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How Builders is fighting back against the French

Leroy Merlin is going to have to work hard to compete against the market leader …

Massmart’s Massbuild unit has given some insight into how it intends marrying the digital and in-store shopping experience, with the launch of its ‘store of the future’ Builders Warehouse in Boksburg earlier this month. At the same time, its bold move is about making sure it can compete effectively with French rival Leroy Merlin, which will open a branch in the area soon.

Leroy Merlin unveiled its first store at Stoneridge in Greenstone, east of Johannesburg, in September last year. This marked the entry into South Africa of the Adeo group, the third-largest DIY retailer in the world and market leader in France, Italy, Spain, Portugal and Russia.

At the time, I argued that “Leroy Merlin is unlike anything we’ve seen in the local market” and that it offered true “world-class retail, especially from a merchandising perspective – with products, brands, choice and assortment that we simply haven’t seen before”. This was especially true in the suburban context.

Read: Look out Builders, the French are here

Massmart, of course, may argue “correctly”, I noted, “that what it built Builders Warehouse into … is unlike anything the local market had seen before”. But the chain had stagnated. “There’s no visible innovation in the core business of DIY/home improvement retailing (the stores look almost exactly the same as they did a decade ago).”

Worse still, some stores, like the old Boksburg and current Fourways ones, haven’t been touched in nearly two decades. This made the decision to build a new store adjacent to its old one in Boksburg – a “very strong market” for the group – a simple one. Boksburg is also one of the four markets in which Leroy Merlin will open its first stores.

The new store was so strategically important to the local group that it owns the land and the building (typically, it is a tenant).

Speaking at the store launch, Massbuild divisional CEO Llewellyn Walters admitted that the old store “looked 17 years old” and offered a “poor shopping experience relative” to what it was “looking to deliver”.

Aside from obvious improvements to things like signage and layout, the new store focuses on five areas in which it aims to differentiate itself:

1. Smart home

This is a new category for Builders, and it clearly sees it as critical given its positioning right as one enters the store. For now, says Walters, security retail is leading this push (think connected video cameras and security systems), with appliances a longer-term play. It is looking to “commoditise new technology for customers”.

2. Flat-pack furniture

This new range is no surprise, given how aggressive Leroy Merlin is on flat-pack furniture. Builders has sourced product globally, and customers can select various colours and styles of the same item. “Ikea revolutionised the market,” says Walters, adding that Builders sees the assemble-at-home category as a “high growth” one in the years ahead.

3. Room inspiration

Another new element introduced into its Boksburg store – areas that provide kitchen and bathroom inspiration, with “mock-ups” to help customers visualise what is possible. Until now, there have only been some average-at-best efforts to showcase kitchen units in its stores. Leroy Merlin went big in this area, and it’s no surprise that Builders is catching up. It has also vastly improved its merchandising and display of lighting options.

4. Integrated retail

The new store in Boksburg carries around 28 000 different products, around 4-5% more than other Warehouses. Builders has another 12 000 lines available online, something it calls an “extended aisle”. In certain departments, such as outdoor/patio, it makes this extended selection available to shoppers via giant touch screens. And in departments with bulkier items (like white appliances), it will also offer customers the ability to buy and pay for something in the department, via staff with handheld devices. The transition from in-store to online (and/or back), which it says will be seamless, is core to where Builders sees retail going.

5. A quicker shop

Builders has also improved the experience for its trade customers – contractors – who make up a significant portion of sales. Their currency is time, so speed is critical. The retailer took learnings from improvements implemented at its Kempton Park store, and says it can get contractors “in and out in eight to nine minutes”.

Paint remains the hero of the store, with its position opposite the main entrance, and there is now an entire department focused on water conservation and filtration.

New services too … and coffee

Builders has also added other new services, such as a cut shop that will cut anything from pipes and cables to board, as well as a 3D printer. Walters uses the example of printing a new handle for a favourite knife. Builders had already trialled the 3D printing service at its previous flagship store in Rivonia/Sunninghill.

The store’s in-store Vida e Caffè mirrors the Mugg & Bean inside Leroy Merlin (Builders already has a Vida in its Centurion Builders Warehouse).

While still familiar to regular Builders shoppers – even those used to a 17-year-old outlet – the new in-store experience sets a far higher bar.

Builders hadn’t been napping

To suggest that Builders did nothing and was caught by surprise when Leroy Merlin opened would be naïve. The Boksburg store is not about suddenly playing catch-up. Builders had no doubt been glancing over its shoulder for some time before the first Leroy Merlin opened for business.

A major challenge for Builders, however, is to improve the inconsistencies across its footprint of more than 100 stores in South Africa. The ancient Fourways store is barely recognisable from the new Boksburg one, for example. And it trades across three formats: big box Builders Warehouses, Builders Express stores that service neighbourhoods, and Builders Superstores for rural and dense urban markets.

It will upgrade its Fourways store next (also no surprise given that Leroy Merlin will open down the road soon) and has already upgraded its Strubens Valley store which is 5km from the next Leroy Merlin to open (in Little Falls).

Upgrading its stores is one strategy, but Builders has also been very clever in how it has made sure that it competes far more assertively in the region around Leroy Merlin’s Greenstone outlet. It has already taken some elements of the new store design and applied them to the two Builders Express stores near Leroy Merlin: one barely 500 metres away and the other in Bedfordview. This ‘outsized’ investment in two stores, which ordinarily would not have received this much attention, has helped it defend its market share in the area.

A single Leroy Merlin store is not going to have a business the size of Massbuild – with R14 billion in annual sales last year – worried.

But four stores, and it suddenly starts to look like a different proposition, especially when Builders only has around 10 Warehouse stores in (greater) Johannesburg and the East Rand (excluding Pretoria).

Adeo’s entry has been described as “uncharacteristically aggressive”.

Massbuild is, predictably, being forced to compete on range, price and experience. Some may say this is long overdue. Regardless, customers win.

Hilton Tarrant works at YFM. He can still be contacted at hilton@moneyweb.co.za.

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I must say that I only had good service every time I visited Leroy Merlin.

I think South African’s are so tired of absurdly poor service countrywide, from all sides, Builders can do what they want, but people will still move over to that more international feel/impression. Until the local staff do what they do best, ignore their training and sit and watch the customer battle.

Builders is simply shockingly expensive. I stopped going years ago when the focus was on top billing and beautifully wrap hammers. You changed your clientele target group who needs a latte before getting dirty

I would love it if Ikea opened up stores here.

When I lived overseas I knew some of the Ikea execs in China. They told me the reason they won’t open an Ikea in SA is because of the perceived threat to the security of their expat staff who would need to live in SA. That was a long time ago, so perhaps they have changed their viewpoint?

I think that Chamberlain’s is better than both.

I’ve found Builders extremely expensive, both in P.E. and George. I do what I can to stay away. Electrical fittings/accessories/components, for example, are 40% to 80% more expensive than at the local electrical suppliers. On the odd occasion that I have visited builders, the service has been reasonable however (not like their sister company, Game, where the service is absolutely and consistently shocking). I would welcome a French store in the Southern Cape.

I used to be a regular at BW in Strubens valley until they did the revamp a few years ago. Not only did they rearrange the layout moving items all over the place but they increased their prices dramatically across the range to the point where it was considerably cheaper to buy the same products elsewhere. I stopped going there and started supporting the smaller businesses who are honestly priced. We all know prices go up but some items almost doubled in price or at least went up over 20% after the revamp compared to weeks before the revamp

My main reason why I go to Builders Warehouse? They open earlier and close later compared to their competitors in my area.

But forget trying to get some know-how from the majority of the staff there.

I do everything possible to avoid BW. I cannot even say their service is bad as there simply isn’t any. Pricing on low quality chinese house brands is ridiculous. BW was charging R80 odd for a door handle available at Gelmar for R40. Leroy and Mica are the stores I immediately think of when looking for hardware. Unless BW replaces its entire staff compliment (well in Fourways at least) they’r wasting their time trying to compete.

And if you had done a bit more homework, you could have saved yourself 60% by buying that door handle directly from the importer Gelmar buys from. Just saying….

Rather more emphasis on knowledgeable staff and less emphasis on the retail experience… supplying builders is where the real money lies, not in six hilti nails for Mr Jones and his picture hanging project. So credit & deliveries rather than fancy coffees

Leroy Merlin is refreshing and has an amazing range at competitive prices. Builders are now forced into uping their game. If it was not for competition they would just continue as they are, just like the rest of the Massmart group, whose offering, service and business practice has not changed in decades.

Now they need to work on their customer service and making sure that their staff on the floor are clued up regarding product they sell

Have to admit that their pricing is ridiculous.
Went into one of their stores in Cpt region to buy a Gas lift up stay and the selling price was in the region of R80.00.
Best of all was, the company Builders buy it from has labels across most of the hardware packaging in that aisle. So called this company directly and was offered same gas stay for less than R20.00 excl vat.
Been buying direct ever since.

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