Throughout the world, textile manufacturing has become driven by the bottom line, most especially in South Africa. This means inferior yarn quality, less pay for workers and compromised working conditions have been the norm.
Mungo, an eco-friendly maker of high-quality cotton and linen homeware, has been defying the status quo and endeavouring to help shape and uphold the standards of sustainable production in a non-industrial environment.
Dax Holding, the managing director (MD) of Mungo, spoke to finweek about how the company goes about achieving ethical trading and having sustainability practices at the core of its business strategy.
How did you become the MD of Mungo?
My father started the business around 2000. You could say that my experience comes from working in the business over the years. I have been part of the working culture until I turned 20 and travelled to the UK, doing some odd jobs there.
I was involved in the furniture making and restoration process of a business before moving back around 2011 to head up Mungo as MD. It was a gradual process learning the business.
I didn’t return to SA with the intention of taking over Mungo. My father had built up this business over the years, but he was now in his mid-60s and didn’t have the energy to deal with the day-to-day operations — he had become more interested in the design aspect of the business.
What are some of the changes you helped introduce since assuming the role of MD?
We opened a retail store and put the whole range up in the store. Before then, all merchandise was sold wholesale, for example to Woolworths. When we consolidated the whole range into a Mungo retail outlet, we saw more potential of what we could create.
So, this is essentially a family business?
Yes, my father, sister and I are shareholders — the three of us are directors.
What have been some of the challenges of working in a family-owned business from a management perspective?
It is very difficult. You can’t really manage your sister or your wife — and even if you did, there are some competitive elements, like taking over from your father.
He has had a certain way of running the business and I have my own, most especially incorporating the fact that we are doing business in different times and environments. So, we have had to adopt my philosophy to run the business.
How many people does Mungo employ?
We have some sub-contractors but, overall, it is round about 85 employees.
Who are your direct competitors?
Fast-moving consumer goods (FMCG) retail and wholesale brands like @Home and Woolworths homeware. We are sort of in the middle between crafters and the business-to-business companies. The angle that we take in the business is that we are quality-driven, we are about visibility and transparency in our products and services. Our brand allows patrons to come and look at the production process.
Our customers feel good about purchasing something of which the origin is known. Although the FMCG homeware retail brands are our competitors in that we sell similar merchandise, our production processes are completely different. They, for instance, use linen from China, which is a different quality to the linen that we use.
As an example, the company that we buy our yarn from has been selling long, continuous lengths of interlocked fibres— suitable for use in the production of textiles, sewing, crocheting, knitting, weaving, embroidery – for over a hundred years and they have direct relationships with farmers in Normandy (France) and Belgium.
As a result of the relationships, they are always in constant communication with producers of the raw material we make use of, the farmers can make strategic decisions about, for example, the size of yarn to spin.That relationship translates into a better-quality product, which we purchase in turn.
How are you optimistic amid falling business confidence due to the unfavourable current economic environment in SA?
It has not always been easy with the economy falling apart around us. We have always had to be flexible to make alternative plans. A few years ago, for instance, a supplier from which we used to purchase our linen closed and we were suddenly without linen, which could have been a disaster.
We ended up turning that into an opportunity to source even better-quality linen from elsewhere. It did cost us a lot of money, though. But, ultimately, we are not in this business to make money. We make decisions based on our values (of putting people, their visions and livelihoods at the heart of what we do and creating heirloom-quality woven goods).
If you put money first, you end up getting to a point where you take shortcuts in your production process and resort to low-quality output. We are, however, putting a lot more energy into exports, making money elsewhere as local economic conditions remain unimproved.
We have also diversified our revenue streams by, for example, selling to varied retailers, wholesale, hotels, small guest lodges, online (including an e-commerce site that we have in the US) and our own retail outlets (in Plettenberg Bay, Johannesburg and Cape Town). We are essentially selling to about six different areas. When retail sales are down, we sell more to a different area to hold us up.
What have been some of the biggest challenges you have had to overcome in the business?
I’d say the family dynamics — in terms of working together. That would have to be the single biggest challenge. There has also been a transitional phase, taking over from my father who had his own vision for the company. When I took over the reins, I ran with that vision and it became a project that I worked on.
Second to the relationships, when I came into the business, we [Mungo] were turning over about R3.5m and this year, that figure is more than ten times higher, which took a lot of pressure to achieve. With such milestones achieved, constantly defining and refining the business vision is also a challenge, including translating that vision to employees, managers and other stakeholders in the company to become even more sustainable.
It is a long process. Right now, the challenge is operating in a slow economic growth environment with less cash flow. We have to tighten the belt and become clever with how we spend our money. However, the challenge has become a benefit in how we are streamlining the business to become more efficient.
What is the number one business lesson you have learnt so far?
I have learnt that it is important to find a balance between planning and implementation. You can sit, plan, be organised and work out the trajectory that you want to find the business on, but never get there. There is a middle road somewhere between planning and instinctively going for something.
What is the best business advice your father has shared with you since taking over from him?
Most of the business advice is anecdotal. The single most important piece of advice I have received from him is to stay independent in thoughts and actions – such as not doing business with people we do not like or do not share the same brand ethos as Mungo. And not being price-takers by being at the mercy of big corporates who tend to dictate prices.