The high-end retail business is cash intensive. The unit price of stock is expensive, and import duties range from 25% to 40%. Cash must be paid on delivery, there are cartage fees, and only once all of this has been covered will the customer actually see the product.
When Armani Jamrozinsky launched V+King, a men’s multi-brand high-end retail store in Menlyn Park in 2008, he had a clear goal in mind: He wanted to focus on bringing exceptional brands to a niche local market.
As a start-up with a tight budget, marketing was not an option, and so he focused on getting feet through his door and customers experiencing his products instead.
“I used what marketing budget I had to offer discounts. I wanted my clientele to experience our range for themselves, and change their buying behaviour as a result.”
By 2010 Jamrozinsky was able to launch a second store in the upmarket Hyde Park Corner in Johannesburg. “The cash flow of the first store funded the second, but with Hyde Park I was looking to bring in fewer, more exclusive brands. I manage my stock well — we sell out within a three month cycle, which means we always have new items coming in and cash flow is healthy.”
However, wanting to upgrade the store and purchase additional, higher-end premium brands, Jamrozinsky began looking for a funding vehicle that would support the growth he had in mind.
“I came across a product by Merchant Capital. They evaluated the last 12 months of my business’s transactions, used the average to forecast similar future turnover and gave me a cash advance based on this figure. It was fast and simple – the money was in my account within days. They essentially discount a percentage of future card revenue and advance the cash today, but the full 100% is repaid with no fixed repayment term. These repayments are made through a small percentage on each credit card transaction. The more I sell, the faster the loan is repaid, and in quiet seasons, I’m not bound by fixed repayment terms.”
The product has allowed Jamrozinsky to increase his brand line, including premium denim brands previously unavailable in South Africa.
- Player: Armani Jamrozinsky
- Company: V+King
- Est: 2008
- Connect: www.vking.co.za • +27 (0)11 325 6301
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