Western Cape Business News

Send  Share  RSS  Twitter  27 Mar 2012

CLOTHING: Retail Relief For Rag Trade


Recent Western Cape Business News

IS incorporating a clothing manufacturing line into a retail entity about to come into fashion?

Recently CBN reported that sprawling fashion retailer Foschini bought its longstanding clothing manufacturing supplier, Prestige Clothing, to improve its competitive advantage. Prestige Clothing will be streamlined and grown to manufacture exclusively for Foschini – which should give the retailer a considerable advantage in sourcing (and selecting) fashion ranges.

But is having Prestige – one of the better known Cape clothing companies – functioning as an in-house supplier really, as some commentators have suggested, a way to prop up the clothing sector? It’s a critical question, coming at a time when the largest clothing and textile manufacturer in SA, Seardel, has once again warned of job losses.

Prestige will no doubt be grateful for steady demand, and an ability to manufacture cost effectively to specific demands from a single client. But surely having an in-house clothing manufacturer means that Foschini could limit its buying from other manufacturers?

The fashion retail/clothing manufacturing link is not exactly a new one. Pep has long held its own manufacturing arm.

Rex Trueform, famously, did it the other way around, creating a retail chain (Queenspark) in the early nineties to trade off its (then) core clothing manufacturing capacity.

The arrangement worked well, until Rextru’s clothing arm saw its outside business dwindle to unprofitable levels. Initially it sold part of its clothing manufacturing capacity to Brimstone (which owns House of Monatic), and late last year sold the remaining parts (which were mainly servicing in-house demand) into Pals Holdings.

Sportware retailer Holdsport – which sells a decent amount of sportswear and outdoor wear – also owns in-house manufacturing capacity through its specialist brand, First Ascent. Recently Holdsport expanded its clothing line with the acquisition of Cape-based outdoor wear specialists, Capestorm.

As a whole, it would appear that Holdsport is carrying through its manufacturing capacity profitably. Presumably Foschini, which has an enviable performance record in the eyes of investors, must be confident of doing the same.

But what about the rest of the clothing sector? One might need to pay close attention to developments at Seardel’s struggling clothing hub (the textile division is faring considerably better) now that innovative empowerment group HCI has got to grips with the business.

Seardel has already (as reported last year in CBN) launched a clothing brand hub – a kind of fashion house. It is still at an early stage, but CBN wonders whether Seardel – with HCI’s financial muscle – might not consider developing a retail presence to improve the utilisation of its clothing manufacturing capacity.

Brimstone – which is a major shareholder in Rextru – also had plans to build a fashion hub around the production capacity at House of Monatic. Unfortunately these fizzled out after Brimstone uncovered serious irregularities at a company in its brand extension cluster.

But the chances of Brimstone taking another tilt at extending House of Monatic into the retail/brand house sphere seem slim. Unless, of course, there is perhaps a way to link up with HCI and Seardel – especially if the latter’s brand house strategy shows potential.

The situation with Salt River-based Pals is also intriguing. The company is no longer listed on the JSE, so it’s impossible to gauge how operations are faring.

Pals’ business model is a little different in that it manufactures as well as imports garments from selected markets (including China).

Pals supplies Woolworths, Foschini, Edgars, Pick and Pay, Polo SA and Hilton Wiener as well as smaller customers and export business into Africa (defence and police forces).

One might guess the diversified retail client base the company services pretty much precludes Pals embarking on any of its own fashion retailing initiatives.

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