BFS-BARKER GROUP
BFS-BARKER GROUP
Growth, Consolidation
Then Growth Again PRODUCTION: David Napier
The BFS-Barker Group comprising of Business Furniture Solutions and Barker Street Office Furniture is one of the leading names when it comes to kitting out office space in Southern Africa. With offices in Johannesburg, Pretoria and Cape Town, and a high volume manufacturing facility in Johannesburg, this is a business that is readying itself for another strong period of growth. Founder and group CEO, Elan Kabb talks to Enterprise Africa about bringing the company from nothing to a major industry player. 2 / www.enterprise-africa.net
INDUSTRY FOCUS: MANUFACTURING
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The market for corporate office furniture in Southern Africa is significant. Perhaps one where work often goes unnoticed, this industry sector is a strong, growing corner of the wider furniture manufacturing industry, and its impact is notable. According to Business Wire: South African manufacturing sales of furniture amounted to R16.2bn in 2017, an increase of 6.6% on the previous year. A total of 2200 registered companies in the furniture manufacturing sector, employing around 26,400 people, contributed about 1% to manufacturing GDP and 1.1% to manufacturing employment. Making the most of manufacturing and distribution is the key to unlocking the massive potential. Sales alone can only take you so far and manufacturing without a clear path to market can be challenging. So, bringing research, design, manufacturing, sales, marketing and distribution under one roof to vertically integrate the value chain makes for a highly successful offering. This is the story of the BFSBarker Group. The group incorporates Business Furniture Solutions, a full-service office solutions provider and stockist established in 2003, as well as Barker Street Office Furniture, a large-project office furniture manufacturer established in 1986. With not much more than a can-do attitude, the company has grown from a simple buy-and-sell operation to become an end-to-end service provider from design and manufacturing to implementation. As a level 2 Black Empowered, and 60% Black-owned group of companies, headquartered in Johannesburg, the BFS-Barker Group is working with some of the top corporate names, providing unique, quality office furniture and support for businesses small and large. With the acquisition of Barker
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// EVEN THOUGH WE HAVE HAD HUGE GROWTH SPURTS IN THE PAST, WITH ALL THE ELEMENTS COMING INTO PLACE, WE ARE WELL POSITIONED TO CONTINUE OUR PATH OF GROWTH // Street Office Furniture in 2017, and the creation of the BFS-Barker Group, BFS has indeed made the South African office furniture industry sit up and take notice. FROM HUMBLE BEGINNINGS Starting out in the family business, selling domestic residential furniture, Kabb learnt the industry from the ground up. “My father was an entrepreneur and taught me all about business. When I looked at branching out on my own, I was more comfortable taking risks thanks to the lessons I had learnt from him,” he tells Enterprise Africa. At that time, the domestic furniture market was undergoing changes, and with his entire family exposed to the B2C environment (where Far Eastern imports were taking over), Kabb decided to explore a similar but different market and he saw the potential of the corporate office furniture market. “I started the company when I was 28, working from home, as a one man show. Initially, we were just a buy and sell business and we were not really distinct from our competitors at that stage as we were still learning the industry.” BFS found success through innovation. “Initially, in 2003, we grew the business through internet marketing, as there were very few people in this space then. No one understood Google or online marketing and that was where we got in, at exactly the right time. “At that stage we didn’t even need to go out and find business, it simply came to us. The business grew organically but slowly giving
us time to build relationships, and grow the reputation of the brand. An early turning point for us came when we secured a large profitable deal that financed our first showroom,” he says. “Thereafter, it was an iterative process of testing and spreading risk. We learnt our way, and then increased our ambition as we grew.” BFS first built capacity and process quality before starting to target some large clients, where they could have an impact across bigger infrastructure. From there, they had confidence to go out in the market knowing BFS would be able to deliver. “We got to a point where we needed to be more in control of the larger supply chain and become vertically integrated. We needed to manufacture for the purpose of feeding our branches in Pretoria, Johannesburg and Cape Town,” details Kabb. “We had a critical mass where, if we could manufacture for ourselves, we could achieve a higher margin and control more of the process.” In 2017, this strategic goal became reality with the acquisition of Barker Street Office Furniture. Together with the manufacturing capabilities, Barker Street also had
// WE BASICALLY DO EVERYTHING IN-HOUSE AND OUR CAPABILITY TO DEVELOP PRODUCTS IS EXCEPTIONAL //
BFS-BARKER GROUP
an established customer base in the corporate market, a high level of technical manufacturing skills and project management expertise suited for the large corporate market. Recently, major banks and government businesses, tech companies, automotive producers, and many more have placed trust in the BFS-Barker Group. Barker Street recently furnished the head office and a number of branches for Barclays Bank in Mozambique. The scope of their work includes, the back office furniture, bank hall furniture and bulletproof teller counters. The banking industry has become a niche for Barker Street with customers in Zambia, Botswana, Namibia, Mozambique and South Africa. In South Africa, with Absa and its new corporate identity, there is an entire range of furniture to match their new brand that is being developed. Barker Street also completed a project for over 400 African Bank branches in 2018. “In Botswana, we undertook an intricate project with the Botswana Unified Revenue Service in a brandnew building in Gaborone. In South Africa, we recently completed a project for BMW for the office and factory in Midrand and Rosslyn respectively. We are currently manufacturing for a project for MTN where we are producing 450 high specification workstations. Depending on the complexity of the product, we can complete similar projects in four to six weeks,” says Kabb. Considering the humble beginnings of BFS, the success that has been achieved is remarkable and a testament to what can be achieved with hard work and perseverance. “I started the business 16 years ago with R14,000 in my pocket and didn’t take a salary for the first year. We are very fortunate that we are now dealing with top corporate businesses, but it took many years to get here,” adds Kabb.
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INDUSTRY FOCUS: MANUFACTURING
// WE ARE ALREADY BASED IN PRETORIA, JOHANNESBURG AND CAPE TOWN AND THE NEXT STEP FOR US WOULD BE TO GROW IN OTHER POPULATION-DENSE CENTRES //
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GROWING, CHANGING In the early 2000’s, the industry was more structured with manufacturers supplying dealerships who in turn sold to end users. Whereas today, there are very few actual office furniture dealerships that remain, manufacturers are mostly supplying direct to businesses, especially larger corporates, as they have the required infrastructure to support their needs, and are more competitively priced. What is left of the dealerships are mostly smaller “agents” that don’t have the infrastructure and competitive advantage behind them. “There has been a lot of change in the market over the 16 years we’ve been in the industry, and looking back it probably would be a lot harder to start over today and achieve what we have,” explains Kabb. Today, after realising steady growth until 2017, and then achieving significant expansion through the acquisition of the Barker Street manufacturing facility, the BFS-Barker Group is building for the future and preparing for a major growth push. “After acquiring the factory, we are currently in a consolidation phase having just grown the business staff complement by three and a half times and our premises size fivefold,” explains Kabb. “We are now gearing for the next growth phase which will come through product development and strategic targeting of lucrative market segments.” The 11,000 m2 manufacturing facility is both impressive and diverse. It consists of a sheet metal and engineering factory with its own powder coating plant, a woodwork factory and an upholstery factory which affords the BFS-Barker Group the ability to combine these processes and materials to design and manufacture distinct and unique products. “We basically do everything inhouse and our capability to develop
BFS-BARKER GROUP
products is exceptional.” says Kabb. “Because there is so much furniture in the market that is very ordinary and generic, the challenge for any business is to have exclusive product which is cutting edge. We currently have a large range of products that are recognisable as our own and we are focussed on leading the market, whether it’s through unique components or styles, and for this purpose we have a research and development team constantly bringing through new concepts and products.” Growth for the BFS-Barker Group will also occur by accessing new regional markets and, while the company already holds a presence across the country, Kabb says gaining a foothold in all the big
cities to be close to local clients is a goal for the company. “We are already based in Pretoria, Johannesburg and Cape Town and the next step for us would be to grow in other population-dense centres.” “Although we have done projects nationwide, having a larger national footprint does allow us to build a greater reach when searching for new opportunities and for ongoing servicing of clients in those areas,” he says. The BFS-Barker Group will look to take advantage of government incentives that exist to bolster the manufacturing space, such as the Manufacturing Competitiveness Enhancement Programme. “We are looking at how we can use government initiatives
to enhance our manufacturing capabilities. If South Africa wants to grow export, then it must grow manufacturing and we are gearing for that growth. That said, we have just experienced significant growth and don’t want to be reckless with our growth so it has to be measured and responsible”, says Kabb. “When an economy is not growing at the rate that it should be, it does not mean that every company in the country is growing at the same rate. There are some companies that are going backwards but there are some that are striving forwards. GDP growth is just an average. If you are a diverse and progressive company with good strategies for management and delivery then you can grow, even in a tight market.”
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INDUSTRY FOCUS: MANUFACTURING
FORGING AHEAD The BFS-Barker Group has an experienced management team, some of whom have grown with the business from inception. However, an enterprise comprising so many areas requires a diverse set of skills and to address this they have appointed Hillel Cohen (formerly from the Bidvest Group) as the Chief Operating Officer. “I have always tried to work more on the business rather than in the business, not wanting to get consumed in the operational requirements.” says Kabb. “The management team basically run the business operationally and that has allowed me to step back and identify growth and acquisition opportunities which I could then harness. “With the arrival of our new Group COO at the start of 2019 stepping into the production and operational leadership position, I will now be able to focus more exclusively on directing the business from a product
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development, marketing and sales point of view.” However at the BFS-Barker Group, the goal is not to be the biggest. Kabb has never been concerned about having the largest stores, biggest factory or most employees – his focus is on delivering the best products and services while striving for constant improvement. “Sometimes it’s good to have long-term vision and aspire for growth but those goalposts always shift. We take the mindset of wanting to continually improve and we know there is no end to where that mindset can take us. We don’t want to be the biggest – we just want to do better today than we did yesterday and better tomorrow than we did today. If we can do that then we will achieve a lot.” There are only a handful of companies that compete for contracts at the top end of the office furniture supply space and, being long-term
investments, these contracts can be few and far between so it is vital that the BFS-Barker Group stands out from the crowd. Kabb cites the company’s experience and longevity, alongside its range of high quality products and services aimed at creating functional and inspiring workspaces as key differentiators. “It’s increasingly easy to source suppliers in today’s internet age,” he admits. “However, it can be difficult to know who is credible and who is reliable. As with most business support industries, the office furniture industry has evolved over the years, in alignment with current business practices and management trends. What differentiates us is the ability to understand how our client businesses operate and be able to propose contemporary product and layout offerings that will enhance and improve our clients ability to grow within their own field of business. To this end, we remain constantly aware
BFS-BARKER GROUP
of the business practices in successful global businesses, technological improvements and the latest products, materials and manufacturing processes within the office furniture industry. This enables us to optimise our broad manufacturing capability as well as a wide service offering. We have stock solutions for clients to pick off the shelf, we have a rental division for an interim solution, we have finance solutions where people can lease to own, we have a range of design services and the ongoing ability to service the customer.” By 2024, it is expected that the global market for office furniture will increase year-on-year by 4.7% CAGR, reaching US$94200 million and with South Africa as the second largest exporter of furniture on the continent, behind Egypt, the BFS-Barker Group will be targeting a big chunk of the export business as it continues to expand with clients across southern Africa.
After a relatively flat 2018 from a GDP growth and investment perspective, opportunities should become more apparent in 2019 with government trying desperately to attract new FDI into the country. During his State of the Nation Address, President Ramaphosa highlighted that new investment is critical in his vision for the future. “We have worked together – as government, labour, business, civil society and communities – to remove the constraints to inclusive growth and to pursue far greater levels of investment,” he said. As stability, certainty and confidence returns to the economy, investment spends on things like office upgrade and furniture renewal quickly begins to flow. And the BFS-Barker Group is prepared. In recent years, the manufacturing industry in South Africa has been criticised for failing to create jobs and contribute to the reduction of poverty and inequality. The economic
environment cast by a challenging political situation has not created a fluid and easy market for any business let alone manufacturing. But these economic concerns are not deterring the BFS-Barker Group. In fact, they are looking forward with appetite. “We still have a lot of capacity to grow the factory and I think we can expect to create more jobs. Realistically, we hope to double our staff complement in the next year or two – not that that’s a goal in itself – but we have the capacity and ability to create work with an increased market share” says Kabb. “Even though we have had huge growth spurts in the past, with all the elements coming into place, we are well positioned to continue our path of growth,” he concludes.
WWW.BUSINESSFURNITURE.CO.ZA
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ENTERPRISE AFRICA
MAR CH 2019