Speaking Directly: South African store a `contrarian’ thinker

The following column, which appears each issue, looks at new and emerging trends in direct marketing. Alternating columnists are Barbara Canning Brown, a leading figure in the Canadian direct marketing industry, and David Foley, a specialist in database marketing programs.In a...

The following column, which appears each issue, looks at new and emerging trends in direct marketing. Alternating columnists are Barbara Canning Brown, a leading figure in the Canadian direct marketing industry, and David Foley, a specialist in database marketing programs.

In a world of ‘rewards’ programs which are specifically tied to purchases with the sponsor, Edgars Club is a fine example of ‘contrarian’ thinking.

Edgars Club members pay a modest monthly membership fee, and to participate in the Club’s main event – a monthly prize draw of about $400,000 in prize money – no purchases are required.

The top monthly prize is $100,000, with other prizes ranging in value from $400 to $20,000.

In addition, 50 Edgars Club members have their account balance paid off in full, or receive a $200 gift voucher (whichever is greater.)

From its launch in 1987, Edgars Club now boasts 1.3 million active members who pay over $40 million in membership fees each year.

These fees support the production and distribution of a glossy Club magazine (published monthly), the administrative staff, facilities and operating expenses of the Club, other exclusive member benefits and profit.

Membership fees are not used to fund the monthly prize draws; those monies are provided by the parent company, Edgars Stores, and the fact that this retailer pays out over $5 million a year in prize money suggests that the Club works for them too.

Founded in 1937, Edgars is the largest clothing retailer in South Africa with 167 company-owned stores across the country.

In addition to clothing, the company sells footwear, leather goods, jewellery and other soft goods (no appliances or electronics.)

A publicly-traded company, Edgars has reported increases in sales, and retained earnings, dividend and share price in each of the last four fiscal years.

For the year ended March 31, 1994, sales were $1.47 billion and after-tax profit was $91 million.

To join Edgars Club, customers must have an Edgars Stores credit card and opt to pay the monthly membership fee.

According to Helen Stewart, club manager, 80% of new credit card customers join Edgars Club.

Upon joining, Club members receive discount coupons valued at $48 or more and qualify to receive special prices on the purchase of certain merchandise featured in the Club magazine.

According to Stewart, Edgars Club ‘has built significant loyalty with customers through its added value programs in the form of Club benefits and exclusive discount offers at Edgars.’

Just asking: Why would discount staple and file folder retailer Business Depot mail its ‘Winter/ Spring’ catalogue in the last week of February?

David Foley is a marketing consultant and an instructor in database marketing at York University in Toronto. He may be reached at (905) 940-8784; fax (905) 940-4785.