The success of the clothing industry of the Foschini Group, SA…
Talk about a tipping point. Between 2014 and 2018, clothing retailer and manufacturer The Foschini Group (TFG) produced 5 million garments a year in South Africa. In 2018, this number started to increase and, in 2021, the group produced 15.4 million garments locally.
The plan is to double that by 2026.
To achieve this, the company, which owns brands such as Foschini, Sportscene, The Fix, Exact, Markham and Phase Eight in the UK, will deploy part of this year’s R2.1 billion capital budget into the development of 10 other manufacturing units. , with 10 more planned for each of the next two years.
By bringing home production from countries like China, Bangladesh and Myanmar – or any of the world’s sweatshops – TFG will see employment at its own facilities and non-owned strategic partners grow from 5,200 in 2021 to 11,200 by March 2025.
Investing in and developing this “rapid response” local manufacturing capability has also allowed the company to reap financial benefits.
For the year to March 2022, total revenue increased by 29.7% to R46.2 billion and gross margin increased to 48.5%. This was largely due to the increasingly efficient, localized and fast-response supply chain supporting TFG Africa. Locally and regionally sourced products now account for 72% of apparel purchases in TFG Africa on an increasingly rapid response basis, resulting in increased inventory turnover and improved stock novelty. Improved margins supported overall profit, which rose 442% to R3.3 billion.
These results were supported by impressive market share gains across all territories, with the group achieving 27% growth in menswear and womenswear in South Africa against an average growth for the segment of 5.9%, 57.3% compared to 12.7% in the UK and 24% for TFG Australia compared to the market average of 12.2% growth.
“By producing locally, using its “Rapid Response Methodology”, TFG can react to fads and weaknesses in the fashion industry, increasing supply of a popular garment and reducing production of a less popular item in a matter of seconds. days,” says Chris Gilmour, a retail analyst who has tracked the group for two decades. “It attracts customers and reduces markdowns and waste.”
The story of the clothing retailer and its acquisition of Prestige Clothing is a remarkable achievement that speaks volumes about the vision of TFG’s leadership – past and present, and the power of a few enthusiasts to turn around an industry in decline.
“The garment industry in South Africa was dying and nobody was doing anything – not the retailers, not the manufacturers, not the government,” says Graham Choice, who founded Prestige in 1989 and is now chief executive of TFG Merchandise Supply Chain.
“It was around 2004 and there was this nerdy auto industry academic talking about supply chains and ‘consolidation’ and how we could cut our production time by 180 days.” That man was Justin Barnes, chairman of B&M Analysts and executive director of the Durban-based Toyota Wessels Institute for Manufacturing Studies.
The pair can be said to be directly responsible for revitalizing SA’s garment industry. “I chose speed as my weapon against China – it became my main skill,” Choice recalls.
But they couldn’t have done it without TFG, which was already a longtime customer when in 2014 then-CEO Doug Murray made an offer to buy Prestige.
Choice accepted. But it took trial, error and effort over the next four years for retail and manufacturing companies to integrate and align, and everyone to sing the same hymn sheet. But when they did, the results were electric.
“Exact was the first brand to get involved with us. Instead of ordering in February, they were able to order in July for September and quickly respond to customer demand – that summer was their best ever,” says Choice.
Since 2018, TFG has continuously increased its local production, while improving its processes and reducing its production times – first from 56 days to 28, then from 28 to 14 days – from order to delivery. . At the same time, he was partnering with small manufacturers, introducing them to the concept of lean manufacturing, bringing them into TFG’s supply chain and reviving local capacity.
Then in 2020, in the depths of the Covid-induced recession, TFG management gave Choice the green light and budget to significantly expand TFG’s manufacturing capacity.
At that time, SA’s last garment manufacturing industry was falling off a cliff. In April 2021, TFG acquired the ex-Seardel companies of Monviso, Bibette and Bonwit to create Prestige (Epping). This business unit produces TFG’s formal wear for men and women. Additionally, Prestige hired 200 employees from the House of Monatic and assimilated them into Epping’s unit. “Otherwise, this highly skilled capability would have been lost to the SA garment industry,” he says.
In the same year, Prestige (Durban) was launched after TFG acquired clothing company TCI Mobeni from the SA Clothing and Textile Workers’ Union. Together with the assets newly acquired by TFG from Playtex, this factory is the manufacturing center for intimate apparel and active sportswear for the group.
These hubs are in addition to the hubs established in Caledon and Maitland. But it is undoubtedly the fifth hub of the group which is the most interesting. This is the Prestige factory in Johannesburg, which operates from a Bidvest-owned factory in Hillbrow. “We have been collaborating with St Vincent’s School for the Deaf since 2019. The school has talented learners, but after they graduate or leave school, they cannot find employment,” Choice says.
TFG worked with the Fiber Processing and Manufacturing Seta to provide the necessary training, which enabled 125 of these young people to make t-shirts for Exact.
The beauty of the apparel industry is that it can employ people with limited skills, which means its factories don’t need to be located in high-tech hubs.
“The factories we plan will be built in areas with high unemployment; others will be deeply rural and at least two will be located specifically near shelters for victims of domestic violence.
Of course, a production ramp-up of this magnitude requires skill. With this in mind, Prestige has set up an apprenticeship program to develop manufacturing and production skills.
It seems that by develop local manufacturing as a core competencyTFG has a built-in strategic advantage that will be hard for local competitors to beat.
The beauty is that, in this case, everyone is a winner. DM168