Leroy Merlin to give SA retailers a run for money
By Palesa Vuyolwethu Tshandu - Jun 28th 2018, 11:03
French homeware improvement retailer Leroy Merlin will be seeking to lay a foundation in SA when it officially opens its first retail store in the second quarter of 2018.
The retailer, which currently operates a pop-up shop in Greenstone Edenvale, as well as an online store, is set to come in direct competition with Cashbuild and Massmart-owned Builders Warehouse.
The opening of Leroy Merlin will make it the third consumer-facing French retailer to open in SA recently, after Decathlon in the sporting goods sector and bakery chain Paul, which is looking to expand in Gauteng.
Almost 29 out of the 40 companies in the French stock market index have already established in SA.
Leroy Merlin SA CEO Cedric Sennepin said the opening of the first store was underway. "Two other sites under construction for opening in 2019 and a fourth store beginning 2020, all in Gauteng for the moment."
Explaining the decision to open in SA, he referred to the potential for home improvements and the level of earnings by the population. "We have the capacity not only to steal market share but increase the global market with new practices, new offers and services, including workshops to learn how easy it is for DIY to democratise."
"It seems that the whole spectrum of consumers is currently under huge pressure. It is difficult to speculate who has the most appetite for growth, as I think everybody has the appetite but is hindered by the tough economic environment.
I am sure we will see a good international competitor [Leroy Merlin] have an impact on sales of the other competitors, especially at the middle to higher end of the market", says Cashbuild CEO Werner de Jager
Leroy Merlin is a part of Group Adeo, which employs 89,000 people across the world, including in 32 autonomous companies in 13 countries dedicated to 15 retail chains.
In its local online store, appliances range from heaters, drills and workshop equipment, as it aims to position itself as a low-to-middle income DIY store.
SA is also the first country in sub-Saharan Africa with the highest number of French companies, ahead of West African countries such as Ivory Coast.
William Roos, the economic counsellor of the French embassy said: "French companies in the retail sector have shown their ability to develop their activities at international level. SA is a major country to invest in, it has a strong internal market and it is a good gateway to the Southern African region and more largely to all sub-Saharan Africa. Therefore, it is only logical that French business would want to invest in SA."
Roos said that part of the French group’s interest in leading markets could be attributed to SA being considered as a mature market with a significant middle class.
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