South Africa’s DIY market continues to thrive and is good news for independent retailers and the big chain stores. That success is also filtering down to the companies that supply these outlets, with L & G Tools enjoying a record first Quarter.
The company has its roots set in family tradition and L & G Tool & Machinery Distributors Limited was started in 1978 by Des Vacy-Lyle, father of the company’s current Managing Director Grant Vacy-Lyle.
“We started out with 7 staff, in a small building in North Coast Road, Durban, close to the Port,” states Imtiaz Ahmed, Deputy Managing Director.
“Over time the company grew organically and focussed more on machinery, power tools and hand tools and the business was marketed aggressively, enjoying a big growth curve in 1994,” he continues.
As the years progressed, L & G Tools undertook acquisitions, purchasing SRD, a complimentary business that added a range of bathroom accessory products and hardware. A further acquisition took place in 2008 when the company bought Compopak, a specialist hardware and iron monger business, while all the time the company was expanding its geographical footprint.
“Today we are a national company, with our headquarters still in Durban, but with hubs in Johannesburg and Cape Town, where we operate satellite offices,” states Ahmed.
“We don’t supply direct to the end user, only to retailers – and our business is split between independent retailers (who comprise roughly 55 per cent of our customers) and the chain stores.
“We carry around 4,500 sku’s, with up to 75 per cent of these imported (mainly from China, India and Taiwan) and the difference sourced by local suppliers,” he continues.
With customer service and on-time customer delivery at a paramount, the nature of the business puts a huge emphasis on efficient supply chain management, warehousing and distribution. Over the last few years L & G Tools has switched to outsourcing these crucial elements of the business, with great success, as Ahmed explains:
“Our warehousing is just under 10,000 square metres and located in Durban; the turnaround time between the port and our distribution warehousing is very quick and has improved greatly.
“We used to operate our own warehousing 24/7 with 107 staff. However we feel that our core capabilities lie in buying and selling so a couple of years ago we changed our approach and we now use Bidvest Panalpina Logistics for warehousing, who have brought a lot of sanity and world class efficiency to our operations. We now use 60 staff and don’t work a night shift, only the occasional Saturday.
“Deliveries are also an integral part of the business and we outsource our fleet management to two companies; with blue chip company RTT providing logistics to the chain stores and UTI Sun Couriers delivering to the independent stores.
“Forecasting is still controlled internally however and we regard this as one of our core aspects. We have our own planning and forecasting team and we use an IT program called Just Enough to review trends and forecasts. We run to roughly a 97 per cent strike rate and we have honed this system over the last 4 or 5 years,” Ahmed describes.
With the forecasting, Ahmed says that there is an element of seasonality, with the pre-Christmas spell always busy and a slight spike in January.
“We also experience another spike over June, as we head into winter as our sales of generators tend to increase. Going into September there is increased demand for spring garden equipment, garden machinery and hand tools,” he adds.”
Ahmed suggests that operationally the biggest challenge is to ensure orders get through the appropriate channels and arrive with the customer on-time and to expectations.
“We provide Bidvest with service level requirements such as delivery within 24 hours; while our lead times might be longer for the chain stores. We measure everything back to ensure we are maintaining our standards.
“The other area of importance is accuracy and ensuring there are no problems with order. We record any problems through a system called Corrective Action Requests (CARS) and we also have an audit team involved at this stage – however I am pleased to report that there are few problems,” he says.
The company recently invested in a new warehousing system called Streamline, which is currently being bedded in, but it is the commercial side of the business that excites Ahmed the most.
“We have just completed our first Quarter and set a new record for this financial period,” he states. “We have found lots of exciting new customer initiatives designed to help market a wider range of our products within independent stores.
“We also recently completed an agreement to exclusively sell AEG Power Tool products in South Africa and we are extremely excited about that.
“Within the country there has not been enough competition in the power tool product range with Ryobi dominating. We have now been awarded the distribution rights for the AEG brand, owned by Hong Kong company TTI.
“We are currently developing our marketing plan which we will be rolling out over the next 6 to 8 months for a range of about 20 different sku’s. It is an awesome brand and the quality is phenomenal!” Ahmed enthuses.
But there are more reasons for optimism, as Q1 underlined; “We have a new range of garden equipment under the Trade Quip brand which has just launched in late January and has been very well received, while we will also shortly launch a new range of ladders and safes.
“We are also currently working on a range of alternative power generation products such as solar power and we are excited for what 2015 will bring,” Ahmed concludes.