Kholofelo Maponya has an ambitious plan to bring retail convenience, home delivery and competitive prices to townships in a bid to narrow the consumer divide that exists in South Africa, writes Jonathan Erasmus.
Due to be launched in KwaZulu-Natal later this year using containerised stores, 2U Foods (Pty) Ltd has developed an integrated business model with marginalised communities firmly at the centre of its business plan.
The idea is to deliver quality retail goods to homesteads, but not to go toe-to-toe on product price with big retailers like Checkers, Spar and Boxer. Instead, Kholofelo Maponya’s business will look at the total cost to customer.
Co-founder and chairman, Maponya says a competitive edge in price may not be substantial, but there is a “substantial advantage” in bringing convenience to customers by helping alleviate transport problems.
“The rural and township population has always been the pillar on which the South African retail market. The opportunity lies in eliminating the poverty penalty or the unnecessary add-on expenses for this customer that arise from low purchasing power and being remote. By placing 2U Foods movable panel stores into strategic locations, unnecessary costs such as transport-related expenses associated with travelling to shopping malls can be alleviated. The target market of the panel store is the low to lower-middle income retail market – consumers with an average monthly household income of less than R9 000.”
Maponya launched the business with late business partner, friend and former chairperson of the National House of Traditional Leaders, Inkosi Sipho Mahlangu.
He said Mahlangu, like himself, came from a family of entrepreneurs and through his deep knowledge and understanding of traditional structures and cultural norms, Mahlangu brought “an immense” amount of knowledge, expertise and wisdom to the business.
“We drove over 10 000km in three weeks to visit the target communities where we aim to set up shop. We went through every valley in the Valley of a 1 000 Hills and saw every traditional chief in our target areas in person,” said Maponya.
The integrated business has three parts: a property arm which owns the containers, a distribution centre, and its marketing business.
Store operators are not required to make any upfront capital outlays and their payments to the parent company are on a “no obligation turnover related basis”. Operators will be responsible for the equipment in the store but 2U Foods will provide financing options.
“Overall, it is important to stress that the success of the 2U Foods Group is dependent on the 2U Foods movable panel store. The success of each outlet is in turn directly dependent on each business, especially the distribution centre. The biggest risk to the integrated business model is the supply chain. Specifically, the ability of the distribution centre to source and distribute the required products for a reasonable price and at the required times,” he said.
The company has prioritised KwaZulu-Natal, Mpumalanga, Gauteng and Limpopo.
Initially, 75% of the stores to be rolled out will be in KwaZulu-Natal. “The first 75 stores have already been pre-manufactured and are being shipped out from China. The bulk of these will be set up in KwaZulu-Natal.” The plan is to bring 600 units into the country.
One of the more unique aspects of the business is that each store will be provided with a three-wheeler motorcycle that can carry up to half a ton of goods. This, said Maponya, will be given to a young adult whose job will be to make deliveries and take orders.
“The bike will be the driver’s business and the delivery of our products will be done for free. Where the driver makes an income will be through commission on sales. Each driver will be provided with a tablet. They will be able to place the customer’s order online and either take payment in cash, electronically, or in the case of SASSA beneficiaries, on credit.”
If an order can be met by the local containerised store, it will be packed by the operator and then collected by the driver for delivery. If the store is unable to meet the order, the goods will be delivered from a local distribution hub and be ready for delivery the following day.
The containers will carry between 500 and 800 SKU (stock keeping units) and distribution centres will carry up to 15 000.
The hurdles are numerous, including access to a stable source of energy. “We have entered into an agreement with Huawei who have offered us a full-solution product including free Wi-Fi at each unit, solar energy solutions, and customer relationship management software.”
Maponya is also the chairman of Matome Maponya Investments (MMI) which according to its website is a shareholder in Afgri Limited, Daybreak Poultry (formerly Afgri Poultry) and SA Home Loans.