JOHANNESBURG - Last week's column spoke about the clothing and textile sector and what some of our big retail chains are doing to capacitate local suppliers in their quest for increased local content. We also pointed out that not every small business dreams of being on the shelves or rails of our so-called big five stores, but many do.
As Proudly South African we recognise the importance for our members in the fast moving consumer goods (FMCG) sector of getting into a high visibility space, and gaining a higher market penetration with the big players, such as Massmart, whose Supplier Development Programme is a Proudly South African one.
However, assuming access to market is granted to a small supplier by one of our large food retail chains, there still remain many hoops to jump through and many impediments to the successful relationship between buyer and supplier.
What will the terms and conditions be like for supply chain, delivery, and more importantly for payment? What are the stock quantities that are required and over what period of time? One thing we learned from our Clothing and Textile Forum earlier this month is that South Africa has one of the most anomalous consumer buying patterns with a massive spike between November and January, more than any other country. Christmas gift buying, our thirteenth cheques and bonuses, combined with a long summer break and a January school year start mean suppliers have to commit to vast quantities of stock in a very concentrated period and by comparison may face a lean nine months outside of the peak buying time.
Who carries the risk in the event that you are selling perishable goods? The predominance of Distribution Centres has brought the phrase "reverse logistics" into the supply chain lexicon, as returning stock and crediting suppliers becomes a more complex process than a single store identifying their supplier, asking them to come and fetch surplus stock and doing a reconnaissance of their accounts on the spot. So who needs to do what to increase the uptake by our FMCG chains of local produce or manufactured consumer goods?
Many supermarket chains are already expanding their local content, but at the same time others are trying to reduce the number of product ranges and suppliers that they carry, and that takes them back to sourcing a number of items from one large multinational. It is hard to avoid the multinationals who also have massive advertising budgets, driving shoppers in their droves into the stores to buy their wash whiter than white or brush whiter than white washing powders and toothpastes.
Differentiator
What are the supermarket chains looking for? If your product doesn’t have a differentiator from competitors, forget it. What, in marketing speak, is your USP or unique selling point? One of our members, Bliss Chemicals, which manufactures Maq detergents for both dishes and clothes, had a long journey to the shelves of our mainstream stores. They distributed initially though the wholesalers and stood out on price point, and only when they had a firm customer base did they move into retail.
Another of our members, Serenitii Luxury Body Care was recently picked up by one of our major FMCG retailers, and her products, made from some of Africa’s most exotic natural ingredients, can now be found in Pick * Pay stores nationwide. Whilst she acknowledges the advice her first buyer gave her, it meant having to repackage and re-label her stock before they would conclude a contract. This was a costly exercise in moving from pump bottles to tubes and reprinting her labels, but she felt it was worthwhile for the exposure she is getting on shelves. Whilst some orders go to the company’s regional distribution centres not all provinces have, so there is an additional courier charge for deliveries to individual stores in KZN that she has to bear.
To answer the question "Who should do what to increase uptake in local goods in our major retailers", the answer then would seem to be that our retailers need to be on the look-out for more local, small suppliers that have the capacity to grow. At the same time, small suppliers need to offer something unique, and to be flexible, even if it means deferring to the retailer’s experience in what your product should look like to truly be a fast-moving consumer item.
We have seen what buyers are doing to assist the ailing clothing and textile sector, investing in their own suppliers, and while many of our supermarkets are doing the same in the FMCG sector, we know there are a lot of SMEs’ products out there that deserve to be seen on our shelves.
What this economy needs to create a significant volume of new jobs is many thriving SMMEs, which can only happen with Winds of Change - a Jimmy Dludlu song title from around a decade ago. They need to blow for the SMMEs and bring new and unique products to our shelves.
Eustace Mashimbye is chief executive of Proudly South African.
The views expressed here are not necessarily those of Independent Media.
-BUSINESS REPORT