Cashbuild expects trading conditions to remain challenging into 2027 as weak economic growth, high unemployment and rising living costs continue to squeeze the lower-income households that underpin its business.

The building materials retailer said in its latest annual report that it remains cautiously optimistic but expects affordability constraints to weigh on demand from households, informal contractors and so-called bakkie-builders.

“Looking ahead to 2027, we remain cautiously optimistic while recognising that trading conditions are likely to remain challenging for many of our customers,” the group said.

The outlook comes as the World Bank projects South Africa’s economy will grow by 1.5% in 2027, while unemployment and inflation continue to put pressure on household finances.

The most recent Stats SA data published in August shows the country’s unemployment rate climbed to 33.6% in the second quarter from 32.7% in the first.

Inflation data from September, published by Stats SA last week, shows consumer prices increased marginally from 4.4% in August to 4.5% in September.

However, economists expect October’s print to see a bigger uptick after another surge in fuel prices this month, in which the petrol price breached the R30 mark for the first time.

These pressures are particularly significant in a market where customers often buy building materials as money becomes available, prioritising essential repairs and smaller home-improvement projects over major construction work.

“Demand is therefore closely linked to household affordability, day-to-day repair and maintenance needs, and small community-based building activity,” Cashbuild said.

Cement remains central to the group’s offering, supporting residential building, extensions and repairs. However, it said short-term demand remained sensitive to affordability, project timing and input-cost volatility, despite the potential for infrastructure investment to support the market over the longer term.

Demand is therefore closely linked to household affordability, day-to-day repair and maintenance needs, and small community-based building activity.

—  Cashbuild

With household spending power under pressure, the retailer’s prospects remain closely tied to consumers’ ability to afford essential repairs and home improvements.

Cashbuild is targeting demand for affordable home improvements, with paint and other decorative products catering to consumers looking to refresh their homes without undertaking major renovations. The group said its expanded paint offering and improved product ranges had supported performance in the category.

The broader building-materials sector faces additional pressure from low-cost imports and competition from informal traders. Provisional anti-dumping duties on ceramic tile imports from Zimbabwe, Zambia, Mozambique and India are intended to provide temporary relief to local manufacturers while the International Trade Administration Commission (Itac) completes its investigation.

To navigate the difficult environment, Cashbuild will focus on competitive pricing, disciplined inventory management, supplier relationships and operational efficiency.

“We will continue to focus on providing value-driven DIY and building material solutions that enable customers to maintain, improve and invest in their homes,” the group said.

Last week the group reported that it grew revenue by just 1% for the first quarter of its financial year, due mainly to the opening of 14 new stores.

The group said in an operational update for the quarter to end-September that for the 304 stores in existence before July 2025, revenue decreased 4% and the 14 new stores contributed 5% growth.

Comparable store revenue, excluding Amper Alles, P&L Hardware, Cashbuild new and closed stores and the Malawi subsidiary disposal, decreased 1%, it said in a statement.

Transactions through the tills decreased 3% in the quarter compared with a year ago, with existing stores decreasing 4% and new stores contributing 1% growth.

Cashbuild South Africa contributed 81% of total sales in the first quarter, while the rest of South Africa, which comprises P&L Hardware and Amper Alles, contributed 9%. Its African operations, which include Botswana, Eswatini, Lesotho, Namibia and Malawi, until its disposal at end-December 2025, contributed 10%.

During the quarter, the group opened two new stores, closed one and refurbished three stores, bringing the total number of stores trading to 318.

Business Day