providing the right product at the right time.

Financial capital

TFG’s sources of funds consist of funds reinvested in the Group, retail profit generated, interest income, income from our value-added services, share capital and a combination of long-term and short-term borrowings. It is used to fund the growth of the Group, to pay interest on borrowed funds as well as for capital expenditure and expansion. When appropriate, it is also used to pay dividends to our shareholders.

Key inputs of financial capital into our business activities

  • Total equity
  • Interest-bearing debt
  • Cash

Read more about how we generate, use, invest and transform this capital in the Chief Financial Officer’s report.

Physical footprint and infrastructure

TFG Africa

We use a range of physical sites and facilities throughout our markets in Africa and internationally, which enable us to procure, import, manufacture, sell and deliver our products and services.

TFG Africa’s distribution of goods throughout South Africa and into African markets is managed via eight distribution centres. A mixed model of own and outsourced road transport is applied. Online order dispatch is managed through an outsourced third party from two warehouses.

TFG Africa procures merchandise both locally in South Africa as well as through imports. In South Africa, TFG Design directs the manufacturing of clothing, with about 19% of local clothing procured from TFG Manufacturing (Prestige) and other local CMT factories whom they have strategic alliances with.

Prestige manufactures in two factories, namely Maitland and Caledon.

During the year, the Group invested a further R10 million in automated and semi-automated energy-efficient equipment at our Caledon factory to improve our manufacturing ability while reducing our carbon footprint. To facilitate best practice processes, improve speed and create better visibility, a new warehouse management system was implemented in our Jewellery distribution centre, while capacity in our Midrand distribution centre was expanded to improve the overall efficiency of our Logistics network.

Merchandising, such as visual elements and displays, is executed through brand teams, with promotions determined by a team consisting of planners, buyers and marketers.

The Group has 2 652 outlets in TFG Africa, which constitute 69,7% of Group turnover. These outlets are leased on longer-term contracts with an average period of five years.

TFG London and TFG Australia

Warehousing and distribution for TFG London and TFG Australia is based on an outsourced model.

Manufacturing for TFG London and TFG Australia is performed by an established long-term global supply base.

Merchandising, such as visual elements and displays, is executed through brand teams, with promotions determined by a team consisting of planners, buyers and marketers.

The Group has 935 outlets in TFG London and 447 in TFG Australia, which constitutes 13,2% and 10,6% of Group turnover respectively. TFG London outlets consist of stores and concessions, with stores leased on contract with an average period of three years. Concessions are arrangements with key department store partners from whom the Group occupies an agreed floor space area (referred to as “mat”) dedicated to our product. TFG Australia’s outlets are leased with an average period of five years.

Key inputs

  • Property, plant and equipment
  • Outlets
  • Distribution centres
  • Factories
  • Logistics infrastructure

Intangible and intellectual resources

These resources enable us to develop, continuously improve and effectively manage and govern our product or service offerings. It includes innovation across all our trading and service divisions to ensure a brand-appropriate customer experience is realised.

TFG has developed into a leading fashion lifestyle retailer by leveraging:

  • broad retail experience;
  • continued expansion of footprint;
  • strong operational support; and
  • market-leading store design capabilities.

Examples of our intangible resources, which constitute our competitive capabilities, include:

Our buying process and quick response model: We have an established process for selecting fabrics and ensuring that stock purchases are planned in accordance with the projected levels of turnover. A portion of the required stock is procured upfront from local suppliers and through imports. The balance of required stock is procured through the use of replenishment and quick response models and processes (mainly local procurement), based on actual trading patterns and sales trends. In-house manufacturing increases the quick response capabilities for TFG Africa. TFG London and TFG Australia procure their own stock based on a similar methodology with the exception of replenishment. TFG London has an open-to-buy policy which allows for flexibility and freedom within season.

Our design process: Our in-house design capability ensures that we are able to develop signature styles per brand and adapt our offering according to developing trends.

Our brand portfolio: Our portfolio of 28 leading fashion lifestyle retail brands across various lifestyle and merchandise categories is a key resource, further enhanced by our online trading capability.

Our customer rewards programme: TFG Africa offers TFG Rewards, which provides customers the ability to be rewarded, across 20 TFG Africa retail brands, with a single card and customer profile. It is a rewards programme intended to suit every lifestyle and life stage. All account holders are automatically registered on the programme, while cash customers may choose to register.

Our e-commerce site: TFG Africa offers customers the opportunity to shop across multiple brands on a single website, with one checkout, and the option to pay either via credit card (Visa and Mastercard), EFT (i-Pay), SnapScan, TFG eGift card or their TFG account card. We also provide our customers with multiple delivery options according to their preference:

  • Courier delivery at their preferred location;
  • A free Collect-in-Store option; or
  • Pargo pick-up which enables customers to conveniently collect their parcel at any one of over 400 local pick-up points.

The Group also offers a customer review service across all TFG Africa e-commerce brands that allows customers to add their own reviews, images, videos and selfies to our product pages.

E-commerce constituted 6,5% of Group turnover for the 2018 financial year.

Our governance structures: The Supervisory Board is ultimately accountable for the strategy, direction, leadership, governance and performance of the Group. The Supervisory Board also has oversight of the development and approval of, and updates made on, TFG’s vision, mission and value statements, significant policies and goals related to economic, environmental and social impacts.

CASE STUDY

innovation

The new format Customer Experience Lab (CX Lab) was launched this year, showcasing nine different solutions or technologies that create innovative customer experiences. Of the solutions reviewed by the business, six have been approved as the business cases have indicated a solid return on the projected investments. Infotec, our IT division, annually visits strategic partners’ innovation labs, to review technologies that support the Group’s strategy.

Human capital

Human capital constitutes the skills and experience vested in our employees that enable us to implement our strategy and deliver our products and services. Leadership is one of our four strategic pillars while attracting, retaining and developing key talent is also one of our material matters, and employees one of our material stakeholder groups.

Recruitment: To reduce the time and cost associated with recruitment, we implemented the talent acquisition solution used by head office functions, for store operations this year. Nine hundred and sixty-four South African retail store employees were placed via our high-volume assessment centre. At TFG London, an applicant tracking system was launched to improve speed of recruitment for stores.

Due to low unemployment levels, the recruitment of key talent continues to be extremely competitive for TFG London. We have the opportunity to leverage talent and career opportunities across our three United Kingdom brands, but recognise that Brexit may have an impact on talent acquisition – particularly of our customer-facing and distribution centre employees – as recruitment of individuals from outside of the United Kingdom becomes more onerous.

Attracting new employees with the necessary skills in business analytics, IT and apparel production management remains challenging throughout the Group. We are also focusing on implementing initiatives to improve the recruitment and development of people with various disabilities.

We do biannual talent planning across TFG Africa to ensure that we have a pipeline of retail and specialist skills.

Development: Our development programmes focus on technical competence as well as leadership development. During the year, TFG received accreditation status as a training provider for retail qualifications in South Africa. The TFG Retail Academy, launched in 2016, provided development opportunities for 404 employees. Thirty factory employees completed the sewing machinist programme with an NQF level 2 qualification.

The Academy enables us to achieve B-BBEE skills development targets at lower costs than using outsourced service providers.

A Retail Executive Programme, in partnership with Duke Corporate Education, was run successfully for a number of senior executives and as a result, four new business projects were proposed and accepted for implementation.

Four bursary recipients who graduated in 2017 were placed in pipeline positions across the Group while 71 store managers completed their accredited generic management qualification and 32 managers graduated from the University of Stellenbosch.

We plan to improve performance against our B-BBEE skills development targets for South Africa, with particular attention to rolling out more skills development programmes for customer-facing employees. We are also aiming to enhance technology-facilitated learning and communication platforms for African operations.

Transformation: The South African specific imperative for TFG Africa is to ensure that we attract and retain employment equity candidates.

Our Youth Opportunity team in South Africa facilitates valuable work experience across many different disciplines within the retail cycle. For the current financial, year we managed to achieve our absorption target of 70% with a strong focus on transformation. Local communities in which we operate are becoming more vocal regarding job opportunities, requiring a different approach to engagement with communities and job creation.

While we are seeing an improvement, we require more focus on senior management transformation in line with our B-BBEE and employment equity targets. We want to make a progressive shift in transformation of our middle and senior managers.

Engagement and industrial relations: We encourage employees to share ideas that could increase turnover and reduce costs as well as voice views regarding culture and leadership. A “Voice of Employee” (VoE) platform was launched for all employees in African operations during 2017. Regular employee engagement through feedback and idea submissions ensure we remain in tune with our people.

We will continue to market the platform and communicate ideas implemented to ensure a consistent stream of ideas and feedback. We also plan to measure continued engagement levels of employees in African operations going forward.

During the year, we decided that employee communication and employee training tools need to be mobile-friendly for wider access to all employees, particularly customer-facing employees.

Employees at our South African head office, manufacturing factories and distribution centres are able to participate in focused wellness days presented in partnership with Old Mutual, Incon, Discovery Health and Octogen. Store-based employees in South Africa, Namibia and Botswana are able to participate in wellness days organised in a number of shopping centres through collaboration with Retailers Unite.

We continue to enjoy low unionisation levels in South Africa. In the other African countries where we operate, we have recognition agreements with a union in both Zambia and Lesotho and enjoy a cordial relationship with both. In Namibia, we have recently implemented a consultative forum with employee representatives.

No time was lost due to industrial action for the reporting period.

We recognise that high unemployment rates and wage gaps in South Africa could impact union discussions and engagements with communities.

Performance management and rewards: Our high-performing teams are evaluated by way of a robust performance management system including key performance indicators (KPIs) linked directly to our Supervisory Board-approved strategy. Performance scores for senior executives are calibrated at Supervisory Board level.

For international operations, all minimum benefits as required by legislation are applied. Harmonisation of benefits and terms and conditions across our United Kingdom operations has commenced. We also ensure that all employees in non-South African countries are receiving market-related benefits.

In South Africa, additional benefits have been introduced for flexitime employees in line with legislative requirements. During the year, we also implemented a more user-friendly HR Connect system, allowing self-service functionality for managers and employees (including access to online payslips and online leave authorisation).

At TFG London, the consolidation of Group structures across our three brands has commenced with planned productivity and efficiency gains. Brexit created much uncertainty for business and employees and was exacerbated by a number of significant legislative changes which introduced additional cost and requires further work force management focus.

Read more about our employees under relationships and society further in this section.

Key inputs

  • TFG’s skilled and experienced employees
  • Internal bursaries granted to employees
  • Internship and learnership opportunities provided by TFG Africa in retail and manufacturing
  • Students hosted for vacation work experience
CASE STUDY

SOCIAL VALUE CREATED THROUGH HUMAN CAPITAL DEVELOPMENT

Four TFG employees who participated in the TFG Retail Academy this year shared their experiences on the personal and career value they gained:

Sherwin Temmers

The pillars of the TFG Retail Academy – Learn, Grow and now Achieve – have significantly improved my leadership skills and had a positive impact on my life.  I have learnt so much throughout this incredible journey, culminating in a much sought-after promotion to the role of Senior Store Manager for Sportscene Promenade. I have been motivated by my passion for delivering exceptional customer experience and working with incredible people. TFG has changed my life; my life would have not turned out the same if TFG did not see the potential in me.

Melina Jackson

The TFG Retail Academy has had a profound impact on me in an exceptionally positive manner. It has given me the guidance I required on how to achieve my key objectives at work. I feel the TFG Retail Academy has given me the knowledge to manage the difficulties I face as a Manager in the retail environment. I feel better equipped to deal with everyday concerns and able to manage things better as the learning I have received has guided and supported me throughout. For me, the future looks brighter than ever before.

Imraan Williams

The knowledge I gained has given me the tools to reduce my store shrinkage and increase profit in my store. It has also demonstrated the importance of employee development. The programme illustrates TFG’s investment in my growth and development. I feel I have accomplished so much just because TFG has taken the time to invest in me personally. I am only 23 years old and already I am a store manager. Going forward, there is still much more I can accomplish during my career with TFG.

Morgan Gcwabaza

I applaud TFG for providing me with the opportunity to gain a formal qualification. The information given and provided was structured very well. It enabled me to practically implement the knowledge and skills taught to me. My line manager could see a positive change in my performance after returning from training. I would recommend this programme to all TFG employees. I have thoroughly enjoyed this journey and would love to continue learning. My personal circumstances have improved and I am in a better position to financially care for my three-year old daughter due to my promotion. I love TFG – it is a good company to work for.

Relationships and society

Our stakeholder engagement approach directs the relationships that enable us to create value within our broader context. As a responsible corporate citizen, we invest in these relationships as a way to create shared value.

Our Supervisory Board is the ultimate custodian of the corporate reputation of TFG and its relationships with stakeholders.

Our stakeholder engagement approach aims to create partnerships with a strong focus on public/private sector collaboration. Our ability to succeed as a business is based, inter alia, on relationships with national employer bodies, trade unions, government ministries, higher education and revenue services, and relationships with our various suppliers. By working effectively with these stakeholders, we contribute towards improving the lives of our customers while enhancing our supply chain. Engagement with our stakeholders provides valuable input into what TFG considers as material. We believe that continued engagement with our stakeholders will ensure that we remain a competitive, sustainable business.

Our engagement with key stakeholders is summarised below:

Customers

Our customers are a strategic priority, as they provide our income through the sales of our products and services. We aim to offer them a diverse range of fashion, lifestyle and homeware offerings through brand experiences that encompass their channel of preference.

We engage with our customers through our call centre, digital media, online and in-store experiences as well as through focus groups and surveys. Customers most frequently raise specific issues relating to in-store experiences or credit queries. They also engage with us regarding merchandise and fashion trends.

Customers form part of communities, which we support through our extensive social investment projects and, in South Africa, through our supplier and enterprise development programmes.

Shareholders

Shareholders, as our major source of capital, require sustainable growth. We meet their expectations through consistent performance delivery and dividend payments, and by implementing a strategy that creates shared value and ensures sustainability. We engage with shareholders through presentations, roadshows and meetings where we receive feedback and discuss their matters of interest.

Employees

We engage with our 27 825 employees daily to facilitate employee empowerment (one of our sustainability focus areas) by driving transformation, leadership and skills development, and promoting a sustainable employee pipeline through learnerships, bursaries and workplace experiences. We invest in people through training and skills development, technology upgrades, market research and brand support, and by opening new outlets.

Read more about our people and our various employee-focused initiatives and about remuneration in the Remuneration Committee report.

Employee engagement focus areas include communication about training and development, human resource policies, remuneration and performance management. We also engage with our employees through our VoE platform, encouraging employees to share ideas that could enhance profitability and allowing them the opportunity to voice their views regarding the Group’s culture and leadership.

As per our Leadership strategic pillar, we are committed to embedding a performance-based culture that attracts, retains and develops the best talent in the industry.

Suppliers

TFG’s suppliers consist of merchandise suppliers and non-merchandise suppliers, including service providers, landlords and concession partners. Partnerships with our suppliers are key in ensuring that we deliver merchandise of high standards, at the right price, in locations convenient to our customers.

TFG’s primary sustainability focus is on local supply chain development. This enables economic empowerment, job creation and socio-economic improvement, and also supplies us with a sustainable source of quality merchandise.

Through supplier take-on procedures and audits, and international supplier societal audits, we ensure that we source ethically and that suppliers are able to invest over the long term.

A formal process is in place to evaluate existing and potential suppliers and monitor supplier performance. This process includes supplier visits and supplier audits to ensure adherence to our code of business principles.

Further information on our local supply chain development and ethical sourcing can be found in our sustainability overview report on our website as well as in our Social and Ethics Committee report.

Governments, legislators and regulators

Government requires businesses to participate in growing the economy, to create jobs and to comply with all relevant and material laws. We engage with government through business and industry associations such as Business Leadership South Africa, as well as the Retail Association and the National Clothing Retail Federation of South Africa. We also provide verbal and written submissions on proposed legislative changes and attend meetings at Parliament.

Non-profit organisations and communities

We have a responsibility to contribute to the societies in which we operate, which we fulfil through the creation of shared value from our business activities, through the education and empowerment of communities and through disaster relief as required. Further information on our CSI projects can be found in our sustainability overview report.

Key input

  • Corporate social investment spend

NATURAL RESOURCES

The resources we use for the production of goods such as water, cotton, gold, silver and diamonds, are monitored and managed to optimise our procurement practices and integrate sustainability enablers across the Group.

Read more in the sustainability overview report.

CASE STUDY

TFG SEW GOOD

In 2015 TFG launched the Sew Good Project and over the past three years it has grown significantly while maintaining its impact. This is the story of how a simple blanket changed the lives of more than 80 000 people in different ways.

Core business and existing resources

The TFG Prestige factories in Maitland and Caledon create quality products for some of the TFG brands and were identified as a platform to launch Sew Good.

“At TFG, Shared Value is not just a buzzword, it’s part of our business strategy. Investing in local production was something the business was already doing and so we considered ways to combine this business function to positively impact local communities,” says Mymoena Mooradd, CSI manager at TFG.

Creating opportunity through skills transfer

Every year, 120 women are trained to make the blankets and in 2018 the range extended to include baby blankets, beanies and hooded tops for children from the off-cut fabric to decrease waste. To date more than 350 women have been trained to create these items, providing them with valuable skills.

Sew Good warms up the community

All the items in the Sew Good range are donated to those in need across the country. Mooradd and her team have partnered with Gift of the Givers who assist with distribution to those most in need, which included the victims of the Knysna fire and the Gauteng storms in 2017. To date, over 80 000 blankets have been distributed and this year the project reaches its first milestone. “This year we’ll officially make and distribute our 100 000th blanket and we’re proud of the work our employees are doing,” concludes Mooradd.

TFG’s Sew Good Project forms part of its overall CSI strategy, #Educate2Empower, by upskilling Prestige employees in order to educate and empower them.

CASE STUDY

WATER

The Western Cape province in South Africa, and in particular the City of Cape Town where TFG’s head office campus is located, is currently experiencing one of the worst droughts since 1933. Every corporate organisation and every citizen has a responsibility to conserve and protect our scarce water resource to ensure sustainability of our water resources. During the past year, TFG invested in excess of R5 million in the following initiatives to save water:

  • Waterwise plants were planted at our head office campus, factories and distribution centres.
  • Boreholes, purification plants, wellpoints and back-up water tanks have been installed, while remaining ASIB (The Automatic Sprinkler Inspection Bureau) compliant.
  • Hand sanitizers were placed in bathrooms to replace soap and the majority of bathroom tap water were turned off to limit handbasin usage.
  • Water collection containers were placed in our canteens for waste water.
  • On-campus car wash services were discontinued.
  • Posters and other communication drives remind employees to save water and provide Day Zero updates and tips for water saving.

Our continued efforts resulted in a saving in the Group’s water consumption in excess of 25% compared to the prior financial year.

Where possible, we will look to implement the above initiatives countrywide in South Africa across our various locations as part of our philosophy to operate sustainably.