Spar sees building boom slow down

Building sales have slowed in the past few months, says wholesaler Spar, suggesting that the home improvement boom that has boosted companies including Massmart-owned Builders and Pepkor’s Building Company is tapering off. Spar released a 48-week trading update from October 1 to August 27 that showed while its local hardware business grew 27.6%, the pace had slowed down since March.

Building sales have slowed in the past few months, says wholesaler Spar, suggesting that the home improvement boom that has boosted companies including Massmart-owned Builders and Pepkor’s Building Company is tapering off.

Spar, a wholesaler in Switzerland, Poland, Ireland and SA, released a 48-week trading update from October 1 to August 27. While its local hardware business saw 27.6% growth, the pace had slowed down since March.

“Despite strong initial demand for building materials, sales have slowed,” said Spar, which owns the hardware brand Build It.

In a recent interview, Mitchell Slape, the CEO of Massmart, said that even if the surge in the home improvement trend had tapered off, he expected growth in building sales to come from the construction industry.

But he highlighted delays in building and construction permits as reasons for slowing the return of the formal industry hardware trade.

Spar’s wholesale grocery business in SA reported sales growth of 0.5%, with like-forlike sales increasing by 0.2%. It compared this with a high base of sales in SA in the hard lockdown in 2020, when customers shopped closer to home, choosing local stores rather than grocery stores at malls.

GROCERY DELIVERY

It is also possible some local Spars that offer convenience to nearby residents are facing competition from Pick n Pay and Checkers, which offer same-day or same-hour grocery delivery.

But liquor sales were up 12%, despite 124 days of banned alcohol trade, showing the strength of the Tops brand and how consumers have adjusted their alcohol shopping behaviour, stockpiling between sales disruptions.

Good news for consumers was that internally measured price inflation of 5.2% for the first six months to end-March dropped enough that price inflation for 48 weeks lowered to 4.7%, suggesting food prices are stabilising.

Spar’s update on its Polish business suggests the retail business Piotr i Pawel, which it bought for €1 and is restructuring, is taking longer than planned to break even.

The Polish business is similar to its SA model, where it sells wholesale food to independent franchise grocery stores that are rebranded to Spar.

In 2020, Spar said the Polish business was expected to break even in mid-2022, but the trading update says “pandemicrelated challenges have continued to hamper the progress of this business”.

But Spar said it had another “extraordinary performance” in Switzerland, an SA success story abroad, as it works as a wholesaler selling with locally owned independent franchises that know their local communities.

It was 7.3% up in Swiss currency as intermittent European lockdowns have kept customers from shopping in nearby cheaper Germany.

Spar said that of the 184 stores damaged in July’s riots and looting, 115 have been reopened. A further 32 stores will be reopened before the end of the 2021 calendar year. The reopening of the remaining 37 stores will be delayed due to the extent of the damage.

Spar, unlike competitor Massmart and alcohol producers Distell and SAB, did not lose any warehouses to looting.