Cape Union Mart, one of South Africa’s largest family owned unlisted clothing retailer, celebrates its 80th anniversary in 2013.
The founding family is still actively involved and run the business together with a tightly knit team of seasoned professionals, who together have notched up over 360 years of service with the company.
Cape Union Mart was founded in 1933 by the late Philip Krawitz, the grandfather and namesake of the current Chairman.
The company started out as an army and navy type store, selling everything from the proverbial anchor to a toothpick.
The company grew under the late Arthur Krawitz, who took over from his father Philip in the late 1940s.
In 1970 the current Chairman joined the business as a third-generation family member and began a cautious expansion trail.
More recently, two of his three daughters, Martine Vogelman and Amanda Herson, joined the company’s management team as the fourth generation.
Strength in diversity
Today the Cape Union Mart Group employs over 2,000 people in nearly 140 stores countrywide and continues to see strong double-digit year-on-year growth in turnover and profitability.
Having firmly secured the lion’s share of the outdoor travel and adventure lifestyle market in South Africa, the company is planning a number of new Cape Union Mart stores and expansions which, by 2016, will see the company grow its footprint by more than 30%.
In addition to the nearly 80 Cape Union Mart stores countrywide, the group owns and operates 20 Poetry outlets and more than 40 Old Khaki stores. Old Khaki and Poetry developed into standalone brands after the respective ranges, which were designed for different consumer sectors, proved to be very successful in Cape Union Mart stores. The group’s activities also include a uniform business, Sparks & Ellis, which supplies security, traffic, fire and rescue, military and corporate uniforms.
The group’s manufacturing division, K-Way, which produces a large amount of the extremely popular range of technical outdoor clothing and gear has been lauded as exemplary in its approach to boosting the local clothing manufacturing sector. The factory has received a number of awards from government-run initiatives aimed at improving the competitiveness of the sector.
As part of the government’s Clothing and Textile Competitiveness Improvement Programme (CTCIP), K-Way received an award in July this year to acknowledge the factory’s commitment to best practice in world-class manufacturing. It was also one of the first players to become involved in the Cape Clothing and Textiles Cluster (CCTC), a partnership between the Western Cape Government, 31 regional manufacturers and 6 major retailers.
In 2012, readers of Getaway magazine chose K-Way as their favourite brand in the apparel, backpack, hiking, tent and travel luggage categories, while Cape Union Mart was named readers’ favourite outdoor retail brand.
Despite the diversity of Cape Union Mart’s offering and its eight-decade long legacy, the company has never retrenched a single employee in the course of its operations. A vast number of employees have been with the company for more than two or three decades and the company prides itself on attracting and retaining some of the best talent in the retail sector. This is done by creating a winning corporate culture and a workplace in which people enjoy their jobs.
A Legacy of Family Values
“Many of our staff have been with us for over 20 years, and some have even been with us for 30 years or longer. You don’t find that kind of commitment in the retail sector,” says Philip Krawitz, Chairman of Cape Union Mart.
“Every employee is indeed regarded as part of the family. We look after them, and they in turn look after the company. It has been this approach to traditional family values, a deep respect for our people and a commitment to developing their potential, which has ensured we’ve attracted the best talent.”
Krawitz believes that as a privately owned and family-operated business, the company has been able to take a longer term view that has allowed it to secure some of the best trading sites, attract good people and invest heavily in marketing, infrastructure and training.
“It’s this approach to ‘good old traditional values’ that has enabled us to grow our customer base, maintain customer loyalty and expand rapidly in the last decade especially. I believe our understanding of our customers and our focus on value-for-money has been key in driving our success,” he says. “Even during an economic downturn customers return because they are willing to spend money on durable, practical products that are well-priced.”
Krawitz acknowledges that success does not happen automatically in a family-run business.
“It requires hard work and comes with its own unique set of challenges. To ensure ongoing success we realised some years ago that we needed to professionalise the business and made a conscious decision to start operating like a listed company, even though we’re not one. Our Board includes two fully independent directors whose experience and competence has added immeasurably to the quality of the company.”
In pursuit of further professionalisation, Krawitz, his daughters and their partners participated in the Harvard Business School Programme for Multi-Generational Family Businesses: “It was a very valuable experience to further our understanding of the ‘business’ of family-run businesses and the unique challenges and opportunities that face such organisations.”
One of the key learnings was that no family member should enter the business without a good education and extensive experience outside the family business.
To that end, Martine Vogelman completed her B.Bus.Sci degree at UCT and spent several years at Investec Private Bank. Amanda Herson obtained her B.Sci Econ at The Wharton School in Pennsylvania and her MBA at Harvard. She obtained her business experience at the Boston Consulting Group (BCG), Victoria’s Secret, and Highland Capital Partners (HCP) in the USA.
The company’s passion for education has seen most members of the management team completing MBA’s, Advanced Management Programmes and other post graduate degrees at UCT, Wits, and Babson College in the USA.
On approaching his 60th birthday, Krawitz started considering looking outside the company for a Chief Executive Officer. “We needed to ready ourselves for the future, and I faced the challenge of wanting to bring in some fresh thinking without losing the company’s sense of family. We needed an entrepreneurially-minded person who had a very strong track record in retail, who was passionate about a family-like business culture, and who was equally committed to the notion of leaving a legacy of doing good business.”
“Symbolically, we wanted to prepare the company for the next 80 years of operations.”
They found this in current CEO, Andre Labuschaigne, who joined the group in 2011. “Andre’s financial experience as the managing partner of PWC Cape Town, as well as his several years as CEO of Pep Stores, made him well suited to the position. However, his team approach, his great values and his people skills were the deciding factors in selecting him,” says Krawitz.
People and Service First
Labuschaigne echoes the Krawitz family’s sentiments towards the business in every way: “Our people are at the heart of what we do. If you look after your people first and give them an emotional purpose in the work they do, excellence in service and profit will eventually follow.”
He explains that the original service philosophy of founder Philip Krawitz Snr remains: “When he started the business in the 1930s, he literally found his little store nestled between a large OK Bazaars and a Woolworths. To keep his customers amidst growing competition, he realised that he had to find a differentiator for his business.”
This differentiator became personal relationships and personalised service, and today the company retains that service philosophy which is evident in the loyalty of its customer base.
Labuschaigne acknowledges that Cape Union Mart – and the retail sector generally – is not one of the easiest working environments: “We expect our staff to exceed service expectations and to perform in difficult conditions. But we also ensure that they are well-equipped, motivated and trained to do so.”
As part of its integrated people and service strategy, the company invests heavily in staff training and development with the number of qualifications per person in the company and in-store far outweighing other retailers. It also employs more staff per square meter than other retailers, and the company spends more on the average shop floor salary compared to others in the sector.
“The fact that staff are encouraged to use in-store products to live the outdoor life makes them the most knowledgeable in the industry,” says Labuschaigne. “We have a number of very creative incentives in place, and we ensure that our people are constantly exposed to the outdoor adventure lifestyle our customers enjoy.”
One initiative sees the company regularly sending teams of employees to Kilimanjaro. The teams are kitted out from their own stores, and wear and use K-Way apparel, tents and gear. To date around 80 employees have been to Kilimanjaro – an extreme, high altitude environment – where employees can test and experience the company’s products first-hand. More recently, a group returned from a trip to Mount Everest Base Camp.
Counter-Cultural Approach to Business
Labuschaigne adds that the company will continue to buck trends in the retail sector. “This is part of our success. We don’t follow in others’ footsteps. There have been instances where we purposefully went against sector trends to maintain our unique positioning – even when we were uncertain whether we would succeed.”
An example is the company’s very purposeful strategy to shorten its supply chain and in turn commit to supporting local manufacturing. The K-Way factory in Ottery, Cape Town, employs over 200 people and the local cut, make and trim factories to which it outsources some production employ a further 100 people.
Although a comparatively small figure to mainstream clothing factories, the difference for K-Way is that the factory has been employing more people in the last few years, and not less.
K-Way has invested heavily in state-of-the-art capital equipment and was one of the first to incorporate new technologies like “Sew-free” methodology. The factory also boasts laser cutting machines, ultrasonic seam-welding machines, waterproof seam-sealing machines, and electronic marking, grading and cutting machines.
Having an integrated manufacturing and retail set-up is another reason for the company’s success. When customer demand for a particular garment rises, production can be switched to supply within days. Since taking that approach, the sales of K-Way branded products have grown five-fold over the past eight years.
When looking to the future and commenting on the current prevailing sentiment that the retail sector will continue experiencing a slump, Labuschaigne concludes: “We’ve never been daunted by negative predictions. Our outlook remains positive and we’re seeing continued growth despite a challenging economic environment. We’ll always do what’s right for the business and for our people. It’s in our DNA.”