Leroy Merlin set to shake up local DIY market
● The world’s third-largest home improvement retailer, French-based Adeo Group, opened a 17,000m² DIY store, Leroy Merlin, in Edenvale in Johannesburg on Friday and has plans to expand with smaller stores in shopping malls.
Cédric Sennepin, country leader for Leroy Merlin in SA, said: “We are working on trying to find a concept that we can adapt on a smaller scale so [that] we can propose something that can fit into malls in different places in SA.”
Sennepin said the Leroy Merlin pop-up store at the Stoneridge Centre in Edenvale would give the company “the capacity to learn and make mistakes on a small scale to prepare for the big store.
“It gives us the willingness and confidence to go into smaller concept stores … but for the moment we are working on biggerformat stores.”
The company is already planning to open two more stores in Gauteng in the next year.
Leroy Merlin will compete with Massmart’s Builders Warehouse and Builders Express, among other home improvement retail brands.
When Massmart’s Massbuild developed Builders Express as a smaller format of Builders Warehouse, the smaller stores were located within the same catchment area as the Builders Warehouse stores.
“Even with Pick n Pay and Woolworths, you can find any of their smaller stores 2km or 5km apart.
But our catchment areas need to be within 30km in order for us to be able to survive as Leroy Merlin stores are very large,” said.
Massbuild has 110 stores across the continent, with net trading space of 461,710m² as of December 2017.
Leroy Merlin has stores in 14 countries including France, Spain, Portugal, Poland, Romania, Russia, Kazakhstan, Brazil and China. Sennepin
But it is setting up shop in SA at a time when consumer spending has slowed.
According to Stats SA, retail trade sales in July increased by 1.3% year on year.
Despite this, Sennepin remains confident the retailer will be able to win over the South African consumer.
“Our strategy is to convert the traditional retail industry into the new age of digital, but our philosophy is not to become a digital company,” he said.
Leroy Merlin will have an online store. “It’s to combine the best of the different channels, leaving the opportunity to our customers to start their shopping or their relationship with the brand at home on their couch,” Sennepin said.
On whether the company could compete with Massmart, Sennepin said: “We are not perfect, we will do mistakes, but we will not be more expensive than our competitors.”
An analyst, who did not want to be named, said Leroy Merlin was expected to compete aggressively in the Builders Warehouse format, “but I’m not sure what their small-format stores are going to look like. If you look at Builders, they are still doing well in their big-box format stores.
“Out of their Massmart fold, they are the ones performing the best in terms of their different segments. We will need to see how it plays out in the next couple of months.”
Our strategy is to convert the traditional retail industry into the new age of digital