The Pep owner relies on local manufacturing as problems in the supply chain persist


Pep owner Pepkor is working to source more products locally.

  • Pepkor is facing global supply chain challenges that have resulted in higher shipping and freight costs, port congestion and some product bottlenecks.
  • While Pepkor’s customers have not yet seen the impact the supply chain issues are having on their wallets, Pepkor CEO Leon Lourens warned that they can expect price hikes starting next winter if the problem persists.
  • When asked if he anticipates any shortages during the holiday season, the CEO said consumers shouldn’t worry.

Pepkor has started sourcing its products locally after experiencing supply chain issues that will weigh on consumer pockets in 2022.

The company, which owns brands like Pep, Ackermans, Russells and Incredible Connection, has been impacted by global supply chain challenges that have resulted in higher shipping and freight costs, port congestion and some product shortages.

While Pepkor’s customers haven’t seen the impact of the supply chain problems on their wallets, Leon Lourens, Pepkor’s CEO, warned that they can expect price hikes starting next winter – if the problem persists.

Lourens said that last year the customers had been cushioned by the weak rim, so that the company could buy products abroad more cheaply and invest the saved amounts in the supply chain.

But the rand has since strengthened against the dollar.

“It looks like it will go into the future … winter next year and beyond … the additional shipping costs will of course be borne by us, we will include that in the cost price of our product and unfortunately there will be inflation”, said Lourens.

This means that unfortunately the costs have to be borne by the consumers.

However, Pepkor is joining a growing list of retailers who are now turning to local manufacturing, not just as a solution to the current problem but as a long-term plan – which bodes well for South Africa’s manufacturing industry.

According to Lourens, the company imports between 65% and 75% of the clothing it sells and the rest is made locally. But the company has started working with local manufacturers to develop more local products.

“Because we are convinced that this will not only be beneficial for our business in the long term, but also for the country as a whole. Our goal is to work with local manufacturers who make them competitive, that’s the secret. ” he said.

When asked if he anticipates any shortages during the holiday season, the CEO said consumers shouldn’t worry.

“The supply chain has an impact on inventory levels, it goes up and down and we’ve had some [delays]but I can assure you that we have more than enough stock for the holiday season, “he said.

On Friday, Lourens presented the Group’s results for the financial year ending September 30, 2021. During this period, Pepkor’s profits rose 115% to R5 billion, sales rose 9.2% to R77 billion, and operating profit rose 40% to R9 billion.

The group managed to open 247 stores during the year, bringing the total number of stores in 10 countries to 5,470. The goal is to open 300 stores per year over the next five years.


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