Brights Succeeds With Strategic Five-Year Plan

In February 2016, Orlando Luis – CEO of leading Western Cape hardware retailer, Brights Hardware – told Enterprise Africa that his company was set firmly on a growth path. His plan to carefully expand the store network is now underway and Luis talks to Enterprise Africa again, saying that in five years’ time the company will have 10 stores around Cape Town, and will be diversifying its client base and shopping experience to prepare for imminent changes in the market.

Brights Hardware was founded in 1971 by Orlando’s parents and from then until now, the familyowned business has been focussed on delivering a personal service and quality products. The company stocks a massive range and can offer everything from braai equipment and home DIY tools to industrial building materials, paint, and much more.

Expansion of the Brights store network is part of a strategic five-year plan which began in 2017.

“We completed one new store in Mitchells Plain bringing the total number to eight,” says Luis. “We are aiming to open another two to bring the total number of stores to 10. The next will open in Table View and that should happen in the next 12 months. Number 10 will be somewhere in the southern suburbs, but we have not finalised the location yet. We have been held up slightly as we are relocating our Stikland branch which is our second oldest. It is one of our key branches and is being relocated to a 6000m2 site, doubling the space we have now. The existing store is in an industrial area and we want to move into a residential area. It’s not even one kilometre away but will give us much better parking and retail shopping experience. It will be an all-round massive improvement for the store and will be much more open and welcoming which will help drive our strategy of getting more people through the doors.”

The eight current stores are supported by a purpose-built distribution centre which allows for the smooth flow of products to wherever they are needed.

“We have a distribution centre of more than 6000m2 with capacity to grow by another 1500m2 if we need to. As we grow, and we start supporting more independent hardware stores, the distribution centre will become busier,” says Luis.

RETAIL IN A FIX

Operating in the retail industry is a real challenge right now. There’s the ever-growing threat from online retailers, offering cut-throat pricing. There’s the impact of a weak economy on consumer’s pockets, and there’s the changing dynamics of the industry with modern advertising encouraging different sectors of society into the market. Only those that can adapt will thrive in such a quickly-changing space. The effect on the industry is already starting to show in Europe where some big department stores have been unable to compete with digital competition, and their big costs for large store networks have forced them into trouble. In South Africa, the picture is particularly bleak in the retail space. In 2017, the industry generated R1 trillion in sales – that’s around R31,900 per second – but just 7% of that spend was on hardware, marking a 0.7% contraction compared with the previous year.

At Brights, Luis began the process of building an online store many years ago and is firmly concentrating on making that store as seamless as possible. Almost everything can be purchased online, accept for bulky items which are uneconomical to deliver. Over the coming years, Brights will continue to add to its online store, eventually taking the online range to more than 20,000 items.

“It should take us around four years to get up to 20,000 but right now have over 5000 items in our online shop,” details Luis. “We are working very closely with our suppliers to ensure that we get all of the correct information on our online store. We have a database with more than 50,000 products so it will take some time but we are making sure we do it right. The manpower to get everything online with the correct information is what takes the time.”

He adds that for industrial customers, it still makes sense to collect some items because of their weight.

“Delivery costs with building materials means it doesn’t always make sense to buy online as it can become very expensive just for delivery because of the weight. Luckily, our market is a mixture. Even a 20-litre tin of paint is not something people will buy online because the weight is so immense it makes the delivery cost so big and it doesn’t make sense. Anything smaller - hardware, electrical, tooling, irrigation, plumbing – those are getting bigger in the online space as the weight means they are easily and affordably delivered.”

CUSTOMER DIVERSIFICATION

Back in 2016, Luis was targeting a swing in the customer base at Brights, hoping to attract more female shoppers into stores. He noticed in 2016 that many female customers were shopping in the online store but few were setting foot in physical Brights branches. To entice them into the shops, Brights introduced new brands, larger products lines, various different ranges, and increased the size of stores. And it’s working.

“Two years ago, our customer base was around 19% female and we have improved that to 21%. It is a slow movement and it is very challenging, but we are targeting 33% in the next five years,” says Luis.

To get to the point where one in every three people that walk into his stores is female, Luis plans to continue with a marketing push that also involves working in local schools so that youth know the name Brights.

“Our strategic plan also includes our influence in other markets like females in hardware and youth in hardware through the provision of training so that our customers can learn about the products they are buying.” Previously, the company has hosted workshops aimed at the female customer, teaching the basics for customers to gain an understanding when purchasing.

“We want to go into the schools and get the youth involved. The next generation is orientated around electronic devices and there is no emphasis on people using their hands. Being a hardware store, we need people to be using their hands. So, it makes sense for us to focus on the youth so that the next generation is practically orientated and they are confident using their hands. In the past, kids would learn woodwork, home economics and needlework in school but that has been lost so we want to go into the schools and deliver those skills ourselves.”

The CEO explains that this focus was part of the reason behind the relocation of the Stikland store – “it represents around 30% of our total turnover and that is mainly for a male customer. There is no space to provide ideas and options that will attract the female customer.”

The two oldest stores in the Brights business, Boston and Stikland, are responsible for around 65-70% of group turnover so Brights wanted to convert them to be much more female-friendly. “We have completed the revamp of the store in Boston and we feel the Stikland branch relocation will really give us the space to show off to our female customers, with more space for products and more brands,” says Luis.

BIG BROTHER

In an attempt to further strengthen its position in the Western Cape, Brights has begun striking partnerships with smaller, independent hardware retailers so that the industry can grow. Often, smaller players in the market are not able to fulfil the needs of big customers or provide unique products for once-off jobs. Brights would like to work alongside independent stores in these situations so that the smaller player can meet the needs of its customers by ordering through the Brights central distribution centre.

“We are focussing on the development of independent stores,” details Luis. “We want to be like a ‘big brother’ to all of the small independent hardware stores. Business is very tough. The water restrictions and other factors have caused havoc in our industry. We have seen companies close down because without water they could not repair, maintain or even paint. The building and paint industry took a real knock with the water restrictions – you had to have a tank of water on site to ensure you could continue. Because of our range of products – we have more than 50,000 compared to your average hardware store that stocks around 20,000 – we were able to survive and thrive. We have been around for 47 years because when one range slows, another picks up. I’d like smaller independent stores to look to us and our distribution centre so that we can supply them with a huge range. We would like to see the smaller stores try and stock a few more product lines and grow their businesses. If it works, keep it; if it doesn’t, give it back to us and we will sell it in our own stores. We need smaller stores to continue creating jobs – this is where the future of South Africa lays.”

Combine the task of attracting different customer groups, building a powerful online presence, opening new stores, and running the existing network, and you have a mix for an extremely busy period. Luis says that, for now, he will not look beyond the company’s strategic five-year plan, and he will certainly not start considering the company’s 11th store until the true impact of online retailing is clear.

“We will keep working on the female market, the youth market and the local independent hardware store market, and that should keep us busy,” he says. “Only after that will we be able to look at how we go forward. By then, online shopping will be a massive factor whereas right now it’s not even worth 1% of our sales. We hope to see it grow to around 10%. I don’t want to act too quickly right now, putting in a lot of infrastructure only for a major switch to online shopping. We can’t plan further than five years – it doesn’t make business sense. The speed at which technology changes makes it difficult to plan one year ahead, let alone five years.”

A BRIGHTS FUTURE

Luis remains positive about the future despite a bleak economic backdrop. His plans to attract new customers and drive digital where possible will need the continued support and effort of the team. After almost five decades in business, Brights is now home to hundreds of employees, and training and developing those people is where Luis thrives.

“You cannot grow a business without developing your people. Training is a massive part of our strategic plan – it’s very important to us. We also want to have all of our procedures and processes documented so that if tomorrow, the next generation comes and takes over the company, there is a manual of exactly what is needed to run the business. We want all of our processes running well, with proper structure so our strategic plan is a bit larger than just developing the store network and product range.

“We’ve grown to 850 staff and we expect that to reach 1000 by the time we open the two new stores. Developing individuals is what stimulates me, as long as that is happening, I will want to be at work at all times. Making a difference in the lives of my staff members is what drives me.”

Luis remains confident that the performance of the South African economy will pick up, citing the country’s diverse mix of people as its main asset. His bullish positivity is infectious and will, hopefully, help Brights to contribute in making building materials once again a top four retail commodity by total retail sales income (4.9%) as it was in 2014/15.

“Even with the new government and President Ramaphosa, it’s going to take a long time to fix things. It will take years; nothing like this gets fixed overnight. We have to be patient. Business confidence will not return immediately, so those of us that have been here for a long-time have to show confidence and show that we will not give up.

“Make no mistake, things are tough. This year, we will only achieve growth of 5% and previously we’ve always achieved 10% as a minimum so we are not happy, but we have to understand that the country is going through a massive transformation. We do not focus on negativity, we only bring along people with a positive mindset. In South Africa, our people is our strength. Our diversity is not found anywhere else in the world and that is what will make us successful.”

Clearly, Brights still lives by its longstanding motto of ‘being more than just a hardware store’. Its five-year strategic growth plan is ambitious and exciting and, instead of allowing the company to be dogged down by negativity, Luis is building for the future.

“Our five-year plan will certainly keep us busy,” he concludes.