BuildCore Retail Group Business Plan › Section 3 › Industry & Market Analysis

3.1 Market Size & Structure

South Africa’s construction and building-materials wholesale and
retail trade is a substantial sector of the economy. Industry estimates
place combined wholesale and retail sales of construction materials at
well above R200 billion annually, spanning cement, aggregates, bricks
and blocks, steel, timber, roofing, plumbing, electrical products,
paint, tiles and hardware. The retail segment specifically — hardware,
paint and glass merchanting together with building-material retail —
represents a multi-tens-of-billions-of-Rand market that has proven
resilient across economic cycles owing to the essential,
non-discretionary nature of much of its demand.

The chart below sets out an indicative trajectory for the value of
South Africa’s construction and building-materials trade. Although
sector sales softened in 2024 amid subdued construction activity and
constrained consumer spending, the medium-term outlook is supported by
an easing interest-rate environment, improving electricity supply, and
renewed infrastructure momentum.

Figure 3.1

3.2 Demand Drivers

Several structural forces underpin sustained demand for building
materials in South Africa:

• Housing backlog. South Africa carries a housing
  shortfall widely estimated at approximately 2.4 million units,
  concentrated in the affordable and “gap” segments — households that earn
  too much to qualify for fully subsidised housing yet too little to
  access conventional mortgage finance. This backlog translates into
  durable demand for affordable construction materials, much of it
  channelled through informal and incremental self-build
  activity.
• Urbanisation. Continued rural-to-urban migration
  expands peri-urban settlements and township housing, the precise
  catchments BuildCore targets.
• Renovation & home improvement. First-time
  homeowners and existing households increasingly invest in renovations
  and property improvements, broadening the retail (as opposed to
  pure-build) customer base.
• Infrastructure investment. Public and private
  infrastructure programmes generate contractor and project demand for
  bulk materials.
• Informal construction. A large informal building
  economy — self-builders and small “bakkie builders” — sustains
  high-frequency, cash-based purchasing of core materials.

Figure 3.2

The housing backlog is geographically concentrated in Gauteng and
KwaZulu-Natal, with significant demand also in the Western and Eastern
Cape, Limpopo and Mpumalanga. This distribution closely informs
BuildCore’s phased rollout, which prioritises the largest, most
underserved catchments first.

3.3 Macroeconomic Backdrop

The macroeconomic environment is becoming more supportive of
building-materials demand. South African headline inflation has
moderated to multi-decade lows, averaging around 3% in 2025, and the
South African Reserve Bank has eased monetary policy, with the prime
lending rate having declined from a peak above 11.7% to the low-10%
range. Lower borrowing costs improve affordability for home buyers and
contractors alike, support renovation finance, and reduce the Group’s
own cost of debt. Real GDP growth, while modest at around 1% in 2025, is
expected to improve gradually as structural reforms in electricity and
logistics take hold.

Figure 3.3

3.4 Industry Trends

• Channel digitisation. Incumbents are expanding
  online marketplaces and digital ordering, although e-commerce remains a
  small share of building-materials sales — a greenfield opportunity for a
  digitally native challenger.
• Township & rural network expansion. Leading
  retailers are deliberately pushing store networks into township, rural
  and developing catchments located near commuter nodes.
• Private label growth. Proprietary brands are
  increasingly used to lift margins and differentiate value
  propositions.
• Supply-chain resilience. Rising logistics costs
  and import competition (particularly from Asia) place a premium on
  procurement scale and distribution efficiency.
• Sustainability. Growing demand for
  energy-efficient and responsibly sourced materials, alongside retailer
  investment in solar and efficient warehousing.

3.5 Customer Segmentation & Target Market

BuildCore’s addressable market is not a single homogeneous customer
but a layered set of segments that share a common need for affordable,
available building materials close to where they live and work. The
Group has defined four primary segments, each with distinct purchasing
behaviour, average transaction values and service requirements.
Understanding these segments at a granular level underpins everything
from store layout and range planning to credit policy and marketing
spend allocation.

Table 3.1 — Primary customer segments and target sales
mix.

The blended profile is deliberately weighted toward cash-based,
non-discretionary, high-frequency demand. This skew is central to
BuildCore’s resilience: it reduces dependence on the formal
mortgage-driven build cycle and on big-ticket discretionary spend, both
of which are more sensitive to interest-rate and confidence shocks. The
contractor segment, while a smaller share of transactions, contributes
disproportionately to volume and is the principal target of the Group’s
managed trade-credit programme.

3.6 Regulatory & Compliance Environment

Operating a building-materials retail network in South Africa entails
a defined set of regulatory and compliance obligations. While none
represents a barrier to entry in itself, collectively they require
disciplined corporate governance and dedicated compliance resourcing,
which the Group has built into its operating cost base from
inception.

• Companies Act & corporate governance.
  Compliance with the Companies Act, 2008, and alignment with King IV
  principles of corporate governance, including board composition, audit
  and risk oversight.
• B-BBEE. Broad-Based Black Economic Empowerment
  compliance is commercially material in South African retail — affecting
  procurement, supplier development and access to certain customer and
  tender channels. BuildCore targets a strong B-BBEE position through
  ownership, employment equity and enterprise- and supplier-development
  initiatives.
• Consumer Protection Act & National Credit
  Act. Retail sales and any extension of trade credit fall under
  the CPA and, where applicable, the NCA — governing disclosure, product
  safety, returns and responsible-lending practice.
• Occupational Health & Safety Act. Materials
  handling, racking, forklift operation and yard management impose OHS
  duties at every store and distribution centre.
• SANS & building standards. Stocked products
  — cement, structural steel, electrical and plumbing fittings — must
  conform to South African National Standards (SANS) and applicable SABS
  marks.
• Municipal & environmental. Zoning, trading
  licences, fire compliance and environmental authorisations for sites and
  distribution facilities.

A dedicated compliance and quality function, reporting to the Chief
Operating Officer and ultimately to the board’s audit and risk
committee, maintains the compliance register, manages audits and ensures
that new-store openings clear all regulatory gates before trading
commences.

Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of BuildCore Retail Group.