The news that listed group Italtile expects its full-year earnings to surge by 70 percent, boosted by a high demand for its products and an 18.5 percent increase in total retail store sales, makes anyone reading this during the pandemic do a double take... is that at all possible?
The retail franchisor and manufacturer (with brands including Italtile Retail, CTM, TopT & U-Light), attributed this robust performance to an improvement in in-stock levels as it built up inventory depleted due to unexpectedly high demand driven by the home improvement surge.
The group’s local integrated supply chain played a pivotal role in ensuring consistent availability of a wide product range and sustained lower interest rates, which supported homeowners’ spend on their primary asset, and the reallocation to home improvements of some funds previously incurred on transport, travel and other recreational pastimes, according to a press release by Italtile.
That pocket of excellence and resilience is the Building, Office & Home Services sector and its retail arm which makes up ten and sixteen percent respectively of the ‘pie’ of various sectors that make up the franchise sector in South Africa. This franchise sector as a whole contributed almost 14% to the GDP in 2019 through its around 800 business systems, and over 48 000 outlets employing close to half a million people.
“Generally franchise businesses have fared better than independents during this pandemic, and in particular specialist retailers in sectors like DIY and Home Services, have thrived as people improve and preserve their home bases. This bodes well for a franchise revival as the economy starts to recover,” comments Pertunia Sibanyoni, chair of the Franchise Association of South Africa (FASA).
Other brands within the Building, Office & Home Services sector - whether on the service or retail side - have also reported increased business and good future prospects.
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