Cashbuild takes on DIY as projects slow

Competition is about to heat up in the do-it-yourself (DIY) market as Cashbuild rolls out smaller-format stores in shopping centres and towns.

The building materials retailer that traditionally services contractors and large construction companies will now go after homeowners who want to improve their homes.

“We believe these stores will give us a market we have never traded in before,” operations director Shane Thoresson said yesterday.

With fewer government housing developments and construction projects taking place, retailers of building materials are seeking to increase sales in residential areas that are already established.

Smaller Cashbuild stores would not only compete with Makro’s Massbuild division, but also specialised paint stores, plumbing stores and privately owned hardware outlets.

During the past financial year, Cashbuild completed 48 store development projects, including the opening of 15 outlets and the launch of seven DIY stores. Cashbuild hoped to open at least 13 of the DIY stores by December.

“This is the largest capital investment we have made in a single year on store development – it is an important investment in the future of the company,” group chief executive Werner de Jager said.

He added that the launch of the smaller stores would give Cashbuild entry to previously inaccessible markets.

Thoresson said the DIY stores were in the early stages with most of them opened in the last few weeks of the financial year under review.

“It is obviously a model that we are piloting at this stage. We will be taking most of the stores to the shopping centres.” A number of shopping centres in which Cashbuild’s smaller-format stores traded were in areas where the retailer previously had no presence.

“There are about 2 500 shopping centres around the country and we are in about 10 per cent of those centres,” he said.

Thoresson believed that the deterioration of the credit environment had affected Cashbuild’s customers. The low 1 per cent growth in comparable store sales was a sign of how strained consumers were out there, he said.

It was a concern that people used unsecured loans to finance their home improvements. “However, Cashbuild results show that the retailer has not been impacted to any significant extent by the fall-out in the unsecured market.

“This implies that the typical Cashbuild customer is a cash customer or one who is not over-indebted,” Verster said.

Source: Business Report 08/09/2014

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