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Operating context report

The context in which we operate affects our ability to deliver on our strategy and create sustainable value.

The table below illustrates the trends which prevail in our industry and market, the impact they have on our business, and our strategic response, which is aimed at mitigating or managing any negative impact, and wherever possible, capitalising on opportunities presented.


Market and/or industry trend


Impact on our business


Our strategic response

Constrained consumer discretionary spend


Weaker sales environment

Intensified value scrutiny


We strive to ensure our brands are aspirational and offer customers consistent year-round value.

Our goal is to deliver an unparalleled shopping experience.

Our price offering is supported by strong brand equity, product quality and customer-centric service.

Highly competitive trading landscape


Intense competitor activity with margins sacrificed by operators striving to survive


We focus on achieving an optimal product-price-margin matrix which holds appeal for customers but supports margins for store operators. Our robust cost leadership ethos is key to preserving margins.

Consumer demand for convenience


Demand for:

  • accessibility to brick and mortar stores;
  • faster, more efficient in-store service (no queues, no delays); and
  • access to omnichannel shopping experience (seamless transition between online and physical stores).

We continue to roll out stores to underserviced markets – with good success.

We continue to explore flexible store-size formats relevant to specific markets for all our brands.

We continue to invest in technology to improve the customer shopping experience. During the year, we launched mobile POS handsets which speed up payments, enable salespeople to check stock while serving on the showroom floor and enable customers to view visuals of products and lifestyles in a virtual reality setting.

As the growth in online retail and mobile commerce gains momentum, Italtile Retail and CTM's webstores continue to achieve new internal records in terms of unique user numbers and transactions, both online and converted in-store. In Kenya and Tanzania where the store footprint is limited, the online service is a convenient supplementary offering.

TopT's webstore will be launched in the year ahead and is expected to find favour with customers.

Technology and fashion are increasingly interlinked


In South Africa, 60% of the local population has access to the internet largely due to smartphones (reference: Stats SA)

The omnipresence of social media and growing sophistication of local consumers is driving an international fashion bias, rapid design evolution and quicker fashion changes, while the demand for instant gratification dictates shorter lead times


Our new Gryphon factory is the leading manufacturer of import replacement-quality large format tiles, while all of the Group's factories utilise state-of-the-art inkjet technology. This technology enables timeous manufacture of up-to-the-minute designs, giving the Group a key strategic advantage in the market.

Strong sales of Gryphon's large format tiles, and wood and cement-look tiles which mirror international design trends, illustrates this.

Industry-wide shortage of skilled retail-specialist personnel


Competent, fit-for-purpose employees and franchise partners are key to the Group's success


Our training and development spend is significant and aimed at building a deep resource pool of appropriately skilled personnel.

We continue to review and upgrade our learnership programmes and recruitment methodologies to ensure our people are aligned to our growth strategy.

Our partnership and reward initiatives are designed to incentivise our people and position the Group as an employer of choice.

Innovative in-store shopping experiences are increasingly important


Online access has educated consumers and influenced in-store expectations. Customers are increasingly more discerning, demanding and quick to use social media to share their experiences


We recognise that successful retailers are defined by consistently memorable shopping experiences. We continue to focus on up-weighting the 'delight and disrupt' factors in our stores through innovative layouts, lifestyles, products and use of technology.

In order to broaden our comprehensive offering and enhance the customer shopping experience, we have also successfully piloted an installation service in Gauteng. Across 2 100 installations completed, our customers rated us 4,2/5, a rewarding achievement – although we are mindful that there is room for improvement.

In the year ahead, we will tailor our strategy to make better use of analytic data to drive targeted customer marketing.

Consumers seek out reward-linked offerings


Research reveals that customers actively support offerings which are linked to rewards or loyalty programmes


We are mindful of this trend and have recently launched initiatives to ensure our customers are rewarded for their loyalty.

CTM and Italtile Retail have partnered with e-Bucks in an exclusive arrangement in the industry, while TopT is exploring a strategic rewards programme partnership with another leading financial institution.

Analysis of the data derived from these programmes will enable us to develop targeted marketing campaigns.

Intensified consumer focus on sustainability and green issues


Environmental mindfulness is a growing trend among consumers stemming from the goal to create a sustainable society


We have appointed a dedicated citizenship manager who is tasked with reviewing and reducing the Group's carbon footprint.

Across our operation we strive to reduce consumption of non-renewable resources and where possible, increase generation of renewable resources.

Our factories at Ceramic Industries use latest technology to ensure efficient production, and rank among the most energy efficient in the world. Concurrent rehabilitation of raw material quarries is conducted and quarries are rehabilitated once end of productive life is reached.