Hatti Zeppel, CEO of Green Cross Manufacturing, South Africa’s leading comfort footwear manufacturer, has been caught off guard by the company’s success over the past year. Jayne Flannery reports.
Green Cross is dedicated to the manufacture and retail of high quality comfort footwear dedicated to the maintenance of healthy feet. All shoes are orthopaedically designed with anatomically correct arch and foot supports. A fashion element has been added in recent years, but never at the expense of comfort—Green Cross wants its wearers to feel as if they are walking on air.
Whilst some manufacturing sectors remain mired in recession, Green Cross Manufacturing has a different tale to tell. The South African public have voted with their feet: following a poll of 3,500 consumers, the 2010 Times and Sowetan Retail Awards moved Green Cross up to take the place of the country’s second most popular footwear brand.
“It was a great accolade to receive in this particular year, as we are also celebrating our 35th anniversary,” states CEO Hatti Zeppel, who is the third generation of his family to lead the business.
“Our continuing success shows that people do not want inferior, poor quality products which are the inevitable result when prices are cut back beyond a certain point. Why buy two pairs of cheap shoes when you can have a pair of Green Cross shoes that will last three times as long?”
The company he leads has grown by 33 per cent in the past year, while retail sales have increased by 21 per cent to take group turnover to over R300 million. R8 million has been re-invested in new machinery to enable the company to meet the demand it anticipates from the forthcoming summer season, with the investment focusing on state-of-the-art CAD and laser pattern cutting equipment which will ensure the design process is in line with international standards.
“Our success has caught us off guard,” Zeppel declares. “We were not anticipating such a fantastic year—in fact, demand has been so great we have had to take on another 100 staff in order to cope, taking our workforce to 665 people.”
Green Cross footwear is sold through pharmacies, independent shoe stores and directly to corporate customers within South Africa and neighbouring countries. However, the most important distribution channel is the company’s network of own-brand stores. These absorb 45 per cent of manufacturing output and sales are growing rapidly.
Green Cross is now gearing up to increase its retail footprint to 30 stores in the next year, with three new stores already in the pipeline for 2011 and a further three stores undergoing refurbishment.
“To date we have focused on having a presence in large shopping malls in major urban centres, but now we are profiling our customers much more carefully and looking at opportunities in smaller malls with a more targeted offering that meets local needs,” Zeppel explains. “South Africa has a very diverse population and each population group has different requirements, so rather than offering our full range, in future we will be looking much more closely at the make-up of the local population to decide on the range we will offer,” he explains.
The range is enormous, catering from baby’s first shoes through to a fine fitting shoe for the grandparents. Zeppel feels that retailing has offered the company much greater insight into what customers want and has enabled new trends to be identified and acted on much more quickly.
Several key niches in the market have emerged where Green Cross has a clear market advantage. “For example, the school shoe market is a niche in the market that is ideal for us. Children spend a lot of time on their feet and do a lot of rough activities. It means that their school shoes have to have a high quality specification if they are not going to be worn out after a few weeks,” he says. Sales of the school shoe range have increased by 45 per cent in the past year, which Zeppel attributes to a larger range and updated styles. In a similar vein, the children’s casual range has also seen excellent growth with a doubling of sales over the past year.
“We are also increasingly sought after in black population areas,” Zeppel continues. “Our shoes are not the cheapest, but they are of excellent quality and durability. We know that our black customers want to spend their money wisely and that they value high quality, so there is a natural synergy with the Green Cross brand.”
For a number of years, the company has been meeting corporate requirements and this market segment is also expanding exponentially. “Our shoes are made of genuine leather and flex to allow ease of movement in walking. They are lightweight and conform to the shape of the wearer’s foot, which means they are perfect for people whose jobs require them to spend a lot of time walking or standing,” he explains.
Looking to the future, Zeppel sees product development as having a fundamental role to play in the brand’s future growth. “The product mix we offer has to be absolutely right. This has design implications and so we have increased the size of our design team, but it also means that we have to forecast and plan very accurately.”
His biggest challenge is managing the supply chain. Local leather, for example, all ends up as upholstery within the country’s automotive industry and so must be imported. “We have seen lead times double for many of our components, raw materials and even finished goods. Identifying reliable suppliers has become much more difficult. Forward planning is now a very long process and is more important than it has ever been,” he adds.
Zeppel is convinced that the management team he has put in place can get it right. “We are sure that we can continue to grow our market share and that our brand will grow from strength to strength. There is still plenty of room in the market for a premium product like ours and we will continue to take Green Cross to new towns and areas throughout next year and beyond.” www.green-cross.com
