Retail Outlook 2019

Retail Outlook 2019

Business is tough, but we always seem to weather the storm. However the forecast for 2019 is one of calmer seas.

Throughout this year, we at DIY & Industrial Trade News have been in contact with our loyal supporters, the suppliers. This gives us a unique insight into what is happening in the build and hardware industry, a view of the fraternity without numbers, charts and forensic analyses. Some might say this is only emotion and therefore worthless, but it is exactly that emotion that shows what people are feeling about the current market space, ultimately this is the drive that takes us into the future.

I said it earlier this year and I will say it again, being resilient and having the ability to adapt quickly to the economic climate by South African business people is astonishing.

We don’t need numbers on paper to prove to us that the private sector is the driving force behind this beautiful country’s economy. In fact government has made doing business very difficult, especially for new entrepreneurs, putting stumbling blocks in the way ranging from labour law legislation and business practice to the political climate.

After almost ten years of having an incompetent leader as a president, Jacob Gedleyihlekisa Zuma’s hand was finally forced by the top ANC’s top structure and he resigned on Valentine’s Day 2018. This after Cyril Ramaphosa was elected the new president of the ANC on 21 December 2017.

This was a breath of fresh air for South African business, knowing he is a businessman at heart too.

He ticked a few boxes in 2018 in the best interest of the country, and although they are small victories, they are positive ones. We’ve seen a Nugent commission of enquiry, Zondo commission of enquiry, a new police commissioner being appointed, a business stimulus plan, a job summit, investment summit, new leadership at Eskom, Transnet, Prasa, SABC, Denel, SAA and SA Express. We also got a new NPA boss.

There are however a few matters that’s is cause for concern and the biggest red flag of them all is expropriation of land without compensation. Highlighting this as a red flag is not because I am against it, but because the phrase in itself, ‘expropriation of land without compensation’ doesn’t sound positive for future business investment at all. Without clear policy in place, this is dangerous. We’ve seen what happens when we entrust government with state funds, I shiver to think how they can manage privately owned land for others. Land doesn’t promise wealth as much as social grants do not promise prosperity. Hard work, discipline and education create wealth.

In 2019 we can expect a bumpy start. We are once again heading to the polling stations in May for the national elections. We can expect the ANC to win again with at least a 50% majority. We can expect a bit more political stability after that. The Trump/China trade war seems to be on ice for a bit so this should also stabilise emerging markets, which includes South Africa.
But to get to a practical level we asked suppliers to answer two questions, 1. How was business in 2018?
2. What do you expect for business in 2019?
and this is how they answered.

Alan Cotton, sales and marketing director at Kansai Plascon answers

2018 was a good year for Kansai Plascon despite tough market conditions and struggling economy. The paint market saw very little growth with consumers under pressure and disposable income being limited. New product ranges introduced to meet these changing consumer needs were very well received by the trade and have performed exceptionally well.

We are positive about opportunities in 2019 although do expect the tough conditions to continue in addition to continued upward pressure on raw material pricing. This will require our business to continue to increase efficiencies to eliminate wastage and reduce costs. We are now in a better position than ever to deliver on our retailers needs and provide market leading solutions and inspiration for consumers to change and enjoy their living spaces with our quality products and support.

Kim Pratley, managing director of Pratley answers

From a macro perspective, 2018 must rank as one of the toughest ever in South African economic terms. Poor political decision making, the massive economic fallout of Government corruption, the failure of SOE’s at the expense of taxpayers, the uncertainty surrounding land tenure and pernicious price pressures from cheap Eastern imports have all continued to put great pressure on South African manufacturers. I have unfortunately witnessed this year the final demise of several respected suppliers and customers who have despite heroic efforts, succumbed economically. Such happenings erode the size of the economic cake and ultimately it affects all South Africans.

On a much happier note for Pratley, 2018 has been a very exciting and successful year of growth. This is almost entirely due to the coming together of many years of research, product development and planning across all of our businesses. In 2018 we celebrated our 70th Anniversary and we launched no less than five new products from our Electrical, Adhesive and Minerals divisions. One new product, ‘FrogzEggz’, proved to be an unprecedented winner in terms of the speed of its market acceptance take up rate. Our substantially expanded video, social media and graphics departments also contributed enormously to the very successful launch of all of these new products.

Our predictions for 2019 in terms of the macro economic environment are probably totally irrelevant. Who can predict accurately with any authority at the moment, given the unhealthy toxic grip that party politics has on everyday South African business? Superimpose on election year and it’s just a guessing game.

Our solution is to stick with what we know best and continue full throttle to bring out innovative, useful and trusted products that underpin the Pratley brand. 2019 will be another very exciting year for us as it will see the rollout of Phase 2 of our new products and innovations drive. Also planned is the introduction of plethora new machinery and substantially modernised systems and methods, consistent with international best practice. Export markets will also be much more aggressively pursued.

Rob Lister, divisional marketing director at Build it answers

The Building Sector had a particularly tough year due to the recession and with limited capital infrastructural spend by Government. Challenges within Government has had a negative impact on new housing spend in urban areas. The Cape Province obviously has had its challenges with water, which put a damper on building.

Build it, however, had an excellent year regardless of the problems due to the fact that our target market is more rural and we are a 90% cash business. We are continuing to build our range to compete in the repair, maintenance and home improvement sector going forward.

We are excited about 2019 and hope that the political landscape will settle and give certainty to the future of the country under a progressive and dynamic leadership.

We have recently refreshed our brand to improve our image and offer to the consumer, which will include a host of essential services including kitchen installation, plumbing and electrical specialists, board cutting and paint mixing.

Our private label offering is gaining traction with great quality products at very competitive pricing.

We believe 2019 will be a great year for the Building Distribution Sector especially in the target market that Build it services.

Heidi Masters, marketing manager for Permoseal answers

There’s always a lot happening at Permoseal and 2018 was no different. Our Construction Division is in its second year and we are delighted at the pace at which we have developed both the product range and our customer base. None of this would have been possible without the backing of the Alcolin brand.

We went on a major expansion drive for the Evo-Stik range and can see dividends paying off.

We consolidated the Perma product range in 2018 –we rebranded, added languages to the packaging and found new range extensions that will be launched in 2019 – it’s a very exciting brand and we have great plans for it.
head office in Cape Town. This has given us the opportunity to restructure our plant and improve efficiencies. New product developments for Alcolin, Bostik and Perma that took place in 2018 will come to life this year.

Expansion plans include developing new territories in Africa and increasing our sales force. For Perma, we will also be launching new point of sale material and marketing campaigns to ensure its continued growth.

Bostik recently announced the acquisition of Afinitica, a Spanish company specialising in cyanoacrylates, this targeted acquisition will enable us to expand our range of super glues.

We look forward to a busy year full of growth.