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THE NEW KINGS OF
After 44 years of trading Metcash has been forced by creditors to sell off its stores. Rivals have been cashing in. Indeed, several stores were brought by one of South Africas fastest growing FMCG distributors, Devland Cash and Carry. Managing director Yoosuf Gathoo tells us more. By Marie Toms
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evland Cash and Carry is one of South Africas fastest growing distributors of fast moving consumer goods (FMCG). It is benefiting from higher disposable incomes and a middle class that is growing to the next level. Within that context, consumer goods companies can make huge profit theyre selling products on large scale quickly and at relatively low cost. Family man and renowned businessman S. Gathoo runs the firm. He knows this all too well. Devland Cash and Carry is his familys business, started by himself and his brother in Devland, Soweto. It started small, modest. But now it is embarking on an exciting new expansion having acquired several Metcash stores. Weve been around for the last 20 years and weve had a little small cash and carry which has grown organically over time, managing director Yoosuf Gathoo says, taking up the story. We did a little acquisition of some of Metcashs Trading Africa PTY retail and whole stores in April of this year. Eight stores to be precise.
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It is a big forward step. The catalyst for the growth I think has been the grace of god for the most part. But weve also been ambitious and wanted to grow. Local retailers expansion into under-serviced areas such as townships led to the collapse of Metcash. It was once the biggest wholesale business in Africa. But after 44 years Metcash is no more. It leaves a gap for astute players to step into, Gathoo says. Indeed, from 59 stores earlier this year, Metcash now has only about 12 stores left to sell as years of poor trading conditions and sales declines led to its financial backers refusing to extend further credit. In 2005, the company boasted sales of about R16 billion, but as more and more retailers such as Shoprite and Pick n Pay set up in wholesalers traditional markets, sales growth stalled. As these retailers gained momentum, street vendors and spaza shops that purchased mainly from cash-and-carry-type stores were forced to close. It is now an opportunity for us to grow, Gathoo admits. Metcash has been selling off a lot of
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stores. We saw an opportunity there to procure some of those. We acquired some of their smaller stores and we did so because we needed to get a footprint into regions. What has happened is that because the chain stores in SA have grown so huge theyve essentially grown too big and have put some smaller stores up for sale. Before the Metcash store purchases we had two retail stores, which obviously wasnt a lot, so when we saw they were shedding their stores and selling off their businesses we saw it as a great opportunity to expand across the country. It was a big investment and weve been doing everything that was needed to turn these into our own shops. We needed to get a foothold in the townships and this was a perfect opportunity. This industry is so competitive so we and to expand to accommodate our margins Were poised for big things going forward, he says. There is huge growth in the wholesale market model. Metash didnt realise that. According to Gathoo, Devland Cash and Carry also operates internationally and Zimbabwe is a growing market. Zimbabwe is one of our big markets, a huge market, he says. Weve also got our own operations in the country. The challenge we see here is that there is a huge credit risk. But we are able to pursue opportunities like this because we are a family business, weve got strong management and we know how to grow a business. We have a strong team of people behind us.
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The catalyst for the growth I think has been the grace of god for the most part. But weve also been ambitious and wanted to grow
Tiger Brands is proud to be associated with Devland Cash & Carry, and wishes to thank them for their continued support.
Tiger Brands is the proud manufacturer of leading brands in a wide range of food, home care, personal care, baby and stationery categories in Africa
Tiger Brands Limited 3010 William Nicol Drive Bryanston Tel: 011 840 4000 Email: tigercsd@tigerbrands.com Web: www.tigerbrands.co.za
He is very happy with how things are turning out. Were very happy with where we are at the moment. Obviously weve invested a lot of capital into the new stores and its about maximising what we have there and maybe well look at adding more in the future. Whats the secret? Weve put in a good culture that allows us to communicate efficiently and make efficient moves. Our structure, being familyowned and operated, enables us to work very well and make decisions. That has played a significant part in our growth. It is not like with a multinational corporation with several management layers and many shareholders to please. Were small and able to adapt.
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Were very happy with where we are at the moment. Obviously weve invested a lot of capital into the new stores and its about maximising what we have there
You wont find Devland Cash and Carry on the web. The reason for that is simple Gathoo says. People understand what we do and weve never really had to market it. Every now and again we do something to raise the profile. Basically we try to be as efficient as possible and get the job done and customers recognise that. We work with many big names like Tiger Brands and Clover Industries. Devland Cash and Carry has also been involved in several charitable initiatives in the past, helping those beleaguered with poverty. We wish it every success and look forward to bringing you an update on the expansion. END
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