Share

Jooste: Change coming in SA furniture industry

Cape Town – The promise of a larger format furniture shop to be opened by the JD Group in the Strand this month, is a first for South Africa, reported Die Burger.

Markus Jooste, CEO of the listed Steinhoff Group [JSE:SHF], said it is a new shop concept being tested, which is based on the larger furniture shops Steinhoff owns in Europe.

Steinhoff took control of the JD Group in 2012 and increased its stake to 86% this year.

Jooste promised in March this year to bring a change in the furniture industry in SA.

This prediction has become a greater reality this month when the Ellerine Group was placed in business rescue to avoid liquidation en the JD Group decided to sell its loss making credit provision unit.

Steinhoff's biggest income and profit are derived from furniture stores and wholesale operations in Europe. Apart from Ikea, it is the biggest furniture retailer in Europe.

Its stores in Europe aims at the target market which is concerned about price. In Germany Steinhoff owns the very successful Poco stores which will now be brought to SA.

Jooste said earlier that furniture retail in Europe differs completely from that in SA.
 
A big difference is that clients go specifically to furniture stores to buy furniture.

"They park there and spend six to seven hours in the store."

The stores are much larger than in SA and the one to be opened in the Strand will cover "a shopping centre". The average size of a store in Europe is between 8 000m² and 10 000m² compared to between 200m² and 250m² in SA.

The focus on credit provision in South African stores is another difference he pointed out. He previously joked that in SA it is like visiting a bank to get a loan and only then a person walks out with a sofa.

Offer to sell

JD announced last week that it has now accepted an offer to sell its credit provision unit.

"Credit provision is not our type of business," Jooste said this week about the plan to sell this unit. "We use partners globally to do this for us in our stores. And we always planned to do this in SA."

Some analysts think it is a mistake to separate the credit provision unit from the retail.

"We have done reseach the past few months after we put our own management in JD," said Jooste. "There are many successful retailers in SA , like Mr Price, which are doing fabulously without credit."

Sad case of Ellerine

He hesitates to give an opinion about what went wrong at African Bank, which was placed under curatorship in August.

At JD we (also) did not stick with our business where we should have, because we started providing personal loans instead of secured loans against furniture.

"But I do not waste my time to look at what happened in the past. Since we took control we have been acting swiftly. We put the management in place, we sold the book and now we are going to fix the retail."

He does not delight in the changes he had predicted and which have now happened.
 
"You know, Ellerine is close to my heart, I grew up in that company since 1988 as a supplier to them.

"Eric Ellerine (who founded the company) taught me what I know about the furniture industry just like David Sussman taught me a lot.

"So, I find it very sad to see what happened. I am not glad about it at all."

Davis Sussman, who founded the JD Group, suddenly went on "indefinite compassionate leave" earlier this year.

In response to an enquiry about this Jooste said Sussman retired in February.

"He is at home and enjoys his retirement."

Would Jooste and his partners be interested in buying parts of Ellerine, which has been placed in business rescue and which will be sold as a whole or in parts?

"One should always look, it is...there might be stores or locations which appear attractive to our management.

"I am not involved with it now, but I am sure our people will take a thorough look to see whether there are things of value for them.

"But our priority remains to get our own house in order, I am not currently that much into buying."

Steinhoff said this week that its transformation as an integrated retailer has been completed.

This means the company is involvement in the furniture industry ranges from manufacturing and distribution to retail.

Jooste said it is a process which started 13 years ago.

"These things take a long time. We bought our first retail business in 2001. It was almost a period of 13 years to build up a retail network to its current size and to slowly swing around the manufacturing and wholesale sides...

"We are very happy the transformation has been completed and that the business is now an international retail business."

* For more business news in Afrikaans, see Netwerk24.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Voting Booth
Do you think corruption-accused National Assembly Speaker Nosiviwe Mapisa-Nqakula will survive a motion of no confidence against her?
Please select an option Oops! Something went wrong, please try again later.
Results
No, her days are numbered
42% - 375 votes
Yes, the ANC caucus will protect her
58% - 517 votes
Vote
Rand - Dollar
18.94
-0.2%
Rand - Pound
23.90
-0.0%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.1%
Platinum
907.85
+1.2%
Palladium
1,012.25
+1.1%
Gold
2,221.12
+1.2%
Silver
24.86
+0.9%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE