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Mar 02, 2012

Growth strategy key for SA retail expansion

Africa|Ghana|Mining|Africa|Democratic Republic Of Congo|Ghana|Zambia|Product|Steel|Operations
Africa|Ghana|Mining|Africa|Democratic Republic Of Congo|Ghana|Zambia|Steel|Operations
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The growing importance for companies to strategically position themselves within a reachable radius of end-users has resulted in JSE-listed steel distributor BSi Steel accelerating its plans to expand its Express outlets nationwide.

BSi Steel’s 45% increase in gross profits between April and September last year can partly be attributed to the company’s venture into the retail sector through the launch of BSi Steel Express, says BSi CE of SA Stockists Ross Teichmann.

“The BSi Steel Express con-cept is one of a number of growth initiatives that the company is embarking on. “While we are ambitious with our plans, we will not be reckless just for the sake of growth. “These branches will develop either through small acquisitions or start-ups from scratch, depending on the markets and opportunities that present themselves

“The roll-out of Express outlets will capture a greater cash sale component for the group, with the aim being to improve our overall gross margin,” says Teichmann.

Looking ahead, the steel distributor says it plans to open a series of BSi Express stores nationwide in the next three years. With two branches already in operation in Kya Sands and Wychwood, in Gauteng, the company is on track to open a third branch in Brits, in the North West, this month. Meanwhile, Teichmann says the branch network in Zambia, Zimbabwe, Mozambique and the Democratic Republic of Congo is achieving measurable success; however, it is too early to comment on the success of the Ghana branch.

BSi will continue to focus on increasing its footprint on the continent, owing to greater activity in the mining, oil and infrastructural development sectors. Teichmann points out that its South African distribution centre remains an important link to its African expansion plans.

BSi Steel says that, with predicted gross domestic product growth of 3% for South Africa in 2012, and considering that the company only contri-butes 200 000 t/y of steel to the country’s consumption figure of five-million tons a year, it is confident it can still gain significant market share in 2012.

Recent challenges faced by the group include the strike action by workers in the manu- facturing sector in July 2011, which Teichmann says, had a significant negative impact on the group’s local and inter- national distribution operations.

Further, the temporary shutdown of steel manufacturer ArcelorMittal South Africa’s Newcastle blast furnace, between August and December last year, resulted in severe steel shortages. An unexpected increase in the demand for steel during the same period resulted in low steel stock levels, he states.

Edited by: Chanel de Bruyn
Creamer Media Senior Deputy Editor Online
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