1. The Amazing SA Syndicate
Cohort 1
The Amazing SA Syndicate
ALP
Evaluate the challenges and opportunities faced by Manufacturing and Producing SMMEs to become suppliers of Major Retailers in South Africa

2. The Amazing SA syndicate
Introduce team members and positions in companies
The Amazing SA syndicate
Cohort 1
Syndicate 2

3. Evaluate the challenges and opportunities faced by Manufacturing and Producing SMMEs to become suppliers to Major Retailers in South Africa
Reasons for why we chose our own topic?

4. Table of Contents Introduction Business problem & Objectives Research
Setting the scene
Business problem & Objectives
Reason for the study
Research
Research methodology, challenges and opportunities
Research results
Discussion of findings
Alternative Solutions
Based on research findings
Final Recommendation
Solution to the business problem

5. Introduction

6. Introduction SMME (Small, Medium & Micro- enterprise)
Challenges and Opportunities SMMEs face in the SA Retail environment
SMME (Small, Medium & Micro- enterprise)
Consist of less than 50 employees with an annual turnover of less than R30,000,000
SMMEs underwrite 90% of all business opportunities
Contributing 50% of employment and GDP growth in a fiscal year

7. Business problem & Objectives

8. Business Problem
Problem statement
Evaluate the challenges and opportunities faced by Manufacturing and Producing SMMEs to become suppliers to Major Retailers in South Africa
The purpose of this research study is to provide recommendations and possible solutions on how manufacturing and producing SMMEs within the FMCG industry in South Africa can develop a sustainable route to market that enables them to navigate through the challenges in the industry and become reliable and consistent suppliers to Major Retailers.

9. Key Objectives Current Retail environment Factors influencing SMMEs
Challenges and Opportunities SMMEs face in the SA Retail environment
Current Retail environment
Determine the current retail environment that SMMEs operate within South Africa.
Factors influencing SMMEs
Factors influencing the ability of SMMEs to start up new businesses and to be sustainable
Opportunities for SMMEs
Finding opportunities for SMMEs to become Suppliers to Major Retailers

10. Inclusions & Exclusions
Challenges and Opportunities SMMEs face in the SA Retail environment
Manufacturing & Producing
Formal sector
South Africa
FMCG
Focus was only on Manufacturing and Producing SMMEs
The study only included SMMEs within the Formal retail sector
The study was conducted within the South African retail environment and excluded international data
All other retail sectors were excluded for the purpose of the study

11. Research

12. Retail stakeholders Interviewed
Research methodology 2
Financial Managers 4
Executives & Business leaders
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Key account managers 5
National buying managers 10
Store managers
The following Major Retailers participated in the interviews: Shoprite, Pick n Pay, Spar and Clicks.

13. Other stakeholders Interviewed
Research methodology 1
Dept. of Trade and Industry 2
Supplier 2
Sales agent
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Franchise owner 3
Case studies SMMEs 10
Survey & Interviews SMMEs
Stakeholders outside the Major Retailers that were interviewed and include stakeholders from Smollan and the Department of Trade and Industry.

14. Research discussion

15. Macro environment 28.5% Manufacturing 35.2% Trade 26.7% Unemployment
Current retail environment SMMEs operate within South Africa
28.5%
Manufacturing
35.2%
Trade
26.7%
Unemployment
rate
R1 trillion
Retail sales
R2,483 trillion
2017
Total Turnover
Industry contribution
Unemployment
Retail Landscape
Across all firms
Area of focus
Opportunity
Opportunity
60% large companies
10% medium companies
30% small companies
Small companies contributed % to the Trade industry
22.91% Small companies contributed to the Manufacturing industry
22% employment opportunities from Wholesale & Retail sector
12% generated from the Manufacturing sector
2017 South African Retail industry generated R1 trillion in sales = R31,900 per second
44% FMCG market

16. Competitive Retail landscape
Current retail environment SMMEs operate within South Africa
Shoprite
Pick n Pay
Clicks
20% market share
+2378 stores
7.8% sales growth
13% market share
+1685 stores
6.3% sales growth
20.8% market share
+646 stores
14.3% sales growth
Spar
Woolworths
Dis-Chem
9.5% market share
+2184 stores
5.6% sales growth
3.7% market share
+1400 stores
9.4% sales growth
22% market share
+129 stores
15% sales growth

17. Case Studies Challenges Poultry farmer Limpopo
Challenges & Opportunities faced by SMMEs
Challenges
Insufficient capital to expand
Insufficient knowledge about retail & trading terms
Insufficient skills
Poultry farmer Limpopo
Poultry farmer Mpumalanga
Opportunities
Access to capital
Major retailer assistance
Natural hair care Gauteng

18. Key Takeout Assistance from Major Retailers Lack of Knowledge & Skills
Challenges & Opportunities faced by SMMEs
Assistance from Major Retailers
Lack of Knowledge & Skills
Route to Market &
Legislation
Financial backing
Competitive advantage
Government assistance
Trading terms

19. Financial backing 83% Most challenging factor 59% Loans 33%
Challenges faced by SMMEs
59%
Loans
Most challenging factor
33%
Inheritance
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17%
Pension/Retirement
Lack of security
Credit history
Education
Business experience
Company registration
Unaudited accounts.
Research indicating that finding capital was the most challenging part of setting up a new business
83%

20. Lack of skills and knowledge
Challenges faced by SMMEs
Most important skills
Skills inhibitors to success
Small business failure is often attributed by a lack entrepreneurial knowledge and skills such as innovation and risk taking and therefore should not be overlooked as essential ingredients for SMME’s success
Leadership
Almost 50% lack leadership skills
Around 30% negotiation skills
15% communication
15% technology
Negotiation
Finance
42%
Communication
Leadership
33%
31% SMMEs
Technology
Are frustrated with the lack of skill and experience in the market place
Negotiation & Communication
24%

21. Terms imposed by Major Retailers
Challenges faced by SMMEs
Swell allowance
16%
Ranging not store specific
23%
Product
quality
Cost implication to list products
Back-end margins
50%
Listing & ranging affective
Listing & advertising fees
These listing and ranging terms, makes it extremely difficult for an upcoming SMME to get their products listed in order for their business to be successful.

22. Support Available to SMMEs
Opportunities for SMMEs
Government
Major Retailers
Black Business supplier development programme (BBSDP)
Co-operative incentive scheme (CIS)
National informal business upliftment strategy (NIBUS)
During 2016/2017 the Department trained informal traders, established 27 co-location points, reduced the vacancy rate by 9.8% and signed 14 partnership agreements
Assistance from Specialist food technologist
“Homemade” development programme, listing products in local stores
Assist SMMEs to comply to food labeling regulations and Consumer Protection Act
Assist SMMEs to improve packaging
Provide growing programmes
Access to centralised distribution centre

23. Alternative Solutions

24. Education Retailers Government
SMMEs have to take ownership over their own development and identifying the areas in which they lack.
Major Retailers can play an integral part in shaping the future and the economy in South Africa by simply focusing on assisting SMMEs to grow sustainable businesses.
Government plays an integral part when it comes to the ability of SMMEs to start new businesses. Funding is not the only assistance that Government could offer SMMEs, but rather a holistic approach to enterprise development

25. Final Recommendation

26. “One-stop” IT Platform
This would be an integrated portal which would bring SMMEs, Government, Financial institutions, Educational institutions and Retailers together to offer financial aid, advice, access to resources right through to investment opportunities and advertising.

27. “One-stop” IT platform
Integrated solution
Financial
Education
Marketing
Government
Retailers
The “One- stop” IT platform would be an integrated web based platform for SMMEs to gain access to ALL the information, advice, training, opportunities and assistance they would require to start-up and grow sustainable businesses..

28. Department of Small Business Development owning the Portal
Salaries
Department of Small Business Development owning the Portal
Software development
Travelling
Marketing & Advertising
Leasing
Stationary
Low Cost
R3,322,000
Start-up Capital
High Cost
R4,933,600
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Private Company owning the Portal

29. Income calculation
213,729 active Manufacturing and Producing SMMEs

30. Low Income –Profit Estimation
Income - expenses R0
R4,933,600 expenses (start-up capital required)
R10,936,450
R3,150,765 expenses (71% profit)
R3,371,318 expenses (79% profit)
R16,297,175
R3,607,311 expenses (83%)
R21,659,125

31. Project Timeline 2018 September 2019 May 2020 March 2018 October
“One-Stop” platform
2018 September
2019 May
2020 March
Start
Project scope & partnerships
Go-live
Create detailed business plan
Appoint project team and IT platform developer. Engage all relevant partners and sign-up agreements
One-stop portal GO-LIVE
Secure funding
Pilot & final testing
Engage stakeholders to secure funding
Final testing of platform, piloting of platform and tying up lose ends & finalising advertisements
2018 October
2019 November

32. Critical Success factors
Ability to bring Portal to life 1
Stakeholder buy-in
Without the buy-in of all stakeholders, the portal won’t be able to exist 2
Full participation of stakeholders
Each stakeholder to understand their role in the upliftment of SMMEs 3
Adequate marketing of portal
Both SMMEs and stakeholders should be fully aware of the product offering and the value gain from participating 4
Start-up capital
Necessary to start the entire project until income can be generated after which the project will be self-funding

33. What’s your next MOVE as a Major Retailer?
Best practice
Partnerships
Mentoring
Resources
Online platform
Trading terms
What’s your next MOVE as a Major Retailer?
The time to act is now, it is up to each and every Retailer, including ourselves to believe in the potential of SMMEs and do everything in our power to start making a difference.

34. UBUNTU “I am because we are”
If all the stakeholders involved would take an UBUNTU (“I am because we are”) approach in assisting and promoting SMMEs, we will most definitely see an uptake in sustainable businesses within the South African economy. The time to act is now, it is up to each and every stakeholder, including ourselves to believe in the potential our country has to offer. It is up to us to take the reins and make a difference, all that’s required is that we stand up and stand together as one.

35. Thank you!