Delivering consistent quality and rapid growth

OBC Chickens comprises 50 stores in eight of South Africa’s nine provinces, with 15 more scheduled to be opened by the end of 2013. (OBC Chickens)

OBC Chickens comprises 50 stores in eight of South Africa’s nine provinces, with 15 more scheduled to be opened by the end of 2013. (OBC Chickens)

Today it is one of South Africa's fastest growing retail chains, supplying house brand and major brand-name perishables and non-perishables to customers across the country.

The chain comprises 50 stores in eight of South Africa's nine provinces, with 15 more scheduled to be opened by the end of 2013.

Initially supplying chicken, it has since expanded to the full supermarket range including dairy, red meat, cold meats, fish, juices and grocery items like pap, tea, bread and biscuits.

OBC opened 12 new stores in 2012, four of which were "conversions": existing, already successful, retail outlets that opted to become OBC stores.

"The OBC success story is spreading and turnover in all of the conversions is well up. We have managed to double the monthly turnover of one of our conversions and expect to open and convert numerous stores in 2013," said marketing manager Robbie Capazario in the company's year-end report.

Managing director Tony de Fonseca said there is an opportunity to reach a 300-store footprint in the next five years.

Expanding to the Western Cape
In addition to the 15 stores opening this year it is also planning to enhance its distribution facilities in the Western Cape, which will enable OBC Chickens to expand into the one province where it is not yet represented.

As a retailer that specialises in perishables such as chicken and red meat, the business is heavily reliant on refrigeration in its stores, trucks and distribution centres. Enhanced distribution will allow it to get quality stock to its franchisees reliably.

"We're very logistics-driven," said Da Fonseca.
And heavily electricity-reliant too. The constant price increases are forcing it to be very lean in its approach, he said.

"In some of our stores the electricity cost is as high as the rent. But there's not much we can do about it beyond being as energy-effient as possible. And of course, we just buy harder, promote harder, work harder and retail harder."

Cost challenges aside, the past year has been successful for the company, which showed improved sales across all divisions.

"Of course to turn in a performance like this means buy-in from many quarters — our staff, our franchisees and our suppliers, who have partnered with us in increasing volumes across all categories," said Da Fonseca.

Direct source of quality produce
A wholly-owned subsidiary of Chubby Chick, a poultry farming operation, OBC Chicken has an advantage over its competitors because it has a direct source of quality produce.

"This relationship gives us the ability to react swiftly to market conditions and also allows us to assure our franchisees consistency of quality and supply. We are less concerned about an import levy because we are assured of a constant supply to ensure our members will always be competitive."

Quality is something the company is very serious about.

"We focus on quality rather than volume," Da Fonseca said. "We don't want to be running around putting flags on maps. We're very strong in Mpumalanga, Limpopo, the North West and Gauteng. We use those operations to springboard into KwaZulu-Natal and will move to the Western Cape later.

"It's a tough business," he said. "You can make lots of money on perishables but you have to be on top of your game at all times."

OBC aims to help its franchisees to be as successful as possible and uses its agile procurement ability to good effect, helping its franchisees to compete against the major chains.

"The reality is that as a small retailer, OBC offers all the benefits of a large retailer," Da Fonseca stated.

"Obviously there are numerous components that go into this, such as bulk buying, competitive pricing, aggressive marketing, access to finance, auxiliary services like competitive banking and cash collection fees, social grant pay-out points, money transfers and of course consistent and convenient delivery — and here OBC minimises the risk of stocking incorrectly and ensures that the store doesn't have to overstock to benefit from competitive pricing."

This model has been so successful that many independent retailers are approaching OBC, wanting to become a franchise and benefit from the competitive advantage that economies of scale and efficient supply chain management bring.

In addition, OBC encourages its franchisees to maintain a level of autonomy and use local negotiating to get the best prices and products for their customers.

"Perhaps one of the most important things we did in 2012 was to continue to work hard on strengthening our relationship with our customers, to get to know them better and to listen to what more we could do when they visited an OBC store.

"This was the motivation for expanding our range to meet their needs. Consistency, competitiveness and convenience remain OBC's primary focus. This applies to quality, pricing and all aspects of offering our consumer a pleasant shopping experience.

"As foot-counts in our stores continue to grow and basket size and value continue to increase, it seems consumers are responding positively and voting with their hard-earned money. From our research, it seems that OBC and its range of offerings is viewed as the leader in its category," said Da Fonseca.

"Efficient distribution goes a long way in reaching the goals of consistency, competitiveness and quality at store level, and we have exciting plans in place where we will be able to consolidate our distribution facilities and increase infrastructure to extend our range with new offerings that will be meaningful to our consumer," he said.

This article has been paid for by OBC Chickens. Contents and images were supplied and/or approved by OBC Chickens.

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