Crime forces major South African company to shut down stores

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Crime in South Africa costs businesses billions of rands annually, and it’s reached the point where some are having to relocate or even close stores as a result.

This was highlighted in Italtile’s results for the six months ending December 2024, which noted the challenges operating in South Africa.

Italtile is a South African manufacturer, franchisor and retailer of tiles, bathroomware and other complementary home-finishing products.

The group’s retail brands are CTM, Italtile Retail and TopT, represented through a total network of 211 stores, including seven online stores.

Among the challenges the manufacturer faces is the rising cost of combating escalating crime in South Africa.

“Ensuring that our customers, staff, and stores are secure is a primary concern for management and a growing expense for the business,” the company said.

“As criminal behaviour and illegal activities flourish, we are continuously committing significant effort and investment to bolster our security ecosystem.”

Italtile added that as a result, in extreme cases, it has had to relocate or even close stores in unsafe areas over the reporting period.

Italtile is one of many businesses battling crime in South Africa. The World Bank and commercial insurers have highlighted the increasing risk of businesses to crime in the country.

The World Bank estimates that crime costs the South African economy at least 10% of Gross Domestic Product (GDP) annually.

This is lost through stolen property, protection costs through increased security and insurance, and missed economic opportunities.

Additionally, it is estimated that one in eight businesses in South Africa has fallen victim to some form of crime, most of which resulted in financial losses.

Rise in crime in certain areas
Data from the South African Police Service (SAPS) shows a concerning number of crimes in certain categories, including those committed at business and commercial premises.

According to the latest crime statistics, 12,412 robberies and thefts at commercial premises occurred in the last three months of 2024, equating to 138 incidents per day.

These trends are most pronounced in provinces with larger shopping centres, such as Gauteng, the Western Cape, and KwaZulu-Natal. Gauteng leads in commercial crime cases.

Allianz Commercial, a business insurance company, also highlighted last year that it witnessed an increase in commercial crime claims.

“This increase is evident across all the sectors that we insure and without a doubt tells us that any business, regardless of the industry within which it operates, may fall victim to a crime of this nature,” it said.

The other challenges Italtile highlighted are the regulatory hurdles and the tough competitive environment for local manufacturers.

“South Africa is viewed as a difficult and unsupportive location for the manufacturing sector, undermining its confidence in and contribution to the local economy,” it said

“In contrast, many of our neighbouring countries offer attractive investor-friendly environments and incentives for manufacturers, which has encouraged the recent spate of new investment by large global Chinese tile producers across our borders.”

Italtile added that these companies are not governed by the regulatory framework South African companies are subject to, including extensive labour-related and environmental taxes and costs.

Additionally, while SADC-manufactured exports to South Africa are exempt from import duties and tariffs, some SADC countries with tile production facilities have implemented excise duties to protect their local producers.

“It is incumbent on the government to consider the impact of this uneven playing field for South African manufacturers.”

Over the reporting period, Italtile’s revenue stayed flat, decreasing by a modest 0.33% to R4.78 billion, while the company’s cost of sales also remained largely unchanged at R2.82 billion.

However, its profit for the six-month period grew by 4% to R866 million, and its earnings per share increased by 5% to 70.6 cents per share.

Source: https://businesstech.co.za/news/business/817293/crime-forces-major-south-african-company-to-shut-down-stores/