Consolidation in the furniture sector has boosted survivors such as Lewis
Buying the United Furniture Outlets chain has given the company a safety net while retailers have to rethink their business models and deal with a struggling economy
The furniture and appliance retail sector was widely regarded as being saturated and has gone through consolidation over the past 10 years. Far fewer players are operating in this sector than before and one beneficiary of this has certainly been the Lewis Group, which has become one of SA’s largest furniture and appliance retailers.
In fact, Lewis CEO Johan Enslin estimates that as many as 1,100 retail stores have shut their doors over the past few years. Pepkor alone closed 300 furniture and appliance retail stores over the past three years. Though Lewis has done well to avoid the bad debt issues that plagued other retailers that sell furniture and appliances largely on credit to low-income earners, it also knew it was vulnerable to a slump in the economy. To mitigate this risk, it bought the United Furniture Outlets (UFO) chain, which sells for cash to middle- and upper-income customers. This has given the company a nice safety net at a time when retailers have to rethink t...