Staying agile while growing big
There is something of a paradox in the amazing growth of Jack’s Paints and Hardware over the past 79 years from one owner-managed store in Johannesburg to a group of 56 stores nationwide and now into the rest of Africa.
Gerhard Waldhauer, co-pioneer of the group and now CEO, believes the success of the company is firmly based on its ability to avoid corporate bloat and to remain as agile and customer-centred as a small owner-managed business. But how do you stay nimble and hands-on when you start counting your total number of employees in the hundreds, your central buying office starts doing hundreds of millions of rands and you have your own prominent paint brand?
For Gerhard, the secret lies firstly in the group’s franchise model, where the store manager is also the owner who has a direct interest in the satisfaction of every customer. “The employee manager of a corporate store knows he will get paid at the end of the month, targets or not. A franchise owner regards every sale as a contribution to paying the rent,” he says. But more importantly, Jack’s Paint and Hardware’s ability to remain agile is based on its culture of replenishing its management talent from the ranks of franchisees who started on the shop floor.
Gerhard, who was 57 when he took over as CEO from his now-retired long-time partner Martin Cohen, is tangibly excited about the team of young entrepreneurial talents that he has assembled on the company board. “We are going to be the largest independent paint and hardware retailer in Africa,” he says.
Jack’s Paint and Hardware’s entrepreneurial culture is also no doubt fostered by its origins as a single owner-managed store that grew incrementally and organically. There was none of the corporate strategy of buying market share by opening up huge stores and running them at a loss until the competition is cleared out, says Gerhard.
It started as a paint shop in Orange Grove, Johannesburg, owned by Martin’s father. After a stint in the US as a professional soccer player, Martin returned to take over his father’s business, and was keen to expand it. A mutual friend introduced him to Gerhard, who was a young retail manager with a prominent paint brand at the time. “I loved sales and people, and I loved the excitement of retail,” says Gerhard, “but I was very keen to start something on my own.”
He and Martin “clicked within the first ten minutes” over their shared love of soccer and their entrepreneurial ambitions. Together with a third partner who has since been bought out, they quickly expanded Jack’s Paint and Hardware to three stores. Early on, Gerhard took charge of operations as managing director and Martin of finances as CEO.
What followed was years of incremental growth, first through joint ventures with store managers who became franchisees, and later by selling turnkey franchise outlets. “We were very fussy when it came to vetting our franchisees. Rather than expanding rapidly, we chose carefully and protected our brand.
The company’s success in the face of all the major upheavals in the markets over the years vindicates the strategy and illustrates Jack’s Paint and Hardware’s entrepreneurial bent.
The financial crash of 2008 was a challenging time for the hardware sector, but Jack’s Paint and Hardware saw it as an opportunity to expand. They identified a major gap in the agricultural supply sector. Farmers’ supply stores all had a paint section but tended to be poorly stocked and services. They developed the concept of a “store within a store” where Jack’s Paints and Hardware occupies a space within a larger farmer’s supply shop and provides state-of-the-art training to the sales staff.
The entry of Walmart into South Africa in 2011 sent shock waves through the retail sector, with many fearing that the giant’s huge purchasing power and aggressive approach it would put local small players out of business. But Jack’s Paint and Hardware simply doubled down on their customer service. The corporate behemoths simply can’t compete when it comes the quality of the expertise on Jack’s Paint and Hardware’s shop floors, says Gerhard.
The Covid-19 pandemic once again tested Jack’s Paints and Hardware’s robustness, and they came out stronger on the other side. Gerhard says their nimble decision making allowed them to trade in sanitiser, protective gear and gas even during the hard lockdowns, and they were ready to capitalise on the do-it-yourself home improvement boom of the pandemic.
When it comes to financing Jack’s Paint and Hardware’s continued expansion, the group is well suited for bank finance, but Gerhard believes he has found a financier that shares Jack’s Paint and Hardware’s entrepreneurial approach.
Some four years ago, Gerhard heard about Business Partners Ltd from an acquaintance in the clothing industry and decided to approach them for financing the acquisition of new stores. Jack’s Paint and Hardware has also made use of Business Partners Ltd Technical Assistance Programme to set up an IT system for the group’s training centre. He was impressed by Business Partners Ltd approach of looking at the business as whole, together with the opportunity in the market, rather than just the balance sheet.
Banking finance has its place, he says, but it has become corporate, distant, and machine-driven, and often you need human judgement and interaction when you are taking decision about business expansion, says Gerhard.