Why supporting local manufacturers could impact your bottom line

by Lena le Roux. Many of us know and have a gut feel that we should support and buy local – local brands from local companies that are procured from local manufacturers or local farmers. The reality and practicalities of this for different industries and in particular, our retail industry, is more complicated. This is true especially when it comes to the economies of running a store.

So let us dig deeper into this buy local concept. We can start by looking into one of the least obvious topics, refrigeration. Refrigeration and lighting account for over 50% of total energy use in the average supermarket, so this can be a “hot” topic. To buy local or not buy local? This is the question. Let us also narrow it down further and look only at the running costs of stand-alone fridges and freezers in your store. Let’s further drill this down to those that have been given to you by your supplier’s brands, to house and display their products, i.e., in frozen foods, flavoured waters, etc. The buy local concept then thus applies to suppliers. But it applies to the retailer too.

Your monthly electricity costs of refrigeration definitely have to be bought into consideration. Fridges and freezers that are built to perform in certain environments, use a certain amount of energy. If for example your supplier’s fridge is manufactured for a European environment, then in South Africa’s hotter climate, it may very well need to use more electricity. This to run harder to cool or freeze what’s inside to the acceptable temperature. We know a retailer’s environment is generally air conditioned but if there is an issue or a breakdown, then the ambient temperature on a hot day will require the unit to work harder so your customers can pull out an ice-cold beverage, for example.

Also, if a manufacturer is from here, then the parts will be readily available in South Africa. So, if a spare part needs to be ordered, you won’t need to wait long for a replacement to get the cabinet up and running again for sales. You might wait though and loose out if the spare parts need be imported. Lead times are often long when freight is involved.

The marketplace in South Africa is also well used to a brand and product made in the same country. So, there will be standardised available componentry and service technicians familiar with the brand and easily on hand if needed. A South African manufacturer will also design the equipment for how it will be used in the environment. So not just from a performance perspective but also, they will design from a durability and reliability point of view in the relevant environment. For example, a unit with infinity edges could be placed in your store to showcase a new brand of energy drink. If your store is a large Cash ‘n Carry Store in South Africa, a fork lift could drive into the glass door by mistake in the narrow and dense isles, breaking it. The store then loses potential sales, as customers won’t want to buy a warm drink.

All these reasons suggest why retailers and suppliers should always look to buy local first especially with the bigger picture in mind to stimulate the home grown economy. This is if the government ensures that they do everything they possibly can to ensure that local companies have the ability to be more competitive than imports. With regards manufacturing refrigeration in South Africa, the steel supply and implementation of the Africa Continental Free Trade Area (AfCFTA) has a huge impact on these variables.

Buying locally makes sense and we should all encourage it as it could definitely affect a retailer’s bottom line, but positively.

Main image credit: Staycold.

Lena le Roux is managing director of Staycold International. She has 27 years of experience in the refrigeration industry; and a passion for buying local, as it supports an extended value chain and contributes to much needed employment in the outlying areas of South Africa.

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Staycold International is a sponsor on RetailingAfrica.com and with Retailing Africa, will be publishing a series of thought leadership articles on the refrigeration industry in South Africa and Africa. Staycold International is a South African refrigeration company which manufactures self-contained commercial fridges and freezers for South Africa and the African continent from their factory in Parys, South Africa. Their business began in 1979 in Parys, where their home base factory is still located; and where they manufacture units primarily for the beverage and hospitality industries. They have been running for over 40 years with the principles of quality, efficiency, performance, reliability and durability.