EDDELS SHOES/CELROSE CLOTHING – Celrose Wears the Trousers in SA Fashion

Celrose has been offering quality garments at competitive prices since 1946, to sartorially savvy consumers both throughout South Africa and abroad. Growing and developing customer needs saw it embark upon a major expansion programme in 1975, opening its main manufacturing complex.

Really ramping up its capacity, this move saw Celrose incorporate specialist equipment into a state-of-the-art warehouse, alongside a high-tech cutting room in order to keep pace with demand. These are two of the pillars of the Celrose philosophy, in order to remain at the forefront and evolve to meet consumer goals.

ONE STEP AHEAD

The clothing giant is unequivocal regarding the importance of harnessing technology. “Celrose will continue to investigate and act upon technological innovations to keep ahead of the field and to maintain its enviable rate,” it states.

“At the same time it will develop and adopt to the ever-changing customer garment market so that customers will consistently benefit from a reliable supply of top quality merchandise at competitive price.”

Also run by Celrose’s CEO, John Comley, Eddels is a shoe manufacturer that has been providing South African consumers with quality footwear for over one hundred years. The company is famous for kitting out faithful customers in brands such as John Drake, QC, Riccardo, Aeroflex and Freedom. 

Celrose, operating in Tongaat near Durban, was the clothing manufacturing arm of the Edcon retail group until 2006, when Edcon divested and John Comley, Eddels CEO and one of Edcon’s most successful suppliers, was brought in as Celrose’s new CEO.

Comley was already well-known in industry circles for having revived Eddels, a shoe factory in Kwa-Zulu Natal where Celrose is located, by introducing innovative worker-participation and incentive schemes to enhance both productivity and profitability. Edcon retains a 49% interest in the entity today. “Edcon will continue to be supportive of the new company to grow its business,” Edcon CEO Steve Ross stated at the time of the merger.

“The factory has clean inventories, a reputable client base and a strong order book – we think the business is in a good position for this transaction to be successful.”

To this day, Celrose and Eddels retain the philosophy of staying ahead of the curve in SA fashion. “To keep ahead of the fast moving fashion world,” they outline, “designers regularly visit European Trade Fairs to asses’ future trends and to ensure a free flow of vital information and a constant interchange of ideas.” 

It is a strategy which has worked, Comley told us when Celrose in particular had begun to attract major attention and result in consistent year-on-year growth. “We work very hard with our customers to prove to them that we are a value-added supplier and offer a point of difference,” he promulgated.

“We work extremely hard on product diversity, flexibility, and become that first name or phone number in the customer’s mind. Not only will they get top service quickly, they will get guaranteed quality and after sales service and support.”

BUYOUT APPROVED

In April of last year, fin24 reported that The Competition Tribunal had approved, subject to conditions, the state-owned Industrial Development Corporation’s (IDC) acquisition of Celrose.

Concerns had been raised previously by both the National Union of Leather & Allied Workers (Nulaw) and the Southern African Clothing and Textile Workers’ Union (Sactwu) regarding what they saw as a potential threat to employment, but the Competition Commission took the view that the merger is unlikely to substantially prevent or lessen competition in any market.

The IDC and Celrose, in turn, said an amended and reinstated merchandise supply agreement will ensure that Edcon continues to procure products from Celrose and Eddels post-merger. The IDC and Celrose undertook that the merger will not result in any retrenchments.

The conditions to which the merger must adhere outline that Celrose must not retrench any employees as a result of the merger for a period of five years from the implementation date of the merger. During the first five-year period of the Merchandise Supply Agreement, additionally, Celrose must provide reports to the Competition Commission in relation to the agreement.

THREADBARE INDUSTRY

What makes Celrose and Eddels’ continued success all the more impressive is a consideration of the overall state of the space in which it has been operating, a situation which stretches back some 20 years. Once the economic lifeblood of many small regional towns, the abundance of cheaper products from China has led to the loss of nearly two-thirds of South Africa’s retail, clothing, textile, footwear and leather (R-CTFL) jobs over the past two decades.

Data from Statistics South Africa (StatsSA) indicates that the total value of the country’s Clothing, Textile, Footwear and Leather (CTFL) market exceeds R180bn. However, the domestic clothing manufacturing sector has declined sharply over the past two decades and currently contributes only around 3% towards the country’s total manufacturing production.

“The R-CTFL sector has shed almost 170,000 jobs during the past fifteen years and as at June 2017 the industry provided formal employment to 87,057 people,” added Business Wire. Having weathered the storm and remained not only profitable, but ever-growing, Celrose and Eddels are ideally poised to capitalise on the shoots of recovery visible in the industry today.

Firstly, and crucially, Etienne Vlok, director of the South African Clothing and Textile Workers Union, has stated that the custom of South African retailers buying their goods from China and other Asian countries is changing.

“The factory-gate price was cheaper there,” he outlined, “but then they did not factor in the cost to the environment of importing these goods, the additional costs of the long lead times, including when replenishing stock,” he said.

Vlok added that local retailers suffered because this previous business model meant they could not respond quickly to changing consumer trends, unlike their international competitors who could change stock almost every two weeks, meaning that South African retailers are increasingly switching to local or regional suppliers.

With the clothing industry at a vital crossroads, it appears that the right moves are being made to steer it out of the downturn of the last 15-20 years. A decrease in the reliance on imports is being backed by substantial government funding. The provincial Department of Economic Development and Tourism last year pledged R132million in funding to stimulate the industry and create new jobs. 

“We import too much and we produce too little,” explained MEC of Economic Opportunities, Beverley Schäfer. “As a country, our imports of clothing, textiles and leather goods have rocketed from just over R5billion in 2000 to almost R60bn now.

“In the clothing and textile sector, South African labour is 45% cheaper than in China at the moment and it makes no sense that we are not producing more locally,” Schäfer revealed. “This region used to be well known for its clothing and textile production and we want to rebuild this industry and use the skills we already have, while developing new ones.

“The manufacturing industry is far from dead and there are still opportunities.”