K I T K AT C A S H A N D CARRY
KIT KAT CASH & CARRY
Kit Kat Group’s Impressive
Expansion Continues PRODUCTION: Karl Pietersen
Pretoria’s Kit Kat Group is famed for its hugely successful cash and carry and Build Mart operations. But now it is focussed on rolling out its model nationwide, despite economic sloth. This is an ambitious business that is doing the right things and sticking to the values that built it.
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INDUSTRY FOCUS: RETAIL
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The importance of relationship building in business development has never been more prominent. Building strong bridges with customers and suppliers is now one of the decisive factors in business survival. All of the major players across all industries have loyalty schemes for customers and benefits for top suppliers. In the retail market for example, international players like Tesco, Costco, Pizza Hut and Nando’s all employ loyalty programs to build relationships with clients. In South Africa, Shoprite and Pick n Pay have their own versions, and even some of the most famous entrepreneurs of them all, Bill Gates and Steve Jobs, have been quoted saying ‘every day, we’re saying how can we keep the customer happy because if we don’t someone else will’ and ‘get closer than ever to your customers; so close that you tell them what they need well before they realise it themselves’. But relationship building is a quickly changing idea. It’s no longer a case of simply sitting down for a meeting or sending an annual ‘thank you’ note. It’s shrouded by social media influences and competition. This is true for both customers and suppliers. Look at LinkedIn relationships or example. Often, Directors of businesses are barraged with requests to connect but after they accept an invitation to ‘become friends’ they will never hear from connections again – the relationship is not real. American entrepreneur, Mike Muhney describes the situation in his book, Who’s In Your Orbit?: Beyond Facebook – Creating Relationships That Matter. “Social media has injected a sense of imbalance, especially in the younger generation,” he says. “I can’t rely on you to follow what I put out there on Facebook or Twitter and then think I have a relationship with
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you. I call it relational voyeurism: I want to poke around and see who’s in your network. Part of good relationship management is helping people not to forget you.” Face-toface still has a very important part to play in building trust, he says. This is very much the view held by Kit Kat Group joint-CEO, Ahmed Gani. The Pretoria-based cash and carry operation is growing quickly and positive relationship building has been a cornerstone in the organisations strategy, held among the company’s most important values. He strives for open and honest communication with customers and the same for suppliers. “We build up good relationships with suppliers over time,” he told Entrepreneur Magazine. “A lot of suppliers feel cornered by the large chain groups so they look for outlets of our type to leverage themselves and get into the market without being dictated to too much. “In order to sell competitively you’ve got to buy competitively so when we sit across a table and do a deal, we fight to get the best possible price, structures and payment terms but once we shake on it, we honour it.” And this commitment to mutually beneficial relationships counts for customers too. “Customers see the value of dealing with hands-on type operators,” Gani said. At the company’s headquarters in Pretoria, he ensured his office overlooks the exit so that he can see people as they leave. He wants to make sure people leave happy and smiling. “I want to see that nobody looks unhappy as they walk out. I want them to see me so that at least our eyes can meet and we can greet each other,” he said, highlighting the importance of personal interaction. “If you are
not satisfied you can meet the MD of the company in a minute and we can immediately try to rectify things so that you leave here as a happy client.” This approach is clearly working for Kit Kat. In the past three years, the company has seen major growth. It started out as a small café/corner shop business in 1953 when Gani’s Grandfather started up in Pretoria’s Asiatic Bazaar. It grew to include a handful of small retail outlets, before opening up a 2000 m2 cash and carry offering. A major milestone came in 1999 when Kit Kat opened its flagship store; a 20,000 m2 outlet just a few blocks from its original store. Today, the company is exploring international expansion have already built a presence in Dubai. It is looking at growing its online offering, investing in its website and delivery tools. The company is also looking at increasing its footprint by further exploring franchise-style options with its Kit Kat Express model. Kit Kat Express stores are designed to be smaller than the flagship premises, 200 m2 in size, but to act as suppliers into certain regions, buying from the company’s main store. According to Gani, it’s about creating customers for themselves. “We only have a few Express stores just now but we aim to grow that that up to 100 stores in the next two to three years.” The company’s reputation is something that the CEO is extremely proud of. “We feel highly contented that it is overwhelmingly accepted and recognised by our valued customers as a trustworthy brand. The trust of our customers in our brand constantly motivates us to offer better services,” Gani says. But with the state of the South African economy halting many plans for growth, is now the time to pursue growth?
INDUSTRY FOCUS: RETAIL
ECONOMIC SLOWDOWN Gani admits the economy is not as strong as it could and should be, but remains upbeat, mainly thanks to the reputation his company holds and the trust placed in the business by its customers. “The market has seen a few turbulent phases during the past year, but we believe there is an underlying improvement in the market sentiment,” he said at the end of 2016. With conditions worsening in 2017, times are now very challenging when it comes to growth. retailers around South Africa are feeling the pinch as
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the country’s outlook remains unstable and unpredictable. After entering technical recession earlier this year, and being downgraded by international credit agencies, confidence in the market is waning. Over the past six years, the retail sector has outperformed economic growth. However, analysts don’t expect this trend to continue this year. Edcon and Stuttafords have already seen dramatic effects of a poor trading environment. In July, IoL’s Business Report described findings from Rand Merchant Bank and the Bureau for Economic Research which indicated that business confidence in the second quarter of this year had slumped to levels last seen in 2009. “The retail landscape has changed and I don’t think we are going to see a lot of growth in the overall sector. We will see winners and losers and right now it’s going to be about evolution,” says Stefan Salzer, Partner and Managing Director at Boston Consulting Group South Africa. But Kit Kat Group continues to push forward and this is where its successful relationship building ability has come to the fore. Identifying the trends around online shopping some time ago, Gani and his team quickly set about updating the company’s digital presence. It is active across all prominent social media platforms, it advertises heavily to shoppers through Twitter and Facebook, and it creates weekly promotions to bring savings to customers. All of this comes through a well-planned digital strategy. Currently trialling a new e-commerce website, which has been in development for the past 18 months, the plan for Kit Kat Group is to have the full stock list of more than 50,000 products available to customers online. While the Kit Kat Express stores will probably only stock around 2000 products as
KIT KAT CASH & CARRY
they open, the website will allow any product to be shipped to an Express store for collection creating convenience and potential further business. Now is the time to invest in such a strategy. The recently released Internet Access in SA 2017 study from World Wide Worx with the support of Dark Fibre Africa, shows that the South African internet user population now sits at around 21 million meaning that the country will reach the 40% internet penetration mark this year. “Reaching the point where we can say every second adult South African is connected to the internet is a major landmark‚ because internet access is becoming synonymous with economic access‚” said Reshaad Sha‚ Chief Strategy Officer at Dark Fibre.
Kit Kat Group is proving that with determination and a commitment to strong core values, you can succeed when times are tough. This is a business setting an example to follow. International expansion, opening new stores, adding to the product range, buying property, creating jobs and all the time building successful relationships with customers and suppliers – the business case is extremely strong. “The journey has been brilliant; it’s been absolutely amazing,” says joint-CEO Riaz Gani. “We love change and we realise we have to adapt to the ever-changing economy and we have to adapt to the ever-changing world; that’s the reality of life. “We plan on becoming a national player in the FMCG
industry of South Africa – our philosophy is very simple: go big or go home,” says Ahmed. With many retailers being forced to hold back, or worse, Kit Kat Group is showing off its hard earned success as an industry leader, and this looks set to continue for some time to come.
KIT KAT CASH & CARRY 012 327 6100 info@kitkatgroup.com www.kitkatgroup.com
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Issue No.61
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JEGIE PADMANATHAN:
People Are The Power
of Bidvest Prestige ALSO IN THIS ISSUE:
CCI South Africa / Thebe Tourism Group / RPP Developments / ALG Estates
A S F E AT U R E D I N
ENTERPRISE AFRICA
AUGUST 2017