Edcon Retail Division Within South Africa Assessment Answer

pages Pages: 4word Words: 890

Question :

Scope of the assignment on Edcon Retail Division

In need assistance with a Strategy – Industry Foresight assignment focusing on the future of Edcon Retail Division based in South Africa taking into consideration the company’s current financial challenges that started about five years ago. The assignment requires a strategy view in terms of the future of Edcon going forward in the next 5 to 10 years. It is required therefore to determine the 5 possible scenarios that Edcon can take to recover from its financial battles, mainly to stay competitive and sustain its financial health in this forever changing world. To scope and develop the possible scenarios it is important to first identify and rank the key drivers and critical uncertainties that have the most impact on Edcon retail business and retail industry as a whole internationally.


  1. Identify and rank key drivers and critical uncertainties
  2. Scope and develop five set of scenarios suitable for management’s approach to the future

Word count:

The total number of pages is 4 (1200 words). The split is 300 words to Identify and rank key drivers and critical uncertainties and 900 words to scope and develop meaningful set of scenarios. Font

Report requirements:

Text font: Arial

Font size: 12 pt

Line spacing: 1.5

Referencing: APA 6th style

Current situation

Please do a bit of research to understand the financial challenges that Edcon is facing. It is also important to understand how they got themselves into trouble in the first place. This exercise will assist in getting a better view of their future direction as per assignment scope. 

Background/ History

Edcon is a Southern Africa’s largest non-food retailer and has been in business for over 90 years. It operates in stores across South Africa, Namibia, Lesotho, Swaziland, Mozambique, Ghana, Zimbabwe and Zambia. The company operate under for principal brands namely Edgars, Jet, CNA and thank U. Edgars sells quality value fashion, home and beauty merchandise; and is targeted at middle to upper income customers. Jets also sells quality value fashion, home and beauty merchandise; but it is targeted at lower to middle income customers. CNA is a stationery store. Thank U is a reward programme which has about 14 million customers on its database and it allows customers to earn points for their purchases in store and with thank U partners.

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Answer :

Edcon Retail Division


Through this assignment, the purpose is to discuss an insight of the Edcon Retail division within South Africa and how there has been a stiff competition which is faced from the local and international retail industry. The company has to overcome the challenge of the key drivers and the outcomes, that can be helpful for the company to sustain itself. Due to the extensive business operation, the company has to sail and handle the external forces and internal forces (Baboolal-Frank, 2019).  Edcon Limited is known as the retail company established in Johannesburg, South Africa. The company subsidiaries include the vast stores and department branches of 203(Ezeonwuka, 2019).


Edcon is known as Southern Africa’s biggest non-food retailer and has survived since the 90 years. The company has expanded and opened its stores across South Africa, Namibia, and includes Lesotho, Swaziland along the Mozambique, Ghana and the wide places in the Zimbabwe and Zambia. So far, the company does the business by the names of the principal brands called the Edgars, Jet, CNA along the thank U (Ezeonwuka, 2019). Edgars does extensive research and caters with wide products such as the value fashion, includes the home and beauty merchandise; along with attributing to the targeted middle to upper-income customers. The company division Jets sells only the quality value fashion along with the wide home and beauty merchandise, and so far it has targeted the middle-income customers. The CNA is focused on the stationery store. Similarly, the Thank U is also one of the reward programs that serves and caters to 14 million customers within the database and so far the customers earn points through the systematic purchases within the stores.

Current Situation

Recently in 2016, the company faced the turbulence of the private equity takeover. The company lost the charm from the succession of CEOs, and they have also lost the significance market due to the changes revamp and also caused the oversupply of the formed leased floor space. It is due to the increase in cheaper imported clothing along with managing the increase in online shopping by customers. During 2016, the company has established with the recorded net debt of R24.7 billion and it was then overtaken by the debtors to avoid any financial collapse. It further resulted in the closure of 253 stores which initiated in 2018 and subsequently a recovery plan. It was then in 2017 and linked to net debt to R4.2 billion(Goga, 2019). Due to the July 2018, Edcon announced which are linked to the Boardman's homeware along with the La Senza stores. In December 2018, after the Edcon and its subsidiaries that would be related to the brink of financial collapse and linked to the mall owners and it would be related to the rental payments. Edcon is defined to the state and related to eliminating company debt and resulted in the closure of its stores. There is also a possibility of the 44,000 direct and additional 100,000 that has resulted in the indirect job losses and it is linked to the stop trading by the SAFTU to criticize President Ramaposa's having the economic policies.


Source (Goga, 2019)

Key drivers 

The company believes in having a strong strategy that should be related to the key levers: that is the comparable store growth having the better new space growth along with an orientation towards the margin expansion and credit (Ezeonwuka, 2019).

The company aims to have the revenue by growing through the comparable store sales and also increasing the new space growth, and being able to relate with the additional stores in South Africa along with the African countries.

The company has edged to receive benefits through the increased volumes and consistently improving the margin on sales. 

The company can revamp the stores, needs to improve the products and assortments, can include the loyalty programs and also form an existing formal footprint. It can also expand in the rest of Africa along with introducing the new formats.

The company can restructure through the local borrowing such as by loaning at a low interest and also through the borrowing such as availing financing facilities, includes the bank loans, overdrafts along with the facilities and finance leases, credit that covers the goods and services along with the borrowing limits done through the mortgage loans, unsecured loans, availing the discounting factors.

The commonly can research and expand in the other countries and expands it, divisions, as it is one of the leading South African retail divisions. The company has limited competition from the domestic and international players who are looking to expand in the country.

The company has to focus on managing the bureaucracies setups and also inclined to restructure, through the support system of the government (Kuhn, 2018). The market is challenging to sustain, but the South African regulatory and the legislative setups are equally lucrative and supportive.

Critical uncertainties

The company has to face the turbulent economic turbulence and the unstable political conditions in the South Africa country.

There are stiff competition and the barriers, difficult to overcome and it is important to have the retail price management system (Nattrass, 2019).

The company has to overcome the problem of sourcing, procurement and also having regular input price management. Due to the fluctuations, inflations or other unstable country issues, the company should not face the volatile and turbulent issues. 

The company also has to do a store optimization and have to timely sustain its inflows and the outflows. Each of the stores has to be optimized to the best of the available resources. It should be in line with consumer preferences and needs. 

The company has to ensure a group support efficiencies and timely manage the inefficiencies and productive issues. Any disadvantage of the imbalance and turbulence can cause either shortage or overproduction, causing a lack of managing the resources.

The company has to realize the opportunities and timely convert the potential counties into certainties. It also has to research the risk factors such as financial, political, legal and other social, political factors (Trbovich, 2019).

The uncertainty is the firm's funding for Companies to collaborate with the  Commercial Banks. The funding can be done through Bank Loans that can result in the tax-efficient benefits through the purpose of trade and include income production. The interest paid on the loan is tax-deductible, subject to the transfer pricing and thin capitalization provisions. The problems are repayments and the interest penalization.


In the end, the company should focus on restructuring its financial resources, store and also the veracity of the environment. The company has to overcome the challenge of the key drivers and the outcomes, and also has to manage through the revamping the financial or the infrastructure, that can help the company to sustain itself. Due to the extensive business operation, the company has to sail and handle the external forces and internal forces. The company should focus on how to receive benefits and meet the challenges by having a sustainable environment through improving the margin on sales.