Disruptions in manufacturing – An opportunity to innovate and create jobs

In 2023, Statistics South Africa reported that South Africa's clothing and textiles industry contributed R227 billion to the country's gross domestic product (GDP) and was growing at a rate of 5.6%.  With these figures in mind, FNB hosted a seminar titled "Mission Unstoppable: Uniting the KZN Textile Industry for Growth" in Durban recently.

The event brought together industry giants and entrepreneurs to foster collaboration and innovation in the sector. The seminar featured two panel discussions, with the first focusing on retailers' expectations from local manufacturers and suppliers.

Also, manufacturers shared key challenges, including sourcing materials, improving production efficiency, and maintaining quality standards.

The CEO of Retailability, largest private fashion retailer and fastest growing in Southern Africa, Norman Drieselmann, spoke about the challenges the industry has faced, from the impact of COVID-19 to technological advancements and the rise of online clothing retailers. "The clothing and textiles industry has seen both highs and lows. COVID-19 changed consumer spending habits, shifting focus from clothing to data. As retailers our primary objective is to meet customer needs, which means continuously predicting what they want," he said.

Drieselmann acknowledged the rise of online retailers from the East and how they have influenced the market. However, he sees this disruption as an opportunity to innovate.

"Mistakes happen, and that's okay. What matters is how quickly you react. If you're still doing things the way you always have, you're making a big mistake. Consumer behaviour has changed dramatically in the past five years. While customers still value brick-and-mortar stores, innovation is key. We even have an app that provides real-time sales data for each store," he explained.

His advice to retailers looking to succeed is to maintain a relentless drive for improvement and pay close attention to every detail.

Also, he urged lenders to recognise the impact of technology and online competition on local retailers, stressing the need for competitive pricing strategies, saying that the industry presents promising opportunities for local fashion designers.

However, Drieselmann advised that start-ups start small and scale up gradually, as large retailers require substantial production volumes.

FNB Regional Head, Jay Pillay, shared the same sentiment, emphasising that the bank strives to provide tailor-made solutions that align with the needs of businesses in the textile sector.

"Our innovative funding models allow us to assess SMEs in seconds based on their financial behaviour. Businesses that have secured contracts but need capital can access funding efficiently. Further, equipment financing and property financing has been quite valuable to our manufacturing clients looking for operating space," he explained.

He added that given the current landscape, it is essential for banks to continuously advise businesses on how to reduce operating costs, including providing access to alternative, cost-effective energy solutions.

The CEO of Kingsgate Clothing, one of South Africa's oldest clothing manufacturers, Yusuf Vahed, highlighted the industry's ability to generate millions of jobs.

Founded in 1955 by Vahed's grandfather, Kingsgate Clothing has a long-standing legacy. Vahed believes that adversity often presents opportunities.

Addressing concerns about online retailers disrupting the manufacturing value chain, he said: "People may think South African manufacturers are lagging behind international companies, but we are highly sophisticated and very adaptable. I remember when AGOA was introduced in 2001. In our first year, we grew our export business to R100 million overnight. We supplied major retailers like K-Mart, Walmart, and Costco, as well as big surfing brands on the West Coast. They praised our product quality and efficiency in meeting delivery deadlines."

However, he noted that South Africa's withdrawal of the export incentive scheme made it difficult for local manufacturers to compete with their counterparts in the Far East and Asia.

Kingsgate Clothing actively supports SMEs by outsourcing some of its production and collaborating with family-run businesses. Vahed encouraged entrepreneurs in the textile sector to seize the opportunities available and embrace innovation.