We Are EGG Part 2: Iteration

We Are EGG is an untested combination of known factors, in a changing market with few guarantees. Throw in new business growing pains and a retail name too young to trade on brand love or recognition yet, and We Are EGG is as much of an experiment as the next new thing. [Missed part 1? Catch up below.]

The Setup: Cape Town vs Johannesburg

The Cape Town EGG store's brand mix is about 82% local and SME, while Johannesburg's mix sits at roughly 75%. Fashion leads turnover at both stores, and both stores bring discovery, convenience and single order shipping relief to brands and consumers alike. Along with EGG's branding, that's about everything the stores have in common.

"There's just more spending power in Johannesburg," Simon explains, "So we are able to put brands in there that I wouldn't think of putting into the Cavendish Cape Town store." Rich Mnisi is one of them, included as a direct response to the Johannesburg market's size and demographic differences. The brand has a distinct area of its own, marked by signature bright greens and pinks, abstract reflective surfaces, and a previous collection's snakeskin print brought to life as an area rug.

It's a merchandising set up that would look out of place in what Paul calls the 'lilywhite' Cape Town location. "We're changing the model slightly, in that we're offerings bigger and slightly more established brands a store-in-store concept, almost like a Selfridges, where we allow them to shop fit their own space, supply their own staff and go through their own till, which is a little bit different to what we have done in the original store, and that model still exists for the majority of people, but like a Yawa, you know, which has got OFF-WHITE, Palm Angels, Heron Preston, all of those kind of things; them, Rich Mnisi... Diane Paris is opening a store in our store. So there's a handful of what I'd say are probably the more premium brands that we believe are capable that are doing that."

The newer store has also benefitted from the Cape Town store's missteps and resulting lessons. "The learning that we've had when we built Cavendish in Cape Town is we were quite prescriptive, and the store is very white and generic... we've done an about turn on that. I feel that brands need their own identity, and we're not going to be able to do justice to them by giving them just a sign above their space. So we're actually letting people create their own spaces within our space; it's one of the major changes."

What Cape Town proved or disproved was applied or corrected in Johannesburg, which will still have its own tests to run, like how well Yawa's premium streetwear and Hamethop's luxury handbags will do in a more accessible setting, one that at first seems better suited to the lower-priced local favourites they'll share space with, like Me&B or Rosey & Vittori. While Paul's watched most local retail innovation take place in Cape Town in previous years, he believes the current market reality makes room for that to change. "Joburg is actually getting the lion's share in this, because we believe that the market wants it, needs it and can support it."

Food, a very different business from fashion & beauty, is a wildcard. "We are not restaurant or food operators," Paul says of the conclusion they came to in Cape Town after its individual food trader pods couldn't justify the model's intensive needs with revenue. "It's actually quite strenuous to try and manage that process, so we've changed the model in that we've partnered with really good restaurant operators. I mean, these guys really know what they're doing." The Johannesburg store's food partner will be Mama Samba, a 700 sqm space designed by award-winning interior architect Tristan du Plessis and owned & operated by the team behind Proud Mary as a 7-year lease.

Putting brick & mortar first in 2022

EGG puts its e-commerce platform firmly in second place. There are cons to that, like the geographically limited reach of any one physical store, and, in EGG's case, the mistakes we tend to make on whatever isn't our top priority. 90% of EGG's turnover came from the Cavendish store in 2021, as a troubled e-commerce launch hampered its omni-channel plans. "We've seen great growth but obviously off a low base," Paul said of e-comm's remaining 10%, gained in the last few months of 2021 when the platform became fully operational. By September 2022, he'd seen a marginal shift of approximately 5% more in total turnover coming from e-commerce.

"Although I believe in the trajectory of e-commerce, and I think it's had its much needed trajectory because of COVID, I believe in basic human nature, that the minutes it's safe to do so people will continue to come," Paul said, referring to his and Arie's choice to focus on the experiential physical store as the primary channel. "They want to touch, feel and engage, especially in an environment like EGG, where we've got all these other activations and experiences for people... I believe the majority of our sales will always come through brick & mortar, but that's not to say that I don't believe in e-commerce, and we certainly are expecting big things from our e-commerce site."

The challenges

No one is spared market-wide problems, and for EGG, they've come in waves in their first 2 years: A return to lockdown after their first month of trade, shopping centre violence that meant fewer people wanted to spend time in a mall (even in unaffected Cape town, where EGG's foot traffic dropped by 50% on sentiment), load shedding disruptions upending consumer's daily schedules and affecting their regular shopping hours, and the global supply chain's glacial recovery (now further impeded by transnet's troubles).

"Anytime that one has challenging trading conditions, this can adversely affect particularly small SMEs," Paul says of how the past few years have treated the brands EGG stocks. "If you're going into a lockdown and you have a challenging month, and one of our partners does not get a sufficient payout from EGG because they didn't do sufficient sales due to external things, they cannot then in turn supply me with new, updated stock, and it's almost a vicious cycle. So one of the things is, although I'm exceptionally proud of the fact that we're this home of local and SME, it created certainly more challenges than I was anticipating, due to subdued trading conditions."

If you can use solid, adaptable strategy and any resources at your disposal to survive all that, your prize is contending with combative consumer mindsets, and working to challenge what people think clothes should cost, and whose clothes are 'good' vs 'bad'. "When I was at YDE, I was very, very stringent," says Simon. "We were the first in the country, quite clearly before its time, where one of the criteria was that it had to be locally manufactured merchandise, and I challenged people to continue to support local and the reason is a lot of people say you know, the local merchandise is expensive."

Paul shares a story about his 15-year-old daughter, who told him her friends thought EGG's prices were expensive. "I looked at her, and I follow these kids on social media, and in my opinion — I suppose I can't deny saying it because I'm saying it to you; you're going to write it down — but it's a lot of greenwashing, because these kids are talking about save the world, support local... I picked them up from a party the other night and I questioned them on where they're buying their clothes, it's Cotton On and H&M. You don't get faster fashion than that. But it's a price point thing, and what I'm trying to explain is that our local designers can't even buy their fabric for what those retailers are retailing. So you know, I really hope that this trend towards 'buy local' is not just lip service, and that people continue to support it because I believe that the country, the world in fact, desperately needs us."

The future

When I asked Paul where else we might expect EGGs to pop up, I was talking about the rest of the continent, but he was thinking further away. "It's been discussed, I think it's early days... I have and have always had this dream of actually opening an EGG on the high street in London... and the reason I say this is that pre-COVID, I was very fortunate that I got to travel extensively. And if I stand in the EGG store in Cape Town now and I look, even with over 80% local product, this store could stand on any high street in the world."

To go global, EGG has to work at home first, but he's hopeful. "I think we've still got this hangover in South Africa about imported or international product is better. I don't believe that, I don't agree with it. I would love the opportunity to take exactly what we have here and open it on a high street but that is a number of years away. We certainly need to do some fixes locally here, expand our local footprint here and then consider that, but in five years time, that may be an option."

Also in the works are some initiatives that will allow EGG to extend its incubation role beyond the shop floor and support SMEs in other ways. "One of the things that is on my list to try and do and achieve is come up with some kind of funding model for SMEs, and we've actually started working on the document," Paul shares. "We haven't taken it to market yet to raise the money, but that would certainly be one of the things on my agenda to try and do for these brands. Because at the end of the day, it will help us if we can."

Government bodies have expressed an interest in helping them do it. "They're bringing a consortium to come and visit EGG, and what I'm saying to these guys is, there's lots of funding available for fashion if you want to go and open a factory; they'll give you money to go buy the machinery, but what happens if you're a designer? You don't own the factory, you outsource production, but you still need the working capital. And that's where I'm feeling it's falling short; what they're doing is they're funding the manufacture, but not taking it to the next end."

Recommended reading

And that's it for EGG. Worth the wait, right? Thanks for reading, and as always, share your thoughts and questions below. I'll be at SA Fashion Week from this Thursday and at the trade show on Monday; if you're around please do say hello.