Edcon cutting back on clothing imports
South Africa’s largest clothing retailer, Edcon, plans to cut back on buying clothing from Bangladesh and China.
Saved by a bailout deal with creditors, Edcon has halved its employee numbers over the past 20 years, and its new move is part of a revival plan by CEO Bernie Brookes, the Australian former head of Myer, who plans a more local approach.
“We still buy more than a third of our clothes from China and India, but want to replace that with local vendors as it doesn’t involve long lead times or rand fluctuations,” says Brookes. “If we can move a few per cent each year to locals, that would be a plus.”
Edcon plans to buy 32 per cent of its winter stocks and 38 per cent of its summer stock from suppliers in the sub-Saharan African region – a number that will grow as Edcon replaces its agents. In the process it expects to ditch 25 of its 37 international brands.
Edcon’s revival strategy follows its plan to convert R20 billion (US$1.4 billion) of its R26.7 billion in debt into equity, easing its debt load and giving it a chance to claw back market share lost to rivals since it was bought out by private equity group Bain Capital in 2007. New shareholders include Barclays Capital, FirstRand, Franklin Templeton and the Harvard Pension Fund.
Chance to exit
Last week, Edcon revealed plans to add more than 2000 staff members, boosting its 30,000-person workforce by 7 per cent, while cutting prices in a bid to be more competitive.
The company, which has 1537 stores, has also pledged to work closer with its suppliers.
Its move to support local suppliers has been welcomed by the Southern African Clothing and Textile Workers Union (SACTWU), saying its recent debt problems had hurt domestic suppliers badly.
“There’s no doubt any challenge experienced by Edcon is felt by workers,” says SACTWU senior researcher Simon Eppel. “The year has been tumultuous for Edcon’s local suppliers. A lot of workers have been retrenched or put on short time.”
The union has been collaborating with Edcon to identify suitable local manufacturers.
In 1996, South Africa’s textile industry employed 220,800 people, which fell to less than 100,000 by the time of the global financial crisis in 2008. The government says that since 1994, the amount of textile imports has shot up more than tenfold, with the trade deficit for the industry ballooning from R3.9 billion to R36.5 billion by last year.
Launched more than 80 years ago, Edcon is the largest non-food retailer in South Africa with nine different store formats.