Massbuild: Building a Stronger, Fairer South Africa

Offering value for money and a great range of products and services has helped Massbuild to ride the current downturn in consumer spending. Massbuild forms a division of Massmart and is making significant inroads into the rest of Africa.

MassbuildWhilst stagnant housing prices and little or no Government infrastructure spending remain the biggest risks to the future growth of the business, the company feels it is well placed to grow its market share within the building materials sector.

Massbuild operates 3 main complementary brands: Builders Warehouse, which operates large home improvement stores in major urban areas; Builders Express, a chain of smaller neighbourhood home improvement stores; and Builders Trade Depot, focusing on delivering the core range for all phases of building projects, focusing on contractors.

Massmart purchased 5 Builders Warehouse stores that were based in Johannesburg and Pretoria in 2003 andbought and rebranded 3 De La Rey stores in the Western Cape in 2005 and now operates 27 Builders Warehouse stores in 7 provinces in South Africa and one in Gaborone, Botswana.

Builders Warehouse follows the big-box or warehouse retail format, offering home owners, DIY enthusiasts and building and maintenance contractors a comprehensive range of competitively priced products under one roof, with a large garden centre display and a builders’ supplies yard. The brand is unique in that it is the only home improvement warehouse in South Africa.

The Builders Express arm of Massbuild was created in 2005, following Massmart’s acquisition and rebranding of 14 Servistar stores that were located in the Eastern Cape and KwaZulu-Natal. The company reports that there are 27 home and garden Builders Express stores operating in 4 provinces.

Builders Express aims to serve home owners and to provide a “filler strategy” for the Group, with an onus on customer-friendly store location and layout, combined with attention to customer care.

Both Builders Warehouse and Builders Express are considered to be pioneers in introducing retail principles to the South African home improvement and DIY sector and attaching garden centres to hardware stores, with the company attributing this to a certain store ambience:

Our new stores aim to introduce a ‘retail theatre’ where lighting, colour and ambience enhance the shopping experience, signage is clean and bold, and product displays are enticing.

Several of our private brands, including Mastercraft hand tools and Builders Pride, have become household names, with our customers assured of stringent quality control and best supplier practices. During 2012 Private Label contributed more than 11.7 per cent to our total sales and drove margin growth.”

Masbuild’s third major brand is Builders Trade Depot – a business formed when 34 Federated Timber stores were acquired and rebranded in 2005. There are now a reported 29 Builders Trade Depot stores which cater for medium- to large-sized contractors and tradesmen engaged in building, maintenance and renovation projects. This company also focuses on servicing the needs of construction entrepreneurs who need trade credit, telephonic ordering and want bulk goods delivered from low-cost outlets.

In addition to the above businesses, Massbuild also acquired Kangela in Mozambique during 2010. There are 13 Kangela outlets in Mozambique, with cement and construction materials making up a higher proportion of sales than in South Africa. The Group remains confident of Kangela’s prospects and indicated as much on its website:

The Kangela building materials business is well placed to take advantage of the growing home improvement, DIY and building contractor markets in Mozambique. We believe that building hardware and home improvement as a format has much potential as the African middle-class grows on the back of increased investment and economic growth and development.”

With expansion very much a consistent pattern across the Massmart Group, it comes as little wonder to see that Massbuild’s 5 year plan includes the roll-out of new stores, revamping or relocating others and alignment of brands to service key markets.

There are opportunities for Massbuild to benefit from the experience of Walmart and our staff will look to share knowledge and experience with the world-recognised retailer.

As Massbuild seeks to find innovative ways to meet our customers’ needs, we will look to increase the convenience factor for our contractor customers by offering online catalogue services. Good progress has been made around the development of an e-commerce strategy to provide customers with more choice and advice, a development which will be a first for the hardware sector,” the business stated in its 2012 Annual Report.

Part of the focus for Massbuild will be on further expansion into Africa, as the Annual Report continues:

The Africa team has been strengthened, with a designated merchandise manager appointed to focus on supply chain and inventory issues at a country level and a regional operations manager with sole focus on the African operations.

Massbuild’s marketing strategy in Africa will be on store-specific promotions and relevant promotional pricing. Suppliers will be approached to participate in weekly promotions to help grow basket size and foot traffic and the on-time delivery reliability of key suppliers is being tracked. The top 20 selling products have been identified per department and these will be monitored to ensure on-shelf availability and best price in the market.”

With Massbuild recording sales growth of 11.9 per cent for 2012, the Massmart Annual Report was upbeat on delivery:

Builders Warehouse, Builders Express and Builders Trade Depot delivered a strong performance on the back of increased sales and improved efficiencies in all formats.

At Builders Warehouse, our sales growth can be attributed to specific events that were aimed at increasing customers’ spend with us. We ensured stock continuity in core ranges and offered customers a full range of products resulting in a one-stop shopping experience enabling them to complete their projects. Our focus on the trade customer has led to significant growth in the building material category in a tough economic climate.

At Builders Express, the improvement in performance was the result of focusing on the Retail basics. Simple initiatives to ensure stock availability and specific sales campaigns resulted in customers responding well to our offering, generating higher sales.

New Builders Express stores were opened in Bryanston and Amanzimtoti, and the previous Builders Trade Depot Store in Ballito was converted to the Builders Express brand.

Our Builders Trade Depot stores remained focused on offering the correct and complete range of products in all the phases of a building project. Massbuild’s roof-truss strategy was finalised by centralising operations and regionalising the manufacturing and sale of trusses resulting in market share gains. Re-introducing treating tanks and the stocking of hardwoods into the business will further reduce the operating costs of the truss plants.

In Mozambique, our fourth brand, Kangela, reported a decline in sales as a result of the cement over-supply in that country. We are planning new stores in Tete and Maputo and the extension of relevant inventory ranges into each of the regional stores. Structural changes were recently made to better manage the business and Massbuild has committed the necessary resources from an accounting, operational, merchandise and supply chain perspective to ensure profitable growth.”