After years of structural issues, Edgars’ new strategy centres on smaller stores, improved margins and reduced credit exposure.
Edgars has cut more than 100 000m² from its national footprint in a bid to restore profitability, a move chief executive Norman Drieselmann says is reshaping the retailer after years of inherited structural problems.
Shift towards sustainable profitability
The brand has reduced retail space from about 465 000m² to 360 000m², saving more than R150 million annually in rent while reporting higher trading densities in major malls.
“Sales are great, but if they are unprofitable then it is just ego,” Drieselmann said.
“Every rand we ring up has to deliver bottom line profit, otherwise the business is not sustainable.”
Some stores have seen lower top line sales after shrinking, but Drieselmann insists this is the unavoidable cost of a turnaround that prioritises margin over volume.
At flagship malls, halved floor space produced a five percent sales drop but a R6 million profit improvement thanks to lower operating costs. He argues the business had become too large and clumsy un‑ der previous ownership, trading in spaces that no longer matched South African consumers.
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Lessons from past expansion missteps
Edgars, once part of the Edcon group, went through two problematic eras: first, an attempt to reposition as a high-end international fashion destination; second, an aggressive expansion strategy that ballooned stores far beyond what sales densities could support.
“You cannot have a 10 000m² boutique. It is not commercially viable anywhere in the world,” he said.
The new model trims noncore categories rather than backfilling space with unrelated products.
“As soon as you move into non-core areas, you risk losing top line and your profit wedge moves in the wrong direction,” Drieselmann said.
Focus on core categories and beauty growth
Smaller, efficient stores are aligned to a clearer assortment.
Beauty has become a central pillar, contributing close to a third of total sales.
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Customers see it as an accessible way to improve how they look and feel, and Edgars has grown the category every year since current owners Retailability took over.
“We are building an experience that locks in our loyal base and gives us a point of difference to pharmacy chains,” he said.
The retailer has also transformed into a cash business. Credit now represents only about 20% of turnover, strengthening the balance sheet and improving working capital cycles.
Looking ahead, Drieselmann expects a subdued festive.
“Hope is not a strategy,” he said. “The economy has not grown much, disposable income is under pressure and I expect a competitive environment with significant discounting. Sales for November and December will be flat on last year.”
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