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Cash In On South Africa’s Burgeoning Second-Hand Goods Market

You don’t have to open a thrift shop to attract the millennial consumer. They’re attracted to bargains from stores you may have turned your nose up to as investment options – second-hand shops and online marketplaces.

Diana Albertyn

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Second-Hand Goods Market

A 2% decline in the real net wealth of South Africans isn’t bad news for everyone.

While Stats SA has reported a corresponding slump in conventional retail sales in the first quarter of 2017, as a start-up franchisee, you can take advantage of this economic predicament.

“We need to get past the doom and gloom and recognise that there is a silver lining in the second-hand goods market,” says Cash Converters CEO, Richard Mukheibir.

Second-hand goods are making a comeback. Engaging well with the influential millennial stance to ‘reduce, recycle and repurpose’, is the best way to respond to this development.

Here’s why considering a franchise that’s geared towards previously-owned goods could be your best bet:

1Pre-loved is popular

According to Bidorbuy CEO Jaco Jonker, second-hand goods account for as much as 40% of all items recently sold on the company’s site.

South Africans are hoarding up to R35 000 worth of unused items in their homes, according to a survey conducted by fellow online marketplace Gumtree.

“Putting that cash back into circulation is quite significant,” explains Gumtree SA spokesperson Estelle Nagel, adding that the results of the survey indicate the stigma previously associated with second-hand goods has been firmly dismissed.

True to the millennial consumer, popular items sold on these sites include electronics, particularly smartphones and laptops.

2Greening the economy; stretching the rand

Richard Mukheibir

Richard Mukheibir

“Buying second-hand makes sense for the environment and has very clear benefits for those concerned about excessive consumerism,” says Mukheibir.

“It began with the trend for vintage goods, furnishings and clothing and has extended into savvy second-hand buying and selling of staples of modern life, such as electronic devices.”

While early adopters of new technology snap up the latest version of technological devices upon their release, environmentally conscious shoppers  line up to buy the discarded devices. This is because the latter know they’ll get a bargain as on these often nearly-new goods.

This should create a constant flow of stock and customers relieving you of that stock quite quickly and consistently.

3Cheaper and safer than before

While Mukheibir believes buying through a bricks-and-mortar store gives consumers additional protection and reassurance, Bidorbuy and Gumtree have seen second-hand goods surge in demand to just under half of all goods sold.

“There are dangers in buying second-hand online because you’re more vulnerable to scams and con artists,” says Mukheibir, but as of 2009 SA consumers’ are protected by the Second Hand Goods Act and they receive further support under the Consumer Protection Act.

So, while you may not think selling other people’s discarded items is a good business idea, consider the millennial consumer who’s looking out for the environment and their pocket. Whether you go online on bricks and mortar, remember that a few people’s trash could pave the way to your business’ success.

Diana completed a BA in Journalism in 2010 and has honed her skills as a newspaper reporter, senior communications specialist and most recently worked at a weekly magazine as a writer. She joined the EMTS Group in 2016 as a writer for Entrepreneur magazine and SmartCompany Networks. Passionate about honing her writing skills and delivering exceptional client results, Diana continues to keep a finger on the pulse of industry news and insights.

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How Body20 Moves Their Franchisees In The Direction Of Success

Nivi Kassiram abandoned the corporate life for a career in health and fitness by investing in a Body20 franchise. She never looked back.

Entrepreneur

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Nivi Kassiram, owner of Body20 Atholl Square in Sandton, left behind her career in finance to focus on being a new mom. Little did she know that this decision would lead her into a venture that would enrich her physically, financially and emotionally.

“After I had my baby I struggled to lose the weight,” she says. “I attended a Body20 trial session. I was new to the concept and curious to try it.”

Nivi loved the experience, but she saw something bigger than simply meeting her weight-loss goals — she saw a business opportunity. A franchise gave Nivi a way to join an established brand with proven systems, while still owning her own business.

“My husband and business partner, Priyesh, who is a doctor, has always been my support and was instrumental in showing me the upside of the business and the validity of the science involved.”

After doing her due diligence, Nivi confirmed that Body20’s unique electro muscle stimulation training concept has established a niche in an untapped market, making the brand a worthwhile investment.

Related: Healthy Body20 Franchise Leads To Happy Hearts

Leaving the comfort zone

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As a new franchisee in a pioneering location, settling into her role as a first-time business owner was a challenge, but a supportive franchisor eased her in.

“Bertus Albertse is hands on and extremely smart,” Nivi says of her franchisor.

“We’re close to him and understand how he operates. His energy, passion and approachability influences everyone in the business network.”

The personalised support coupled with the easy buy into the franchise was enough for Nivi to get into Body20. “We’re an agile brand that never rests,” she says.

Lessons learnt

Many franchisees buy a business and get someone else to run it. “Owner-operation is vital. You need to be part of the brand. It all ties in with having your finger on the pulse of your industry and the business, and knowing your clients personally. Your clients’ goals become your goals, you feel their pain and celebrate their achievements,” she says.

“We change lives doing what we do every single day,” says Nivi.

“Some clients have undergone so much of a transformation that they are even able to come off their blood pressure medication, or complete a sports event that has always been a goal.”

Related: Is It A Good Time To Invest In A Franchise Right Now?

To keep clients motivated, Nivi’s team focus on a personalised touch, ensuring each Body20 client feels special when they walk through the door.

“Your staff are an extension of your business and if they love what they do, clients will enjoy being there and look forward to each session. Our trainers all have their unique strong points and we’re always keeping the training fresh and dynamic, making sure we’re effective and ensuring the training is not boring. We’re a lifestyle brand and work relentlessly in the pursuit of a holistic, sustainable solution for our clients’ ultimate goals.”

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(Watch) Franchising Refuelled: The Road To Tshepo Maboa And Andrew Sehata’s Partnership

Tshepo Maboa and Andrew Sehata have gone from an independent business owner and petrol attendant respectively, to running two successful fuel retailer franchises in Pretoria. Eight years later, their partnership is growing strong — both within their businesses and with their banking partner.

Nedbank Franchising

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Watch this video on Tshepo Baboa and Andrew Sehata, Engen Fuel Retailers

Vital Stats

  • Tshepo Maboa and Andrew Sehata
  • Franchisees since: 2009

What made you decide to become franchisees?

Tshepo: I found it difficult to run a business from scratch having attempted to keep a laundromat and pub, among others, afloat before joining a franchise. I had all the business knowledge I needed to grow the businesses, but found myself lacking in terms of systems required to drive the business, and I learnt the hard way that it can be a dangerous combination.

Andrew: I used to be an employee at a fuel retailer franchise and my dream was always to be my own boss. By owning a franchise I knew I’d be able to create a steady income and help those in need of employment, as our country is facing an unemployment challenge.

How did you secure your first, and subsequently second, franchise?

Tshepo: I attended a lot of seminars and used any information I could get my hands on. The capital required is high, especially the unencumbered funds, so when Andrew told me he needed a partner for a fuel retail franchise he had been offered, I was already looking around.

Andrew: I think my journey from being a petrol attendant helped me to get to where I am today. I already knew the franchise basics so it became much easier for me to adjust to being a franchisee.

Related: Ocean Basket’s Top Lessons Learnt From 21 Years Of Being In Business

What has been the most challenging part of your journey?

Tshepo: Raising the capital to finance the business. Our first site was small, comparatively speaking, and we had to grow to acquire a second site. Rapid growth required a capital injection to keep up with the pace of growth. For example, our second site had a very primitive design when we acquired it, and with the revamp, the whole site had to be completely knocked down and rebuilt from scratch, and we added a fast food franchise in the process. All this was a very costly exercise. 

Andrew: Money is tight all around, but more so in the township. This often makes it difficult to sell items in our area of trade. Sometimes we have robberies late at night and shoplifting is rife.

Why did you opt for a partnership?

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Tshepo: Andrew needed a partner because he didn’t have enough cash to open a franchise on his own. I didn’t either, so it made sense to join forces.

Andrew: Tshepo helped in raising the franchise fees, and as you know, two minds are better than one. That’s why we are running two sites today.

How do you run the two sites jointly?

Tshepo: We have a 50% stake in both businesses. I manage the site in the CBD, because I live in Midrand and it’s easier for me, while Andrew runs the Mamelodi site as he lives in the area.

Andrew: We have been faithful to each, and sometimes we swap the running of the sites.

Related: Pick n Pay Franchisees Share Powerful Insights Into Running a Pick n Pay Franchise

Why is it important for successful franchisees to have a strong relationship with their banking partners?

Tshepo: When we moved our banking from our previous bank, the funds needed for any upgrade were easier to acquire. Nedbank really understands the nature of our business. They have a team that specialises in fuel retail so it’s made it easy for them to ask the right questions.

Andrew: Nedbank has put some orderly daily systems in place to make it easier for someone to understand his business needs. They also provide you with a professional team of staff.

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(Watch) Why Nando’s Is Clucking Its Way To The Top

Nando’s turns 30 this year. Trudi van Niekerk unpacks how the brand remains relevant and keeps growing.

Nedbank Franchising

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Watch this video on Trudi van Niekerk, Nando’s, with advice on running a company.

Vital stats

  • Player: Trudi van Niekerk
  • Position: Business Development Director
  • Company: Nando’s
  • Visit: nandos.co.za

Running a company — regardless of size — in South Africa can be challenging. Resource constraints, economic and political uncertainty all make consumer spending rather conservative at times. Nando’s Business Development Director Trudi van Niekerk knows this.

“The biggest daily challenge is that we are people-reliant, so we are driven to make the guest experience a good one,” says Van Niekerk.

“We ensure the guest leaves with the best possible experience, even if the staff is having a bad day.”

Nando’s knows what it’s doing. Van Niekerk says it’s about the people who make the chicken. “We invest heavily in our people; our Nandocas. Be it training or taking care of their basic needs such as health care and ongoing education.” It’s a differentiator that has seen the franchise chain continuing to grow year-on-year, even with the massive amount of global competition flooding the market.

“We operate in a very competitive environment and over the past 30 years many large international food brands have entered the local market,” affirms Van Niekerk.

Related: Make Krispy Kreme Happen

“Despite this, we have shown very impressive growth in both sales and market share in recent years. We have invested heavily in our brand and today it is one of the most loved brands in South Africa. We never compromise on product quality and we truly believe we sell the best tasting flame grilled peri-peri chicken in the world.”

Keeping the brand grounded

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“Nando’s owns a third of its existing footprint, which helps it to stay in touch with its market and the restaurant business model, which in turn, benefits franchisees,” says Van Niekerk. Not only does this mean the company will suffer most if the business goes awry, but it’s a great way to try out new products and ideas without using franchisees’ funds.

“It provides us with a great platform for trialling new staff incentives, looking at different layouts and testing new menu products’ viability.”

Nando’s has established itself in around 21 countries and plans to continue expansion in the near future, along with rolling out a lot more of its drive-thru models, which have proven very successful within the South African market, according to Van Niekerk.

“We’re potentially taking that idea into other markets we’re currently trading in. We’re also very focused on some new menu innovation ideas.”

Van Niekerk delves further into Nando’s success, future plans, and how Nedbank is helping to get them there.

Related: Should You Purchase An Existing Franchise?

Why is it important for successful franchises to have a strong relationship with their banking partners, and how does it benefit both the franchisor and the franchisee?

Having a strong relationship with their banking partners is critical for franchisees as it will assist them both in their short-term cash flow needs as well as their future growth plans. They need to have a financial partner that understands their business and can advise them of the best funding or investment mechanisms.

Nedbank’s Franchise Division has built up a strong track record and understanding of franchised businesses over the years. They understand the financial implications of a franchised business and are geared to tailor-make banking packages for a particular brand.

What attracts franchisees to Nando’s?

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The important thing in business is to have a business model that works. Franchisees need a healthy pay-back period so that they can generate a good return on investment. In addition to this, we provide a strong support base to our franchised system.

What are some of your biggest achievements that other franchise brands can learn from?

We have always stuck to our core values, namely pride, passion, courage, integrity and family. Those values are the point from which we make all of our business decisions, and act as a guiding light, no matter what challenges or innovations we are facing.

Related: 3 Secrets To Franchising Success

What role do your marketing campaigns and social media presence play in your success as a business?

nandos-drivethru

Our ads define and create the brand character that is Nando’s. We have become a social commentary brand in SA and we can say what other people are thinking. But we never lose sight of the fact that the goal of the advertising is to get guests to the restaurants, and to make people remember and think about the brand.

Fundamentally we are a brand that cares about the things that most South Africans care about, and so when we’re ‘firing things up’ (be it online or on TV) we are connecting with the hearts of our consumers. That connection builds brand love and has built the Nando’s business you know and love today.

Banking on success

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“Nedbank has made a significant contribution to our business, especially in supporting us and our franchise base to effect changes, which keep us ahead of the pack,” says Van Niekerk.

Related: 11 McDonald’s Facts That Will Knock Your Red And Yellow Socks Off

“They understand franchising and individual franchisees’ needs. They don’t lose sight of the fact that they’re banking a brand and they give the franchisee the benefit of being part of a bigger umbrella organisation.

“Nedbank has been a key business partner to Nando’s over the years. This helped us to grow both the brand and our franchisees.”

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