OPINION: Putting more home-grown products on retailer shelves
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JOHANNESBURG - Last week, together with the Consumer Goods Council of SA, the Manufacturing Circle and the Department of Trade and Industry (dti), we convened a retailer consultative workshop to look at ways in which our major stores can increase the levels of locally grown, produced and manufactured goods on their shelves.
Chatham House rules preclude me from divulging too much, and the session was really an exploratory discussion on how to move forward, but it was very informative and we saw that the commitment to increasing levels of localisation - that is more shelf space for locally made products - is definitely there.
Our next step will be to engage the retailers in bi-lateral one-on-one sessions where their confidentiality can be protected and we can drill down on ways in which they can be assisted to overcome whatever challenges or impediments they face in order for them to implement localisation for different categories of products with a focus on import replacement and inclusivity programmes.
What everyone understood is that without supporting local producers, the potential for job losses increases, and impoverished consumers don't make good customers. Ultimately, the imperative to buy from local farmers, textile factories, etc, is in retailers’ own self-interest.
The retail value chain is complex and extensive and represents hundreds of thousands of jobs.
The Manufacturing Circle’s Philippa Rodseth quoted in her presentation the case of a packaging company that's seen a reduction in the number of aerosol deodorant orders as consumers tighten their belts and switch to cheaper roll-on antiperspirants. This change in buying behaviour has the potential to lead to retrenchments but retail buyers must respond to customer-driven demand and make appropriate choices.
It is therefore imperative that Proudly SA, as the national Buy Local advocacy campaign, work on a stakeholder-led education campaign to inform consumers of the wider economic benefits of buying locally produced goods and services.
The discussion turned to partnerships between retailers and manufacturers to find mutually agreeable prices, terms and conditions, and between retailers and the government, represented by the dti, which is actively seeking partnerships with reciprocal benefits.
The government could, as an example, introduce or advocate for policy positions that would bring down retailers’ overall set-up and operational costs, allowing them to take up more local stock, even where price parity between local and imported goods does not exist.
Input costs were, of course, an issue for all the retailers that were represented at the workshop. The president himself at a recent event spoke about South Africa's former status as the country with the lowest electricity costs, but we now have the dubious status as the most expensive. These input costs, where refrigeration units for example have to be imported, are over and above price considerations of any single product. Central distribution points also make logistics and transport expensive.
We all agreed to identify the top 10 or so selling items that retailers are importing and identify those which we can relatively easily replace with a local alternative, at a price that suits the retailer and ultimately the consumer. In order to drive inclusivity and allow new entrants into this space, we need to make room for new suppliers.
Bayete and Jabu Khanyile asked in their song Thata Umkhaya Lo, and so we are asking retailers the same, to take our homegrown products and put more of them on their shelves.
Eustace Mashimbye is the chief executive of Proudly South African.