S&V Weekly Newsletter Vol.5 No.16, April 24, 2019

This Newsletter is sponsored by SAFLIA

LET'S MAKE 2019 A REALLY GOOD YEAR!

Please note: Click on any ad to go to the advertiser’s website

Retail over Easter

Comment from 5 regional and national chains yesterday
“We are generally happy with the Easter weekend trading figures with our stores reporting healthy growth and meeting budgeted expectations. The cooler weather was welcome as winter orientated product moved well.” - Kelli Kupritz, marketing director, Dodo's Shoes, Johannesburg, Gauteng, SA.

'We had a very successful Easter trading period, we were fortunate with the weather that it came towards the back end of Easter. The early interest in Winter merchandise has been really good performance, double digit growth on the overall and the last week – the knits, hoodies, chinos, denim, and footwear have achieved great sell thru.  Having some promotion offers in the store has also been a draw card, that is good to note, value based offerings on key lines is important during this time when the shopper is looking for quality product at affordable price points.  We had a store opening in Eastgate which had a hugely successful opening week. We are excited for the Winter season roll out." - Nicole van Doninck, marketing manager, John Craig, Johannesburg, Gauteng, SA.

"Thursday was fine but otherwise the weekend was a bit quiet. I think it was partly because it was one of the few Easter weekends which has fallen in the middle of the month. Hopefully this coming weekend will be better." - Hashim Ismail, member, Crossover, Johannesburg, Gauteng, SA.

"It was amazing. We were up almost 30% on last year on comparable stores. The reason was price - we're a parallel importer of brands, and we offer branded items at prices 50% to 60% below other retailers offering the same brands. For example, Diesel retails at around R2 500 a pair, but we're selling the same brand at R799." - Yusuf Vadi, GM, Discount My Fashion (DMF), Johannesburg, Gauteng, SA.

"Disappointing compared to last year. Easter is normally a mini-Christmas for us, but not this year. It's the economy, in a nutshell." - Gavin Sack, member, Kinky Shoes, Johannesburg, Gauteng, SA.

Ostrich companies approach Competition Tribunal in their quest to merge

Pretoria, Gauteng, SA – The Competition Tribunal will today (Wednesday) hear the application by ostrich processing companies Mosstrich, Klein Karoo and Cape Karoo to be given access to the confidential information which the Competition Commission took into consideration when it prohibited their proposed merger late last year. In a statement yesterday, the tribunal said:
       Three companies involved in the supply of ostrich meat are approaching the Tribunal, after their proposed merger was prohibited by the Commission late last year. They want access to confidential information which the Commission used in its decision-making process.
       The information was supplied to the Commission by other companies which raised concerns about the merger.
       The Commission prohibited the merger involving Klein Karoo International (Pty) Ltd; Mosstrich (Pty) Ltd; and Cape Karoo (Pty) Ltd on the basis that it would result in a substantial lessening of competition in the market for the supply of ostrich meat. The Commission also found that the merging parties would have the ability and incentive to foreclose the downstream ostrich feather market.
       In late January 2019 the companies filed papers (a reconsideration application) with the Tribunal. They want the Tribunal to approve the merger without conditions, on the basis that the Commission erred in its market definition in respect of ostrich meat -- and that they (the merging parties) will not foreclose the downstream ostrich feather market.
       The other companies (which raised concerns about the merger as third parties) include EES Millinery, Charles Biggs N.O (trustee of Classic Trusts) and Lewitton Industrial Corporation CC. They have all resisted the disclosure of / access to their information on the grounds of confidentiality.

Footwear & Leather Industries Cluster gets go-ahead

'Prime objective is to bring jobs home'

By Jonathan Hallowes
FLIC - the Footwear and Leather Industries Cluster has been approved by the DTI. FLIC replaces the NFLC - National Footwear & Leather Cluster.
       FLIC is headed by Ernest Heunis who will also assume the function of guiding the leather business of the cluster. Well known throughout the industry he will be setting mandated direction and, apart from his fiduciary role of ensuring good governance and compliance within industry clusters, he will continue to assist participants with local industry incentives.
       Footwear and accessories will be guided by Jonathan Hallowes with Richard Starmer (product development, range building & training) and Russell Addinall (who will continue his work on, and training in, CAD/CAM systems for both design and production for Sub-National Clusters and the industry at large).
       The prime objective of FLIC will be to bring back to South Africa, footwear production lost to countries overseas. Footwear and clothing have been used as prime segments for industrialization by many countries to provide employment to local populations. China have managed to bring unemployment down to +/- 10%, or 80 million working age people, (unofficial - some Google articles have twice as high - against an official +/- 4%) which still constitutes twice the size of South Africa’s total working population. It is thus no surprise that Chinese manned operations are springing up in many African countries.
       FLIC hopes to achieve this repatriation by enabling local industries to be competitive in terms of design, manufacture, marketing and cost. Great emphasis therefore will be placed on:

• Comprehensive ongoing technical training and mentoring.
• Improving creative skills to develop differentiated original concepts and product.
• Examining state-of-the-art manufacture & processes
• Innovative logistics
• Inventive marketing and retailing
• Exporting to the rest of Africa and beyond

       In addition, FLIC aims to assist the Government, SAFLIA and other agencies to ensure level playing fields by fostering compliance to the country’s laws in terms of illegal imports, fair labour practice, fair incentives, and fair business practice.
       FLIC’s initial program will be to map the industry to determine gaps from desirable metrics in terms of design, manufacture, employment, growth, profitability, and sustainability. It will then be setting goals, activities and timing with cluster members (and the industries at large) in order to bridge such gaps.
       Consequently, many participants in the industry can expect calls from these 4 individuals who have committed themselves to impartiality, confidentiality, availability and assistance where appropriate, as well as learning as much as possible about industry needs and desires in order to fulfil their mandate. The more we understand about where we are, the better we can plan the way forward.

Celrose/Eddels: IDC has no plans to sell yet

Johannesburg, Gauteng, SA – The Industrial Development Corporation's divisional executive for corporate affairs, Zama Luthuli, responded to questions on its purchase of Edcon's shares in Celrose and its footwear manufacturing subsidiary, Eddels, as follows: What is the IDC's share in Celrose? IDC will now hold a controlling stake in the business.
How much did the IDC pay? We paid a market related price.
Why did the IDC buy Celrose instead of letting a private sector company take it over? IDC would not have had a problem if there was a suitable private sector buyer. Celrose’s value proposition and the expansion opportunities made it an attractive acquisition for the IDC.
Does the IDC think that Celrose needs any changes? Celrose has a number of strengths as a company and has the potential to grow its business by replacing imports.
What are the IDC's plans for disposing of Celrose? Having just acquired this business, there are no immediate disposal plans. We want Celrose to reach its potential and as part of those plans we would want over time to exit to a partner that would help achieve this.

CTFL counterfeit goods worth R2.7 billion seized last year

According to a SARS press release, Customs continues to increase the number of busts year on year: Goods valued at R3.7 billion bust by Customs in the past financial year. Clothing, footwear and related goods dominated the figures.

Pretoria, 18 April 2019 – The South African Revenue Service (SARS) has released its latest consolidated Customs busts statistics from 01 April 2018 to 31 March 2019. The total value of all goods confiscated amounted to R3 694 742 928.
Some of the statistics include:

• Narcotics: 892 busts valued at R535 132 535
• Cigarettes: 220 busts valued at R50 252 520
• CITES (including endangered species such as abalone): 43 busts valued at R 42 224 372
• Currency: 14 busts valued at R64 986 630
• Viagra / Viagra Generics: 170 busts valued at R69 280 100
• Counterfeit clothing, footwear and other goods:  1 526 busts valued at R2 710 118 775
• Clothing and Textiles (second hand and other infringements):  407 busts valued at R7 988 166
• Alcohol: 298 busts valued at R18 430 752

         Compared with the same period during the previous financial year (April 2017 to March 2018), the number of busts has increased to 6 828 from 4 840, and the value of the busts has increased to R3 694 742 928 from R2 461 425 369.
       “Acting Chief Officer: Beyers Theron continues to commend Customs officers for ensuring that South Africa’s ports of entry remain closed to illicit goods. Also travellers, particularly in this time period, are encouraged to familiarise themselves by visiting www.sars.gov.za with what goods are allowed or not so as to ease their travel into and out of the country.” - For further enquiries please contact sarsmedia@sars.gov.za or call Sicelo Mkosi 083 455 3344.

Wage negotiations: Footwear

Durban, KZN, SA – Employers in the Footwear sector last week proposed a 3-year wage agreement, offering a 7% increase per year, according to a reliable source at the first round of annual wage negotiations. The source said the unions undertook to respond by the second round on May 13 and 14.
       The Tanning sector, the third and last sector of the National Bargaining Council of the Leather Industry of SA, will meet for its first round, in Port Elizabeth, on April 29 and 30.

Corrugated packaging paper companies prosecuted for collusive conduct

Pretoria, Gauteng, SA (April 15) – The Competition Commission has referred to the Competition Tribunal for prosecution, packaging paper products manufacturers and suppliers, Mpact Ltd (Mpact) and New Era Packaging (Pty) Ltd (New Era), for cartel conduct.

       The two companies have been charged with fixing prices, dividing markets by allocating customers and tendering collusively in the market for the manufacturing and supplying of corrugated packaging paper products. Mpact and New Era manufacture and supply containerboards and cartonboards.
       These products are used to produce final packaging paper products being, finished boxes.  These finished boxes include fruit boxes, and boxes for secondary packaging of wholesale goods, cereal boxes, detergent boxes and paper plates.
       This follows an investigation initiated by the Commissioner on 16 May 2016, against Mpact and New Era for price fixing, division of markets by allocating customers and collusive tendering in contravention of the Competition Act. This initiation was later amended to add more companies namely Sunnypack, Corruseal and Corruseal. The Commission did not find any evidence against these three added companies.
       The Commission’s investigation found that from the 1980’s to 2015, Mpact and New Era had an agreement not to compete with each other for customers for the supply of packaging paper products. They achieved this by agreeing to allocate customers and ensuring that they did not bid in competition with each other in respect of the allocated customers.
       Mpact and New Era also rigged the bids that they submitted to customers in order to prevent other market players from competing with them for the business of their allocated customers.
       This conduct amounts to price fixing, division of markets by allocating customers and collusive tendering, which contravenes the Competition Act. The referral to the Tribunal follows an investigation by the Commission which included a dawn raid by the Commission conducted at the premises of Mpact and New Era on 26 May 2016.
       The Commission has asked the Tribunal to impose an administrative penalty of 10% of New Era’s annual turnover.
       “We are extremely concerned about the pervasive nature of this conduct in the packaging sector. This affects most products, including the packaging of basic food stuff. It is largely the poor who bear the brunt of this manipulation of prices and division of markets. That this cartel has endured for about 40 years means that prices of so many products may have been inflated as a result,” Competition Commissioner, Tembinkosi Bonakele said. - Sipho Ngwema, Head of Communications, +27 (0)12 394 3493 / (0)81 253 8889, SiphoN@compcom.co.za

Death notice: Raymond Manuel, Bolton Footwear

By Selwyn van Aarde, Bolton Footwear
Cape Town, W Cape, SA – It is with sadness to let you know of the passing of Raymond Manuel last Friday.  He was born 12 June 1963.
       He started at Kronies Footwear in 1983 as a pattern room Supervisor until 1989. He started at Villani Shoes 05/03/1989 as a Manager and Designer.
       He relocated to Cape Town to join Barker Footwear 1/09/2015 as Quality Manager. His knowledge of footwear and his love for the people was great. He will be greatly missed by his colleagues at Bolton Footwear as well as the Industry. The industry has really lost a great shoemaker.

They Said It

"What do you mean, 'Gucci don't want it'?" - Anonymous hide trader parodying cattle farmers who insist on massive brands on the butt area (the middle of the animal's back), the prime cutting area of a hide, because "I want to be able to identify my cattle from my helicopter". With changes in leather use and pressure from the anti-leather lobby, lower grade hides, including those with big brand marks, have lost most of their value.

"There are quite a few orders coming in - but we haven't had the cancellations yet." - Rowan Allison, Midland Tannery, KZN, SA, on an upturn in business. He does have a very dry sense of humour.

"WOW...am I  reading and understanding right... The  IDC  getting involved  with  Eddels Shoes . In what CAPACITY will they  get involved...do we  have another  T R U B O K   Clothing  on our hands ... a great company  that was screwed  down to the ground in a few  short years...3 years if I am not mistaken.. Welcome  more  UNEMPLOYMENT....Welcome  more CHINESE...." - Ahmed Sibda, City Fashions, Benoni, Gauteng, SA.

SLTC Convention Countdown: Just 4 weeks to go

The convention will take place from May 17-19 at Green Leaves Country Lodge & Venue in the Magalies Mountains.
To book, please contact SLTC secretary Nicola Phipps at nphipps@telkomsa.net.

S&V Directory - Order now

The directory is ready. On sale for R450. The online version is also available at R450 for 12 months' access.

2019 Trade Fairs Another essential service from S&V

Please note that we have put a list of the 2019 trade fairs and conferences on our website, linked to their websites: http://www.svmag.co.za/events

Exchange rates

Source: http://www.x-rates.com/calculator/

ABSA Agri Trends 10/04: Hides & skins prices

Bovine: The average hide price over the past week rose slightly to R1.68/kg green. NB* Hide prices are determined by the average of the RMAA (Red Meat Abattoir Association) and independent companies.

22/04/1959: John Comley, Eddels, Pietermaritzburg.
22/04/1959: Richard Louw, Quality Store, Lephalale.
22/04/1986: Shaun Moodley, BM Agencies, Durban.
23/04/1951: Jerry Pillay, Triple S Footwear, Durban.
23/04/1997: Latasha Singh, Chillisource, Durban.
25/04/1961: Marcelle Kurth, emigrated, formerly Corbeau, Cape Town.
25/04/1963: Neil Barnes, Millbrook Trading, Durban.
25/04/1971: Clinton Cloete, BBF Footwear, Port Elizabeth.
25/04/1955: Maryrose Lesalaisa, Cee Dee Footwear, Johannesburg.
26/04/1943: Juan Lichnovsky, retired, formerly Futura Footwear, Pinetown.
26/04/1953: Rodney Hill, left the industry, formerly Prime Leathers, Pinetown.
26/04/1964: Desmond Swartz, DS Agencies, Johannesburg.
26/04/1965: Faizel Jeewa, Traford Footwear, Durban.
26/04/1982: Keaton Quarmby, Falke Eurosocks, Cape Town.
27/04/1944: Kelly Smith, agent.
27/04/1964: Francois Strydom, Bolton Footwear, Great Brak River.
27/04/1968: Wyatt Brodie, left the industry, formerly Polo SA, Johannesburg.
28/04/1949: Malcolm Novos, Economic Shoes, Paarl.
28/04/1972: Serge Glowiczower, Lion’s Gate, Johannesburg.

In Memoriam this week

22/04/2007: Louise Cowie (b.05/06/?), GW Cowie & Co, Durban.
23/04/2012: Chris van der Merwe (b.05/04/1945), Oasis Tanning, Krugersdorp.
26/04/2005: Bryan Dean (b. 09/01/1939), Amber Footwear [closed], Pietermaritzburg.
26/04/2012: Roy Eckstein (b. 22/10/1941), Reebok, Springfield, and Jaguar [closed], Durban.
26/04/2018: Alan Hornby (b. 16/08/1961), Topline Agencies, Johannesburg.

Have you let us know about your birthday, or the birthdays of your colleagues? Our readers love this section, so please become part of it. This also applies to the In Memoriam section. Help us remember former colleagues.

Have a look at these links

Apeco, component supplier, Pinetown, KZN, SA: www.apeco.co.za
Apsley Group, retailer, independent and online. Johannesburg, Gauteng, SA: http://apsleygroup.co.za/

Classified Adverts

Representation in UK

Tom Marcus, formerly of Tholanizikhumba Trading in Pietermaritzburg and now resident in the UK, is offering representation in the U.K. - tom.marcus@btinternet.com

Contact us

News & Classifieds: Tony Dickson, +27 (0)31 209 7505, tony@svmag.co.za

Next newsletter: April 29, 2019.

SAFLIA enquiries: Tel 0800SAFLIA * Email info@saflia.co.za * Website http://www.saflia.co.za

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