A C I M
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SELF-MADE
S U C C E S S It’s not just the customers of Mica who do it themselves – the co-operative company has been building its own future since it became independent in 2009, Ruari McCallion reports.
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Mica FEATURE
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erhaps the most significant event in Mica’s 27-year history took place in October 2009, when almost all its members bought shares in the business and it became an independent co-operative. “The company’s previous owner made the decision to focus on what it sees as its core business and to dispose of its non-core assets,” said Clifford Buchler, Managing Director of Mica Investments (Pty) Ltd. which is the trading arm of Mica Holdings Limited “We currently have 146 stores and by the end of the year we expect to have in excess of 150. Our stores are spread across the country in roughly equal proportions to regional
economic strengths.” The store owners are also the owners of the company; they run their own businesses – the stores themselves – and leverage their own business strengths through co-operation. Mica Investments is the conduit of relations between the store owners and the company’s suppliers. Mica supplies trade customers through its Mica Build stores, but its core business – certainly in the current economic situation – is DIY and residential hardware. The stores come in three sizes segmented to suite the market: Mica Paint & Hardware is the ‘expert around the corner store’, targets home owners and DIY enthusiasts the convenient, local source of necessary hardware, consumables and advice. Mica Home Warehouse is a larger format store and offers a wider range and supplies all your DIY, hardware and home improvement requirements; Mega Mica is the largest format stores with the widest ranges “One Mega range under one Mega roof – pretty much everything from a hammer and bag of nails on up”. “The stores range from 450 sq m to 4500 sq m,” said Buchler. “We are not ‘big box’ retailers – we feel that the bigger you are, the harder you fall, in that scenario. We see our growth coming from towns, where we can open 800 sq m stores.” The real ‘Mica difference’ is service. The store operators, as owners of their own businesses and the company itself, are truly committed. In contrast to some DIY retailers, Mica stores offer knowledgeable staff who can give customers valuable advice. And there’s more. “Compared to other co-ops in this business, we offer a wider range of home décor, garden and DIY products,” he continued. “Paints are our biggest line, with power tools, electrical equipment and builders merchandise following.” The last group has suffered during the economic downturn, as builders themselves have run short of work. The upside is that small activities, domestic DIY in particular, has grown. He says that traditional building www.southafricamag.com
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Mica FEATURE
is not Mica’s core business; more the ‘informal artisan’. The change in ownership last year was a big upheaval – in effect, Mica is a new business that has 27 years of history behind it. The previous few years had seen a lack of investment and commitment to the brand, something the new regime is determined to remedy. “In Years One and Two, we are focusing on our existing members and our supplier base,” said Buchler. “We have an aggressive expansion strategy, either with the conversion of other brands’ locations or with new sites. We have a strategy for sub-Saharan Africa but there is a lot of leverage yet within the membership base, so we’re focused on the current situation.” The objective is to ensure central support, lines of logistics and both supplier involvement and marketing activity are strong and reliable. There are no ‘corporate-owned’ stores within Mica – that approach has inherent conflicts of interest and does not go down well with the members. So Mica Investments focuses on supply chain, logistics and marketing. “We have partnered with ‘best of breed’ suppliers in South Africa and with two major wholesalers, who have helped us to fill the gap between self-ownership and integrated business,” he explained. “They give us excellent support and service. Our members don’t have to buy massive quantities in order to get good discounts. They can get three deliveries a week, rather than one, for example – which means they don’t have to invest in unnecessary storage space. Our largest paint supplier provides us with our exclusive brand – Colour Co. We have our own range of trademarks of exclusive brands, including Escape for outdoor and camping goods; Elements for seasonal needs; and
the Basix range for plumbing and other applications – and we’re going to tender shortly for up to five supply contracts for them.” The company also works on ideas with Mica in the UK and Mitre 10 in Australia and New Zealand. Getting the absolute rock-bottom price is not the sole objective. It’s the combination of price, support, good deliveries and good payment terms that is the desired combination – especially in tough times. The head office function has been slimmed down, which means less overhead for the members. Mica has partnered with a specialist shopfitting company, rather than owning its own operation. “We used to have over 100 support centre team members; we now have just 18,” Buchler continued. “By keeping the model low, we don’t have to push the members for large rebates. We do deals with suppliers; some are very low margin but compensated by volume. We have invested in a new IT business system, which gives the membership clear information on what they have purchased and how much they have earned. It means they don’t have to get in with different supplier methodologies – we do it for them. We see ourselves as a service and support centre – that’s our model.” The future for Mica will see continued expansion – up to around 500 stores, with a growing market share. It has already been voted the most popular hardware brand in South Africa over the past three years and it wants to stay that way. And to strengthen itself, by leading into new areas, such as some ‘green’ ideas that are already established in the UK and Europe. The classic symbol of a bright idea is a lightbulb; Mica will be offering energy-saving versions in the near future. Its adverts already have a green background – Mica has clearly signposted its way ahead. END
The real ‘Mica difference’ is service
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