Crime Forces Major South African Retailer to Shut Down Stores

Rising crime in South Africa has reached a tipping point for businesses, with major retailer Italtile announcing the closure and relocation of stores in unsafe areas. The company’s latest financial results highlight the escalating costs of combating crime, underscoring the broader challenges faced by businesses in the country.

Italtile’s Struggle with Crime

Italtile, a leading manufacturer and retailer of tiles, bathroomware, and home-finishing products, operates 211 stores across its brands, including CTM, Italtile Retail, and TopT. In its interim results for the six months ending December 2024, the company revealed that ensuring the safety of customers, staff, and stores has become a primary concern and a significant expense.

“As criminal behaviour and illegal activities flourish, we are continuously committing significant effort and investment to bolster our security ecosystem,” Italtile stated. The company added that, in extreme cases, it has had to relocate or close stores in high-crime areas, reflecting the severe impact of crime on its operations.

The Broader Impact of Crime on Businesses

Italtile is not alone in its struggle. Crime costs the South African economy an estimated 10% of its Gross Domestic Product (GDP) annually, according to the World Bank. These losses stem from stolen property, increased security and insurance costs, and missed economic opportunities. Additionally, one in eight businesses in South Africa has fallen victim to crime, with most incidents resulting in financial losses.

The South African Police Service (SAPS) reported 12,412 robberies and thefts at commercial premises in the last three months of 2024—an average of 138 incidents per day. Provinces with large shopping centres, such as Gauteng, the Western Cape, and KwaZulu-Natal, are particularly affected. Gauteng leads the country in commercial crime cases.

Allianz Commercial, a business insurance provider, has also noted a rise in commercial crime claims. “This increase is evident across all the sectors that we insure and tells us that any business, regardless of the industry, may fall victim to crime,” the company said.

Regulatory and Competitive Challenges

Beyond crime, Italtile highlighted additional challenges facing South African manufacturers, including regulatory hurdles and an uneven competitive landscape. The company pointed out that South Africa is viewed as a difficult environment for manufacturers due to high labour-related and environmental costs. In contrast, neighbouring countries offer attractive incentives for investors, leading to increased investment by global manufacturers, particularly from China.

“It is incumbent on the government to consider the impact of this uneven playing field for South African manufacturers,” Italtile said. The company also noted that while SADC-manufactured exports to South Africa are exempt from import duties, some SADC countries have implemented excise duties to protect their local producers, further disadvantaging South African businesses.

Financial Performance Amid Challenges

Despite these challenges, Italtile reported a 4% increase in profit to R866 million for the six-month period ending December 2024. Earnings per share also grew by 5% to 70.6 cents. However, revenue remained flat, decreasing by 0.33% to R4.78 billion, reflecting the tough operating environment.

The closure and relocation of Italtile stores due to crime underscore the growing challenges faced by South African businesses. With crime costing the economy billions annually and regulatory hurdles further complicating operations, companies are forced to make difficult decisions to ensure their survival. As businesses like Italtile navigate these challenges, the need for effective crime prevention and supportive government policies becomes increasingly urgent to foster a safer and more competitive business environment.

{Sourced BusinessTech}

Follow Joburg ETC on Facebook, Twitter , TikTok and Instagram

For more News in Johannesburg, visit joburgetc.com