Trellidor Holdings made headlines this year after supplying the London Underground with what the British standards body labelled the “most secure retractable gates in the world”.
The group’s marketing director, Peter Rawson, spoke to finweek about the group’s transformation from a small, family owned business in Durban to an international franchise listed on the JSE.
How did Trellidor start?
Leon Pallace started L&L Metal Finishing in 1976 and designed a trellis-style security gate, called the Trellidor, in the 1980s based on the retractable gates that were used in American lifts.
Pallace passed away in a car accident, after which the company was sold to four individual businessmen in 1986.
They sold their shares to an investment company in 2002.
Trellidor Holdings was listed on the JSE in 2015, comprising the Trellicor (Pty) Ltd and Trellidor Innovations (Pty) Ltd businesses.
When did you get involved with Trellidor?
I have been with Trellidor since 1997, when the group only had four branches and a handful of distributors across the country.
How has the group grown since then?
Trellidor has over 70 outlets throughout South Africa alone, along with an export division giving us presence in 24 African countries as well as the UK, Sweden, Australia, Israel and various countries in the Indian Ocean.
We directly employ 330 people and another 500-plus through our franchisees.
How did you accomplish this growth?
Trellidor adopted a franchisee model in the 1990s as route to market, which allowed us to expand our footprint in South Africa and internationally without this having a huge impact on business operations or structures.
Besides expanding our manufacturing operations, the shift merely required good management of franchise owners, which is not that hard as they have a vested interest in the success of the business.
Tell us more about the franchisees.
Many of the initial franchise owners used to be employed by Trellidor.
There are many success stories of families who, over time, bought into the business.
Over the past few years, we have received a growing number of enquiries from expats, especially those living in Europe, Australia and the US, due to escalating security problems.
How do you determine the price of the franchise?
The price is market related, based on location and historical sales, income performance and future potential.
Franchisees, nevertheless, negotiate franchise sales based on a willing seller, willing buyer principle.
Trellidor approves the new buyer.
While we do not interfere with these business sales, new owners still have to comply with our business practices and agreement terms.
How do the franchisees make money?
They buy the security barriers at a generous discounted price from Trellidor.
What are the challenges with having this type of business model?
You need to find the right partners, which can be especially challenging if you are operating in outlying areas or in other countries where people speak other languages, such as French or Portuguese.
Another danger is underperforming franchises.
Our close relationship with the franchisees, however, allows us to spot these quickly.
We generally offer business support to struggling franchises, because poor performance not only has a negative impact on our business performance, but may also damage the brand.
The franchises are generally sold if they cannot be turned around, which is usually in the best interest of both parties.
Fortunately, we have had very few sales of this nature.
How has the company’s product range expanded since it was started?
Where we initially only offered a retractable security gate, we now offer eight different household and business solutions for doors, windows, patios and safe rooms in various sizes, colours and material.
We have invested substantially in product development to create solutions that offer protection, while also being aesthetically pleasing.
What is the market like for security barriers and how do you differentiate yourself from competition?
There is a growing demand for safety solutions due to rising conflict in South Africa, Africa and in different parts of the world.
The major difference between us and our competitors is that we offer tested customised solutions and not a “do-it-yourself” product that can be bought over the counter.
What is one of your biggest challenges in the market?
It is very easy to enter the market with a sub-standard and cheap product.
The high quality of our security gates has led to Trellidor becoming a household name in South Africa, with many people mistakenly referring to any security gate as a Trellidor.
We invest a lot of time and money in consumer awareness campaigns to address this issue.
The bottom line is that when you buy a cheap product, you get what you pay for.
If it does not say Trellidor, it is not a Trellidor.
Last year, revenue fell by 4% to R286m. Why?
We are pleased with the group’s performance, as we have been able to meet our sales targets in spite of the current tight economic conditions.
Trellidor specifically managed to maintain prior growth by growing sales internationally by 9% thanks to, among others, the installation of the newly developed and certified product for stations in the London Underground.
Tell us more about the London Underground deal.
Negotiations with the London Underground started in 2002 already, but various companies were involved and there were a few hiccups along the way.
The approved Trellidor Trojan 3 EMESC T3000 steel security gates were the third version of the product and took 18 months and R3m to develop.
The gates, which are over 3.6 metres in some cases and weigh about 50kg per square metre, have been designed to be easily opened and shut by people who are not that strong, and has a unique emergency locking system, designed by Trellidor engineers.
What is the business outlook for this year?
We will most probably see more of the same during this financial year, with the market hopefully picking up by next year if investor confidence improves.
Most of our market is in the mid- to top-end range, with many people in this segment holding on to their money due to the poor economy and challenging environment.
Market conditions in West and East Africa are, nevertheless, looking promising and we expect further traction from the Underground project in the UK.
The gates have been installed in five train stations and we hope they will also be installed in the remaining seven Underground stations that are part of the initial batch.
We have also implemented various strategies to streamline and enhance production efficiencies.
Can you give some examples?
Instead of the finished product, we now export product components that can be assembled at selected export destinations.
This has lowered transport costs, as you can send more product per load, as well as tariffs in some countries, since you are creating new job opportunities.
The practice also impacts lead time to market.
What are your plans for the future?
In July 2016, Trellidor Holdings purchased the majority stake in the Taylor Blinds & Shutters operation.
Taylor Blinds & Shutters is a major manufacturer and distributor of custom-made blinds and security shutters as well as an importer and distributor of cornicing and skirting products.
The group will look for further acquisitions of this nature and others, while growing existing operations through geographical expansion.
We are always looking for new markets and product development opportunities.