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Christo Wiese’s Invicta Holdings is moving its Tiletoria tile distribution business into the key Gauteng market and has signalled its preparedness to move down the tile supply chain into retail when the market improves.

July 3, 2008 

By Tom Robbins

Cape Town – Christo Wiese’s Invicta Holdings is moving its Tiletoria tile distribution business into the key Gauteng market and has signalled its preparedness to move down the tile supply chain into retail when the market improves.

The first steps for expanding Tiletoria into a major national player had been taken with the acquisition of Durban importer Tile People, Invicta managing director Arnold Goldstone said yesterday. The downturn provided an opportunity for well-priced acquisitions, taking advantage of an expected return to long-term buoyancy.

At present, Italtile, which owns the CTM chain, is the only significant retailer in the market. It has annual system-wide sales of R2.58 billion. The rest of the market is made up by independent players.

Shoprite chairman Wiese, with a 34.5 percent stake in Invicta, is the company’s biggest shareholder and its chairman. Invicta is the owner of leading engineering consumables distributor Bearing Man.

Goldstone said Invicta’s existing Cape Town tile business, Tiletoria, had taken over stock and staff at insolvent Tile People for an undisclosed price.

Through sales staff in Gauteng, it would supply retailers in that province from the Durban warehouse, avoiding costly investment there. But Goldstone said: “If we find the ideal retail business in Gauteng over the next 18 months, we will grab it.”

Mom-and-pop retailers mushroomed during the house building boom, which came to an abrupt halt last year.

“Every Tom, Dick and Harry” entered the market before steeper interest rates led to the current “tough” retail market, Goldstone said. The market was ripe for consolidation, but Invicta had not committed itself to a retail strategy. Its approach to the already committed wholesaling business would also be cautious.

But he confirmed that getting distribution right was a key element to a successful retail business.

Invicta was installing the Kerridge supply chain information technology system it used in the Bearing Man business.

In total, it would invest between R15 million and R20 million in the tile business in the current financial year.

But it would not limit itself to distributing to the struggling consumer sector. It would wholesale to the stronger commercial and infrastructure construction sectors, where more durable tiles were required.

Brian Pyle, a portfolio manager at Old Mutual Investment Group South Africa, said that while there was an opportunity to acquire market share by snapping up retailers at decent prices, the market was not growing. A relatively new player such as Invicta would have to have a long-term vision.

He added that Wiese was an astute businessman with good understanding of retail and distribution.

Wiese had experience of building materials from a time when Cashbuild had been part of the Pepkor group. Wiese is the chairman of Pepkor.

Industry sources believe that were Invicta to take Italtile on, the exchange rate could become a key factor. Italtile sources more than half its tiles locally, while Invicta is an importer.