Merchandise proposition:
Home Improvement retailer and Building Materials supplier
 
100
stores
(92 stores in 2013)
10,187
full-time employees
(8,882 in 2013)
 
5
BBBEE score
(Level 5 in 2013)
Massbuild’s BBBEE score for 2014 is estimated to be 57.96
 
5-10
Builders Warehouse
5-10
Builders Express
4-8
Builders Trade Depot
2-6
Builders Superstore
 
Geographic presence:
South Africa, Botswana, Mozambique
Massmart, with its strategy of investing in acquisitive and organic growth, previously made several acquisitions in the Home Improvement sector, establishing the Group as the largest participant and, in many respects, the leader in this growing consumer sector, and in Building Materials with complete project solutions. Massbuild has four store formats that cater to different markets with their own personalised feel and service offerings.

The Massbuild formats consist of:
Builders Warehouse follows the big box or warehouse retail format. Builders Warehouse offers an extensive range of competitively priced products with a large garden centre display and Builders’ supply yard.
Builders Express, which caters to the home owner and DIY enthusiast, focuses on a convenient location, a customer friendly store layout with pleasing displays, and personalised service and advice, making it a “one-stop” shopping experience.
Builders Superstores focus on underserved markets around the country. The stores are situated in dense residential, township, rural and developing areas, and conveniently located near commuter nodes.
Builders Trade Depot caters mostly for medium to large sized contractors and tradesmen engaged in building, maintenance and renovation projects. The chain mainly focuses on servicing the needs of construction entrepreneurs who require trade credit, telephonic ordering and building materials in bulk, delivered from low-cost outlets.
 
Value proposition
Builders Warehouse and Builders Express are both pioneers in introducing retail principles to the South African Home Improvement sector and attaching garden centres to hardware stores. The clean, friendly and uncluttered look and feel of our stores offers customers a shopping experience not traditionally associated with the sector. Our stores aim to introduce “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 have become household names with our customers assured of stringent quality control and best supplier practices.
Builders Trade Depot’s value proposition to customers in both the residential and commercial property markets, is our unique ability to consistently deliver an appropriate, professional range at highly competitive prices underpinned by trade credit and combined with exceptional contractor support services in a relationship-driven environment.
Builders Superstore focuses on the lower-income population. Their range of products and location of stores make it a favourable destination.
 
Highlights
  • Twelve new stores opened in 2014, of which four were relocations, including the flagship Builders Warehouse Rivonia store and Builders Warehouse Matola, the first full-size Builders Warehouse store in Mozambique, both of which have achieved exceptional results.
  • 553 new jobs created in 2014
  • Continued growth in operating profit in Builders Warehouse and Builders Express
Improvements
  • Improvements in productivity and transport contributed to savings in the Gauteng Distribution Centre
  • Conversion of the Western Cape facility into a regional distribution centre resulted in a significantly higher throughput
Challenges
  • The economic environment and slowing government expenditure on infrastructure
  • Availability of real estate for new stores
Financial performance
Sales
R10,822.8m
Up from R9,441.3m in 2013
23% Massdiscounters 27.6% Masswarehouse 13.8% Massbuild 35.6% Masscash
Trading profit before interest and tax
R537.6m
Up from R467.6m in 2013
8.8% Massdiscounters 50.6% Masswarehouse 26.1% Massbuild 14.5% Masscash
Key sales drivers
  • Residential property prices and housing growth
  • Price/value perception
  • Interest rates
  • Consumer confidence and disposable income
  • New stores
Product inflation
5.9% 
4.1% in 2013
+8
stores
Total assets
R5,027.7m
decreased from R5,212 million in 2013.
Total liabilities
R4,730.6m
decreased from R4,857.4 million in 2013.
Net capital expenditure
R296.8m
Up by 7.9%
increased from R275.1 million in 2013.
Increase in trading space
6,3%
Trading area 436,538 m2
Trading area 410,546 m2 in 2913
DC space 61,733 m2
DC space 61,733 m2 in 2013

 

Divisional strategy:
  • New store roll-out; grow South Africa and Africa store footprint.
  • Optimise Builders Trade Depot by focussing on inventory range and leveraging IT platform.
  • Optimise Superstore offering and grow the brand.
  • Extend and optimise the supply chain network.
  • Builders’ single brand alignment rollout – rebranding effort in Builders Trade Depot and Builders Express.
  • Focus on Trade Customer and Business-to-Business
  • Private label expansion: continue with roll out of key programmes.
  • Omni-channel.
Future outlook:

Massbuild has now entered an accelerated growth phase with the aim of increasing its footprint by opening new stores in South Africa and southern Africa. Furthermore the division is intent on increasing its market penetration through its fourth format, Builders Superstore.
Massbuild’s objective remains to be South Africa’s market leader in Home Improvement, DIY and Building Materials.

Investing in our community

Massbuild aims to make a relevant and notable contribution to the social development agenda by investing in early childhood development, education and training, women’s empowerment and nutrition.
Build a classroom
We embarked on an ambitious venture to build 15 classrooms at schools throughout the country and managed to complete nine in 2014. Since its inception in January 2014, this project has seen an investment in excess of R2 million.
Ripples for Good
We teamed up with the non-profit organisation, Ripples for Good in 2011 and this engagement has evolved from assisting with maintenance projects in schools to undertaking school refurbishments. In 2014 we managed to reach 100 schools.
Store openings
We celebrated our new stores by adopting a school in each community where a new store was opened. For example, when the new Rivonia store opened, Sefikeng Primary School received a cash donation to assist with the upkeep of their veggie tunnel donated by Massbuild in 2012.
Mayibuye Primary School in Tembisa received a donation of 120 desks and chairs. Protea Glen and Illinge Secondary Schools each received a donation of R50,000 toward their construction requirements. Another R50,000 was donated to Cosmo City West Primary School to be used towards their kitchen makeover.

Investing in our human resources

Massbuild believes in building a sustainable business by continually investing in its human capital. In 2014 a total of R29.8 million was spent on Learning and Development. Focus is on Leadership interventions where Managers are enrolled on programmes through either Massmart Corporate University or other external tertiary institutions. We also capitalise on SETA-funded leadership programmes. Skills are also imparted onto Management through online interventions.
We have had 216 people on various 12-month Learnership Programmes.
Business finance courses are also run for all levels of the organisation ranging from junior non-supervisory level to senior management level (455 attended). For team members in non-management roles, the focus is on specialist product training. In order to ensure the business adheres to good governance, training is also conducted in the areas of Compliance and Anti-corruption; Ethics; Employment Equity; and Orientation.
Priority is given to the advancement of women in the operations’ environment and to this purpose the Massbuild CEO’s Women’s Council Mentoring Programme, in which 15 mentors and 13 mentees attended various workshops and interventions throughout the year, was established in 2014. New mentees will be added to the programme annually.

Investing in our environment

We are committed to minimise our impact on the environment by:

  • Using natural light and efficient LED lighting systems to save energy
  • Investing in air-conditioning technologies that do not emit greenhouse gases
  • Recycling our bulk packaging, paper and plastic

 

Our new Rivonia store has been fitted with high bay LED lights that have reduced consumption per light by 60%. The roof is fitted with daylight harvesting domes that will eliminate the necessity to have all the lights burning in the store. A state of the art Building Management System has been installed to regulate the switching on of lights in the store when the daylight harvesting domes do not have sufficient light inside the store. The system will also control the air conditioners in the store and regulate the temperature. This will also alleviate maximum demand spiking .

Directorate

Guy Hayward Chairman, Llewellyn Walters Chief Executive Officer, Norman Gray Non-executive, Neville Hatfield Merchandise, Diane Hoffman Supply Chain,
Chris Lourens Operations, Zandile Manana Marketing, Lizelle Petersen Financial, Alex Rymaszewski Store Development, Mike Spivey Non-executive,
Andre Steyn Builders Express and Builders Trade Depot, Chris Tugman IT, Johannes van Lierop Non-executive