The environment we operate in
Local economy
- high inflation (affecting basic living costs and product and building costs)
- high interest rates
- high unemployment, indebtedness and low wage inflation
- negative consumer and investor sentiment evidenced by weak demand
- strained consumers purchasing lower-cost alternatives, affecting production mix
- country-specific risks: energy instability; deteriorating infrastructure; social unrest; government mismanagement; endemic crime and corruption – worsening in the construction industry
Global economy
- intermittent shipping constraints, volatile freight rates and international supply chain disruptions
- subdued global demand is driving suppliers to new markets and intensifying margin pressure locally
- carbon tax
- shareholder and legislative pressures on remuneration
- legislative pressure on transformation
- social imbalances, income inequality and poverty prevail
- disparity in gender and race representation
- historical inequities and slow pace of government reforms continue to cause socio-political instability
- transformation (diversity, equity and inclusion) is a key business imperative, but hampered by the small pool of employable skills due to underperforming education system
- widespread dissatisfaction with the state's poor basic service delivery record
- online sales as a proportion of total sales rising globally
- IT risk management and cybersecurity are global concerns
- higher levels of digital adoption and changing consumer behaviour require more focus on data analytics and business intelligence
- artificial intelligence ("AI") and machine learning ("ML") becoming commonplace and demand investment to keep pace
- digital marketing increasingly important and complex
THE ENVIRONMENT WE OPERATE IN
The general context in which we operate impacts on our ability to achieve our strategic goal to create sustainable value for all stakeholders.
This report outlines the emerging as well as existing trends which prevail in our industry and market, the effect 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.
Increasingly, disruption (industry reconfiguration, social change, technology or other factors) and diversity (cross-cultural, gender, intergenerational), are becoming commonplace, alongside volatility, uncertainty, complexity and ambiguity.
Refer to Our Stakeholders' report and Strategic management of material risks report.
- reduced freight costs and low product pricing due to weaker global demand has improved feasibility of importing product, which declined during the pandemic
- expansion of offerings and production capacity by existing local competitors
- proliferation of new entrants in the retail and manufacturing segments
- SADC-based ceramic competitors engaged in predatory pricing in South Africa
- tile supply now exceeds demand in Southern Africa
- prices are deflationary and margins under pressure
- shortage of retail and manufacturing-specialist skills. Causes include: emigration, poor standard of education and historical inequities
- the Group's demanding high-performance culture proves challenging for certain recruits
- poor productivity of local labour (cost vs output)
- key components of ESG considerations for investors and customers
- carbon tax increasing in line with government's drive to reduce emissions
- growing impact is driving awareness and responsiveness of appropriate policies and practices
