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Emerging entrepreneur defies Covid-19 contraction with stunning sales growth

Emerging entrepreneur defies Covid-19 contraction with stunning sales growth

Theo Baloyi, last year’s Emerging Business Entrepreneur of the Year at the 2019 Entrepreneur of the Year® competition, is proving his mettle by forging ahead with a phenomenal growth spurt this year despite the lockdown that has led to the biggest economic contraction in South African history.

While countless businesses are scaling or closing down, the 30-year-old entrepreneur’s Bathu Swag shoe company has opened no fewer than six new bricks-and-mortar stores so far this year, bringing its total to ten. And that is not counting its vibrant online store with which it started in 2016.

“By the end of the year we will have 15 stores, at least one in every province,” says Theo, sounding frustrated at the fact that his workforce has grown this year from 49 to 84. “We had planned to have more than 100 by now.”

For anyone thinking that it sounds like an unsustainable flash in the pan, consider this: Bathu Swag is funding its extraordinary growth purely from its own cash flow. The company has so far not made use of any outside funding, not even its overdraft facility offered by the bank. 

It is often pointed out that many successful businesses had started during an economic downturn. The rise of Bathu Swag offers a fascinating glimpse of how that dynamic actually works. With so many businesses shutting down, Theo is in a very strong position to negotiate favourable leases with mall landlords, making it the best time to establish a physical presence for the new brand across the country.

At the same time, big fashion retailers have been hit hard by the lockdown, creating space in the market for an upstart with an affordable price range and a very cool image, clearly Bathu Swag’s greatest competitive advantage.

A legend of homegrown African aspiration and success is fast solidifying around the Bathu brand. The name Bathu is South-African slang from “shoes”, rooting the company’s stylish sneaker ranges unambiguously in local township culture. This image has been assiduously cultivated by Theo as the bedrock of his business, yet the story is authentic in that it mirrors the rise of the young entrepreneur who was born and raised in Soshanguve township near Pretoria.

His mother worked as a store manager for a furniture chain, and his father was a qualified nurse who quit his job to become an estate agent, a brave and entrepreneurial step which Theo believes was formative in his own career. “My father taught me to think intellectually about money, not emotionally. If you lose ten rand, don’t cry about it – rather think about how you can make the next twenty rand.”

Theo did well at school, and after matric studied accounting at a Unisa-based college in Johannesburg. His father had to sell his car to pay the fees, and soon Theo rose to excel inside and out of the classroom. As top accounting student he landed a sponsorship from the accounting firm – PWC, and in his spare time he and his best friend Andrew Lale sold unbranded perfume mostly in Alexandra, the Johannesburg township where he lived with his uncle. Their perfume business did so well that Theo became completely financially independent from his parents.

The PWC bursary set Theo up for an exciting corporate career. As a star recruit he was sent to work in the company’s Middle Eastern division. It was in Dubai where the seed was planted of the idea that would change his career. He met the owner of a French clothing store who described to him the potency of the reputation of French fashion in the success of his business. 

It got Theo thinking about African brands, or the lack thereof. As a “self-proclaimed sneaker head”, Theo had noticed that every continent in the world had at least one home-grown sneaker brand, except Africa, where sneakers are highly prized aspirational items. This was a huge gap waiting to be filled, he realised.

Quietly, Theo set about working on the idea of creating a sneaker brand that was affordable and aspirational at the same time, just as stylish as the international giant brands, yet distinct from them. He focused in on an idea of designing a sneaker made wholly from mesh, which up until that point was used only to cover gaps in the leather or canvas which formed the tops of the name-brand sneakers.

Having grown up in mild Gauteng and working in the sweltering Middle East, the idea of a cool breathable sneaker seemed a natural innovation to Theo. Furthermore, the “Happy Socks” trend had taken off, and the mesh design gives wearers a chance to show off their colourful socks.

Theo faced two main challenges to bring his idea to market. First, shoe factories were sceptical that a sneaker top could be made entirely out of mesh, and, second, the minimum order to produce a batch of shoes was way beyond anything that Theo could afford. 

After many pitches, a shoe factory in Durban finally agreed to produce only 400 “proof-of-concept” mesh sneakers. Tapping into his network of family and friends, Theo made sure that all 400 pairs were pre-ordered, and he impressed the manufacturers by telling them that the shoes had sold out in only 48 hours.

They agreed to a second batch of 1000, which did indeed sell out quickly as the first 400 pairs started driving word-of-mouth sales. By the end of 2016, when Theo formally launched his online store, the website drew so many views that it crashed. Since then, Bathu Swag has placed orders for tens of thousands of his mesh sneakers at the factory and has introduced a range of more traditional closed leather sneakers, as well as a suede range.

Theo actively sought – and won – praise from several local celebrities and online influencers who love their Bathus, including the acclaimed TV and radio personality Somizi and soccer legend Benni McCarthy. And his reputation has grown through awards such as the 2019 Emerging Business Entrepreneur of the Year. Theo says the award, which was sponsored by Business Partners Limited and Sanlam, not only helped with brand exposure, but boosted his credibility as a serious entrepreneur.

For a while Theo ran the business as a side hustle while still working for PWC in the Middle East. But when it took off, Theo decided to cut his promising corporate career short and choose the path of entrepreneurship.

Theo says it did not feel like a scary decision at the time, because he was simply following his father’s approach by carefully calculating the risk and reward of each option, with the minimum of emotion. Interestingly, Theo says looking back on it after a few years on the entrepreneurial roller-coaster, his decision to leave the corporate world seems scarier now than he experienced it then.

So far, Theo has chosen incremental, organic growth as a strategy, but there is nothing small about his plans of building a global but distinctly African brand. When the time comes, Bathu Swag will be ready for a round of venture investment, he says. The scale of his vision has steered him to corporatize his business from the very start by building a team of talented professionals and setting formal systems in place.  The result looks like an emerging force that not even a global pandemic can stop.

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