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BiBi Cash & Carry: Tommy Makhatho

Free State retailer carves a niche for himself in the supermarket sector

Monique Verduyn

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Tommy Makhato of Bibi Cash & Carry

The rise in the spending power of blackconsumers is boosting South Africa’s retail sector, but there are fewblack-owned retailers able to take advantage of this trend. One exception isTommy Makhatho, CEO of BiBi Cash & Carry stores, whose Free State-basedstores turn over R250 million a year.Makhatho left school in 1976 at the end ofstandard nine and worked as a waiter at a restaurant in Joburg’s then swankyCarlton Hotel. One of his customers was a flashy hairdresser who always wore acowboy hat and drove a top-of-the-range left-hand-drive limousine.

“He liked me because I was curious abouthis business and eager to learn,” says Makhatho, recalling how the man gave himhis first break and employed him as a part-time trainee shampooist in hissalon. Makhatho went on to qualify as a professional hairdresser.In 1982, with R7 000 in the bank, hedecided to leave Blackwave and go it alone in Soweto, but he failed to build aclientele and was soon forced to ask for his job back. “I had beenover-ambitious and made the mistake of not planning properly,” says Makhatho.A year later he was on the road,distributing hair-care products and bed linen in townships in the Free State, Northern Capeand Lesotho.“I travelled thousands of kilometres every week and the business was doingwell. I quit my job again and opened a salon in QwaQwa.”

With the help of his wife, Thandeka, heopened six more salons in four years. But rapid growth made it difficult tocontrol the operation and the salespeople. “We couldn’t manage the businessfrom a distance, so we had to close the branches and go back to the originalsalon. We had, however, accumulated R300 000 in two years.” The experience taught him that distributinghair-care products from a main centre would be easier to control and manage.The Jabula Cosmetic Centre in QwaQwa opened in May 1991 and four othersfollowed. There were over 3 000 different stock lines, which meant the businessneeded more storage space and more sophisticated planning, management andcontrol systems. A warehouse was opened in 1992.In 1998, Makhatho entered the supermarket sectorand opened the first BiBi Cash & Carry Family Supermarket in QwaQwa. Allcompany profits were ploughed back into the business to fund expansion. Asecond store opened at the Setsing shopping centre in 1999 and a third at theNaledi Mall in 2004. In 2006 BiBi Wholesale was opened to servicesmall-to-medium enterprises. In April this year, a BiBi Cash & Carry storeopened in Bethlehem.In addition, the Makhatho family still has two hair salons.

“One of the most important lessons I havelearnt is that running costs always increase, so if you don’t expand you won’tmake a profit”. Accordingly, his company has created its own stokvel and hasmembers in many small Free Statetowns. “The stokvel industry is worth about R6 billion, so it makes sense totap into it. Our members bank their money with us, we give them vouchers andthey provide us with a list of their needs.”Makhatho is a firm believer in the power ofadvertising and spends 1% of the business’s total turnover on leaflets, flyers,SMS promotions and radio commercials. BiBi cash & Carry also advertisesextensively at funerals which typically draw large numbers of communitymembers.“We believe in conducting our businessprofessionally, progressively, honestly and with a commitment to address the needsof our predominantly black customers. Makhatho now employs over 540 staff,indirectly supporting over 2 000 people. The company also contributes tocommunity-based projects and provides scholarships to a number of universitystudents.“It’s my dream to expand the number ofstores and we are working on a franchising concept,” he says. “Townshipbusinesses were once considered risky, but now malls are popping up all overthe place. I’m proud to have been one of the first retailers to service people wherethey live.”

Contact: +27 58 713 0920

Monique Verduyn is a freelance writer. She has more than 12 years’ experience in writing for the corporate, SME, IT and entertainment sectors, and has interviewed many of South Africa’s most prominent business leaders and thinkers. Find her on Google+.

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