Glodina: ‘Covid Set Back’ but Remains Positive

Up and down is the story of Glodina. Like most companies, the peaks have been sweet and troughs sour. But this South African legacy has seemingly faced the extremes of the highs and lows. Founded more than 60 years ago, the company comes with strong South African roots. Known for producing high-quality luxury towels, Glodina has a reputation as a KZN manufacturer of choice, supplying into high-street retails stores, hotel chains, and many independents. After leading the pack for decades passed, in 2017 the textile giant closed its doors after stumbling into a period of poor performance. A weak economic climate and the increase in imports saw all 550 employees facing an uncertain future. It was a difficult time for the company, and the region. Located in Hammarsdale, on the outskirts of Durban, many of the affected employees would be unable to find new opportunities and, following the closure of another large employer in the area at around the same time, the government was forced to step in.

The Glodina Factory was at an absolute standstill for 12 months and in November 2018, the Industrial Development Corporation (IDC) announced that the company would open its doors once more. The iconic Black Label towels, famous for a soft and luxurious feel, could be manufactured locally again. R150 million was ploughed into the business, with investments into new machinery and efficiencies. Mark Goliath, the IDC’s textile lead and trouble shooter was installed as Interim CEO and looked to resharpen the Glodina approach.

He told Enterprise Africa that competitiveness was being reinstated by reducing bottlenecks in the company’s manufacturing processes. Modernisations in the weaving shed, dyeing and finishing departments, makeup and sewing areas, as well as the introduction of automation would help to drive productivity and create a more seamless flow of goods.

After sinking to the unchartered depths, this textile phoenix was rising again. At the beginning of 2020, Goliath told Enterprise Africa once again that the company was moving in the right direction, improving from 30% capacity to 50%. Makro and Game were customers, and Colibri (a Western Cape towelling business and former competitor) had also been merged with Glodina. Things were looking good for the business as it attempted to bring manufacturing back to South Africa, demonstrating that the country’s sector could compete on quality and value, even with imports from the East.

But by the end of March 2020, South Africa (like much of the world) had been placed into a state of lockdown as a result of the Covid-19 pandemic. Tourism was decimated and non-essential retail forced to close. Once again, Glodina was facing a very difficult test.

New CEO Abdul-Gakeem Satira, who was appointed to bring long-term sustainability and stability, was immediately in a whirlwind.

“I have been with the organisation for a matter of months and I have had to hit the ground running from day one,” he smiles.

DRIED UP

Trying to balance continued production, sales, and finances, while also incorporating new technology into a business which is facing stunted demand is no easy task, and Satira has been forced to make tough decisions.

“From a Covid perspective, we have been hurt,” he says. “Covid has impacted all businesses, not just textiles specifically. It has definitely put a spanner in the works, in that a significant part of our business sits in hospitality and with the lockdown in full effect, combined with the international restrictions, a lot of that business has been taken away. We saw an immediate collapse in hospitality. We have however had instances where we have had some ease in lockdown restrictions and we would immediately see interest for new business within hospitality, however Covid as a whole has definitely impacted us negatively.

“From an operational perspective, we were unable to complete some of our upgrades on time, which in turn has impacted our production output. Though new technology has come to the market which we have installed in our mills, none of it could be effectively utilised in order for us to drive better efficiencies. So, we find ourselves in a similar position to where we were pre-Covid.”

At the start of 2020, Glodina had managed to re-employ more than 210 people and was on track to meet targets for the financial year. It had regained the business from hospitality giants Tsogo Sun and Sun International, and was targeting exports in tourism-focused economies such as Mauritius, Madagascar and some Indian Ocean islands. Other attractive areas across southern Africa had been targeted, but with a total collapse of people movement in a tourism capacity, these ambitions have been halted.

“Covid has definitely slowed down our progress but sometimes a slowdown is much-needed before you launch products into the market. It has provided us a platform where we could reassess our business model and our capabilities to ensure we are fit for purpose, in line with our growth strategy moving forward,” says Satira.

TIME TO ADJUST

Clearly, Glodina could not sit back and wait for the pandemic to pass, doing nothing at all. Satira has encouraged reassessment and refocussing of attention so that strategies can be executed effectively, making the most of all opportunities available.

“We’ve used the time to refocus our energies on other parts of the business, other than new sales, which also needs attention. These areas include improving processes, clearly understanding our real challenges and how we can affect that, and focussing on our commercial capabilities and what we need for the market. None of this, of course, being possible without investing in our people. This is one of our key priorities.” he says.

“As much as Covid has impacted the business negatively in terms of revenue and production output, it has fast-tracked our focus on our development of our people, in our quest to provide excellent customer service through every-day-great-execution.

“Right now, the aim is to stabilise the business and that is our core focus. When we have a certain level of stability, we then have the platform to sustainably expand into other growth areas. The important thing for us is not to do the same. If we are expecting improved performance results, then we have to change our ways or working. We need to mitigate our risk and dependency on certain markets and diversify our customer portfolio and be more entrepreneurial. We need new areas of growth and there are a few projects on the way, on how we tap into these new opportunities.”

DIGITAL FUTURE?

For now, as the market continues to settle in a post-pandemic world, Satira is keeping expansion plans close to his chest. There is a level of fluidity needed during these challenging times, and as tourism and hospitality remain uncertain, diversification will continue to be explored by Glodina.

“We have already started evaluating our current product and customer portfolios as well as our considerations of how we mitigate our financial risks,” he says. “With hospitality being such an essential part of our portfolio, we’ll continue driving growth in this area whilst expanding into new untapped areas in order to deliver sustainable business growth. New product developments are already under way and as the market re-opens, we’ll be better positioned to provide improved service delivery with a variety of products available to choose from. The emphasis on our brand moving forward is absolutely key to our success. Competing like-for-like on price with imports is not a sustainable model for Glodina. A towel is not just a towel, especially when Glodina is your brand of choice. As my seven-year-old son articulates: ‘Dad, my Glodina towel is so warm and fluffy, I just want to use it as my blanket and go sleep with it’. Glodina is not just a towel, it’s an aspirational experience. It’s wrapping yourself in luxury in the comfort of your own home. We want to sell this experience and win the hearts and minds of our customers.”

Textile imports in South Africa reached an all-time high of R5826 million in April 2020, increasing year-on-year since 2014, highlighting a disturbing trend of suppliers looking to China, India and East Asia and Pacific regions to satisfy a need. The Textile and Clothing (T&C) industry is a major job creator – especially in the low-skilled sector – and to see jobs being shed thanks to imports overtaking local supply is a long-term problem for the industry and government to address.

Interestingly, the pandemic has provided an opportunity for local manufacturers, with trade interrupted and large workspaces closed in foreign markets. Retailers had to turn to South African manufacturers to fill demand, and this is just the sort of opportunity that Satira and Glodina will look to grasp.

“We will always be challenged with imports, however Covid has influenced the focus of local retailers, highlighting the importance of supporting local manufacturing. With this need comes the responsibility of providing excellent customer service, with a great sense of urgency and speed to market. We need to be agile in order to respond to the ever-changing demands from our customers,” he details.

“This is another positive for local manufacturers that has come through this process. We also cannot ignore the fact the e-commerce will now be more important than ever. Retailers and customer alike, now understands that we have to go digital if we are going to survive in this new world. Obviously there have been negatives, but there have also been some positives that we can extract from this entire process.”

Moving forward, if the company can take advantage of an increasing appetite for local supply from the country’s big retailers, as well as the emphasis being placed on local job creation by the general public and government, Glodina could secure a large market opportunity. The pandemic kickstarted e-commerce in South Africa – traditionally viewed as a nation with a love for in-store shopping. The country’s largest online retailer, Takealot, saw revenue up to the end of September increase by 41% over the previous year. Massmart saw impressive online growth through a number of its brand channels, and supermarket retailers are also intensifying their digital efforts after seeing growth in demand during the pandemic.

“That being said, with South Africa being in lockdown and mostly only essential services operating, customers were just not able to get into stores and this has fast tracked the need to go online. All in all, we’ve definitely seen the impact of the economy shut down and people were very nervous about what happens next,” admits Satira.

Glodina has always bounced back when faced with difficulty. It is a company that has overcome hurdles and successfully navigated challenges while producing quality South African-made goods. The pandemic has forced a step-change within Glodina, and the new CEO is ready to adjust to a different future. Establishing a new culture surrounding excellence, and driving sales in innovative new ways, Glodina is looking to life after Covid.

“Where Glodina found itself two years ago was unfortunate, however with that, there has been a change in culture and organisational behaviour. A lot of time and energy has gone into people and making sure we have the right capabilities to manage the levels of technology we have brought into the company,” Satira concludes.

TRULY GLOBAL

Currently, EKM Exports on behalf of the GoGo Group is moving product heavily into China and the Far East but India remains a major target area. To bolster its brand in India, the company began a high-profile marketing campaign back in 2015 making use of a major South African export to India. Cricket legend AB de Villiers was photographed in full GoGo cricket uniform and printed on boxes, cartons, packaging, and digitally through website and social media channels. The batsman, at the time playing for Royal Challengers Bangalore, was keen to help promote a South African success story.

“It’s definitely a positive thing in the market, especially in places like India and Bangladesh. We are going to carry on with this campaign and push it harder than we have before,” said Kruger.

Wherever the demand comes from, the GoGo Group and EKM Exports stand ready to deliver.

For South Africa’s fruit industry as a whole, the pandemic has been another factor in a long line that have boosted exports. An exchange rate which sees a very favourable Rand for exporters combined with a market left bare, after European and northern hemisphere stocks were depleted, has provided South African growers with an open goal – especially while consumers look to traditional fruits, rich in vitamins, to bolster their immune systems.

The 2020 export crop for the USA has been a bumper. CGA Chief Executive Justin Chadwick said at a recent digital event that the numbers were staggering.

“In March 2020, when the Covid-19 situation was really bad in the US, sales increased by 84% compared to the same time last year. Over the year, there has been a 29% increase in navel sales. It has been a massive positive for South African citrus in the US.”

He added that the same was true for red grapefruits and lemons with sales increasing by 11% and 17% respectively.

China and East Asia accounts for around 20% of all citrus exports and this is major milestone for the industry. In 2004, when South African citrus was first allowed into the Chinese market, the country was shipping around 10,000 tonnes. Today that figure is higher than 140,000 tonnes.

While the export figures have been good for the year, it has not come easily. The need for innovation has been strong thanks to a slowdown at the bottlenecks in the chain – the ports. Some of South Africa’s ports had to close to be deep cleaned before reopening with fewer staff and reduced capacity. At the GoGo Group, this challenge was hurdled through the use of rail.

The company’s position, close to rail links allowed loading reefer containers that headed straight for Durban very convenient. Loading at Bela Bela, Tzaneen, Musina and City Deep before being sent out on reefer vessels from Transnet’s Port of Durban, the GoGo group railed 70% of all the containers destined for shipment through Durban this season, and 100% of all exports. With limited road capacity in Limpopo, rail links are a major hope for the future as more citrus farmers in the region are encouraged to use the tracks to access lucrative export markets.

By 2021, EKM Exports forecasts 3.7 million cartons of South African produce will head for international markets. By 2022, four million cartons will be moved. This demand will emerge from a consistently first-class product, and a seamless link between producer and consumer.

“We are proud to say that, through our consistency and dedication, GoGo has now gained a reputation as ‘the Rolls Royce of fruit’,” the company states.