DEFY APPLIANCES
DEFY APPLIANCES
Defy Cooks Up New Plan for Sub-Saharan Africa Expansion PRODUCTION: Manelesi Dumasi
Driving a new brand purpose, underpinned by vital strategic pillars, Defy Appliances is proactively looking to drive market share across sub-Saharan Africa. CEO Evren Albas is keen to transform the business by implementing a collaborative approach across the entire value chain. 2 / www.enterprise-africa.net
Defy Danskraal Warehouse
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In 2015, long before Covid and before today’s political/ economic turmoil had become part of the daily discussion in South Africa, one of the country’s leading manufacturing businesses was busy planning its continental expansion. Defy Appliances, part of the global Arçelik business, has been active in South Africa for more than a century. Now dominant across the country with a range of modern home appliances, Defy is looking to make the most of its international connections to push hard into subSaharan Africa. Enterprise Africa heard from former Defy Marketing Director Rajan Gungiah in 2015 and even then, African expansion was on the cards. His idea was to move into two new countries each year for the next decade, while promoting significant investment and efficiency improvements at plants in South Africa as a major advantage over competition.
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In 2018, Evren Albaş was named as the company’s new CEO. A veteran of Arçelik group, having started as an engineer 27 years ago, Albaş brings with him an appetite for growth and a renewed focus on dominating the African market after an obviously turbulent 2020. Originally from Turkey, Albaş moved to South Africa four years ago to lead Defy Appliances locally while pushing into sub-Saharan Africa. He was labelled as the Regional Director for Arçelik in sub-Saharan Africa and looks after export from SA into multiple African markets. Arçelik owns 12 brands across consumer durables and electronics, and operates in 146 countries around the world. Apart from Defy in South Africa, another notable brand is Beko – recognised as a market leader in the UK and known as a global sponsorship partner of Barcelona FC.
SUB-SAHARAN GROWTH “From the beginning of 2018, Defy started to operate as the regional headquarters of the Arçelik global export business in sub-Saharan Africa,” Albaş tells Enterprise Africa. “We are managing our business in South Africa as well as the other 34 markets in sub-Saharan Africa. From Nigeria and Ghana in the west, Ethiopia and Sudan in the east, and all the way down to the DRC, Zambia, Zimbabwe, Angola, Namibia, Botswana – these are all within our territory.” The group has placed a major emphasis on the continent and is keen to gain a position among the industry front runners in all major markets, with a particular focus on major African economies. Where the Defy brand is not as strong as the Beko brand, the company will utilise all resources at its disposal to ensure market penetration. “Continental expansion is very important for us,” admits Albaş. “To get
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Defy and Beko among the top three brands in the big African markets such as Kenya and Nigeria is a big target for us. We are doing everything to ensure we achieve this target including product strategy, strategic relationships, and good marketing.” Currently, 80% of the product range sold into Africa – which includes washing machines, refrigerators, ovens, hobs, dishwashers, freezers and cooker hoods – is manufactured in South Africa at plants in Jacobs, Ezakheni and East London. The balance is shipped in from Arçelik manufacturing facilities around the world, from as far away as Turkey, Romania, China and Thailand. “We are organically and inorganically well-connected to the markets in Africa. For example, in South Africa we have seven sales branches across the whole country and we have local and regional teams through dealer stores who manage the day-to-day relationships. We have this across Africa
too. We have 34 dealers with at least one in every sub-Saharan country. We are about to invest into an assembly line in Angola and this local presence and local connection gives us an advantage in terms of supply chain management, accessibility, and managing relationships,” details Albaş. Over the next decade, you can expect to see product development and innovation from both the Defy and Beko brands to ensure suitability for continental operation. Clearly, subSaharan Africa is a very important sector for Arçelik and Defy, and the group will push whichever brand helps secure market share. “Based on brand awareness, which is different in each country, we will go with Defy or Beko. Due to historical business connections, Defy is wellknown in southern African nations like Zambia, Botswana and Namibia. On the west and east, we mainly promote Beko brands,” confirms Albaş.
SOLAR HYBRID In February, Defy launched a groundbreaking new fridge freezer product which makes use of traditional electricity sources as well as solar energy when possible. The Solar Hybrid product switches between power sources based on the best available supply. The statistics speak for themselves: reduction in energy cost of up to 44%, food stays frozen for 49 hours even without power (load shedding), and the cost is less than R6000 – cheaper than most alternatives. This product has been designed with Africa in mind and will be an important marker for strategy going forward. Defy is a ‘Proudly South African’ company, committed to enhancing capabilities and opportunities in South Africa and this, according to Albaş, helps differentiate the company from the rest. “We have a real understanding of consumer market needs,” he says. “Africa is a different market and the buying attitude is different. Economic
Defy Danskraal Warehouse
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// WHAT WE STAND FOR IS WHAT WE STAND ON – THERE IS NO PLANET B AND WE MUST DO ALL WE CAN TO PROTECT AND PRESERVE SO THAT FUTURE GENERATIONS WILL LIVE HERE HAPPILY AND HEALTHILY // power in terms of scale compared to the world average is different. You have to adapt according to the consumer needs in terms of product innovations, cost structure, total cost of ownership when offering a product to consumers. Our local understanding really separates us from others.
Defy Offices
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“Defy is a South African company,” he continues. “We were established in 1905 and last year was our 115-year anniversary. As a company coming from humble beginnings, starting out producing stove parts, we are now producing state-of-the-art home electronics. There has been a big transformation in a country like South Africa which has had many ups and downs due to political system changes and macro-economic and social crisis. Surviving in such an environment and bringing the business to where it is today is a great transformational story which makes us resilient. We were here 115 years ago and we will be here 100 years from now. This makes a big difference and gives great confidence to our business partners when it comes to the continuity of our business.” The first-of-its-kind solar hybrid appliance was available through 78 stores around South Africa at the end of February. A simple installation process is managed, countrywide, by a trusted Defy partner and ensures longevity. By removing the need for costly inverters
and batteries, this Solar Hybrid brings the total cost of ownership down dramatically and answers an oftenasked African question. Defy will also soon roll out development of larger fridges and freezers to work with the Solar Hybrid system. Acting as a leading solutions provider for the markets in which it operates is a key part of Defy’s new strategic brand pillars which Albaş will be pushing hard through 2021 and beyond. BRAND PILLARS y reforging the company’s brand purpose, and looking at what Defy stands for as a corporate citizen and as a global operation, Albaş is bringing further Arçelik thinking to South Africa. At group level, Arçelik aspires to the vision of ‘Respecting the World, Respected Worldwide’. Defy, through its own brand pillars, will drive this vision in sub-Saharan Africa. “We are trying to roll out our new brand purpose and align that with our business strategies. We are excited to spell out this purpose: Pioneering
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our Future Together. It resonates very well in Africa which is a continent with obvious challenges but with a great and promising future,” he says. “Internally, we have had workshops to make it crystal clear in terms of our core, what brings us in to the office and factory every day and what makes us work hard. We write this as our brand purpose and we strategize everything around that.” The four pillars are: Pioneering Growth, Winning Together, Transformation, and Generational Custodians. For Albaş and Defy, these pillars encompass the entire Defy operation and provide a structural framework on how to move forward. “First, Pioneering Growth. In order to do that we are continuously coming up with innovative products and tailor-making new technologies. We have launched the world’s first solar hybrid appliance – a clear requirement on a continent which is energy scarce and where cost of living is an important parameter. “We are supporting this by investing in manufacturing efficiency and manufacturing quality. Right now, we have a lot of transformation projects in all of our factories. For example, in our cooking factory in Jacobs, Durban is undergoing a big transformation where we are investing in a lot of new technologies. We are calling this project ‘Jacobs Reborn’. It is a fascinating name for us as this factory is 115 years old. Our company established here and is still operational here, and investing in Jacobs Reborn is meaningful for us. “In Midrand, Johannesburg, we opened a large consumer experience centre to demonstrate all of the new product innovations to consumers. In Kenya, we are opening a big retail laboratory in Nairobi to bring a new retail understanding to how we sell the appliances.” Defy also continues to invest in new businesses, including small domestic appliance ecommerce offerings, to generate more revenue for the company
and for business partners, building a stronger industry. Secondly - Winning Together. “This is a very important ambition for all of the company and we are trying to create a ‘one team’ understanding with our suppliers, workers, and dealers, and this is something we have become more aware of while we were under harsh lockdown,” admits Albaş. From 26 March 2020, South Africa entered its initial period of strict lockdown – one of the world’s most severe. For many businesses, this time was fraught with worry and frustration. But Defy engaged its entire employee base and business partners, ensuring continued operations as one team, with one goal. Across sub-Saharan Africa, the company ensured that every member of staff was aware of their contribution.
“We were impacted but we managed to keep our operation up and running through this understanding,” says Albaş. The third pillar for Defy is Transformation. This involves making use of the Winning Together mentality to include as many as possible in the company’s success. Transforming supply chains, delivery models, product diversification strategies and operational thinking will help Defy to lead the industry in a new direction. “By implementing our brand values, internally and externally, we are involving our partners in the business – suppliers and dealers – and finding ways to express the Defy transformational message,” the CEO says. “In order to do that, we are investing in breakthrough transformational projects like
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opening authorised service centres in South Africa so that we can accelerate our service quality. We are investing in Artificial Intelligence for our supply chain and demand planning – we are studying machine learning algorithms to model our production demand and sales forecasting. We are investing heavily in development of our R&D capabilities, going beyond the South African borders, hiring engineers from Turkey to come and work in South Africa.” Defy will make use of the HR capabilities at Arçelik to identify suitable candidates for development programmes. Already, this scheme has taken African engineering students learning at premier Turkish educational institutions and helped them into the business to progress new product ideas. The final brand pillar for Albaş is being Generational Custodians. “This is all about building a sustainable future,” he says. “What we stand for is what we stand on – there is no planet B and we must do all we can to protect and preserve so that future generations will live here happily and healthily.” To better manage its footprint, Defy is increasing the use of recyclable materials in its production across
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almost every product group, utilising more energy efficient technology in its manufacturing facilities, and is following a range of other energy saving initiatives. “For example, in South Africa, we started an energy efficiency awareness company which is customer educational. We will train each consumer on what the energy efficiency label means and how much you can save if you buy an energy efficient appliance. If all South Africans moved up one level on the energy efficiency index, we could stop using two of the major power plants and stop using coal.” Arçelik is the global leader on the Dow Jones sustainability index with continued sustainability efforts. It is the only appliance manufacturer to be ranked in two consecutive years. FOR AFRICA Without doubt, Defy has not let the Covid-19 crisis dampen its ambitions and has in fact become more determined to deliver its brand of upliftment and opportunity. For Albaş, the company is more than white goods, it is more than a revenue feed into a larger global entity, and it is more than 100-years of development.
“We have 2700 people and it’s a big workforce that we are very proud of. They are connected through the business through our new brand purpose. We connected with people at every level and everyone knows about the strategic pillars. We are engaging everyone in the challenges and successes that we face, and we feel that everyone is well-briefed in what is needed for the future. “We also want to create more employment,” he confirms. “In my opinion, a sustainable future is not all about products saving energy and being more recyclable; we have to bring a more inclusive financial system to life in Africa. The number of jobs is limited and young people are out there looking for jobs, so if we can offer more jobs and employ more people, across all of Africa, that will be a great win. It will increase our social impact as a company and that is one of the most important objectives for us. “There is very rich human capital – the population in sub-Saharan Africa is already over one billion people and that is expected to boom over the next 15 years. These are young, creative entrepreneurs from humble backgrounds. This brings an amazing
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positivity to the continent and we are very focussed on this, looking at how we can be a part of this growth with our strategy pillars.” External relationships will also be enhanced, and there was clear evidence of the company’s desire to foster connections during the country’s closed period as a result of the pandemic. “During the harsh lockdown, we reached out and checked the financials for those that needed support. Based on our capabilities, we tried to extend help and organise recovery plans for postpandemic work.
// WE ARE ENGAGING EVERYONE IN THE CHALLENGES AND SUCCESSES THAT WE FACE, AND WE FEEL THAT EVERYONE IS WELL-BRIEFED IN WHAT IS NEEDED FOR THE FUTURE //
“Our business is not just buy and sell so we have a long-term relationship with our suppliers. We are continuously developing new products and we need to offer spare part availability, and that requires a great process and business alignment with our partners. We are organising strategic meetings with our suppliers annually so that we can make them part of our new designs and involve them in the strategy. We want to use their knowledge and engineering to manage our design processes in a more agile way. Although they are separate entities, they are integral to our business so we treat them as part of the company,” says Albaş. One product that found itself among the Defy range as a result of the pandemic was a specially designed ventilator used to assist critically ill patients with breathing if they are sedated or struggling thanks to virus symptoms. Manufactured at the company’s plant in Jacobs, the Impilo – the word for ‘life’ in Zulu and Xhosa – was lauded recently for its innovation. Developed in partnership with the University of Cambridge Open Ventilator System Initiative team, the Impilo received the Royal Academy of
Engineering’s President’s Special Award for Pandemic Service, as a result of their efforts in manufacturing mechanical ventilators for developing countries during the Covid-19 pandemic. The CEO praised local innovation and design teams, as well as the entire supply chain involved in bringing the life saving invention to the fore. Support from Arçelik, Beko, and Denel Land Systems was important and has helped to improve manufacturing methods in the country. Clearly, Defy as a brand, alongside its global parent, is bringing original and innovative ideas to a market that is yearning for progress. With a refreshed brand purpose and a strategic roadmap detailing how this purpose can be achieved, Defy is well positioned to grow after the difficulty faced by all in 2020. “It has been a long year but I am hoping and expecting, with the amount of science and technology in our hands now, that we can handle this and move on within this year,” Albaş concludes.
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