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A debate has long raged about the merits of sustainable business practices. Some argue that they are a nice-to-have and soon abandoned should they pose any threat to the bottom line. Others aver that decarbonising and de-polluting supply chains actually improve profitability. Settling the debate this week is the pragmatic and profitable Shoprite, which has just been awarded ‘A’ scores for both environmental leadership and best practice in strategy and action by the global NGO Carbon Disclosure Project (CDP). Last year, the business increased its renewable energy usage by +91%, reducing its emissions by 106,141 tons of CO2e, while reducing its energy usage by 161 million kWh through the LED lamp replacement project. It also reduced its water use intensity (i.e. water usage divided by total square meterage) by -6.6%, which equates to R18.3m over the 2023 financial year, with monitoring systems that identify leaks, validate usage accuracy, and manage consumption effectively. “Through strategic investments in clever systems, the Group has improved efficiencies, expanded customer choice, minimised food waste, and uplifted the communities in which we operate,” says Head of Sustainability and CSI Sanjeev Raghubir.

Comment: Any supplier able to assist Shoprite in this critical endeavour is likely to be similarly rewarded.

Use of loyalty programmes has grown from 67% in 2015 to 76% now, according to the most recent “South African Loyalty Landscape Whitepaper” by Truth & BrandMapp. Question is, who are all these punters loyal to? Depends. Among better-heeled shoppers, Checkers Xtra Savings, closely followed by the Clicks ClubCard. In the mass market, Shoprite Xtra Savings, then Capitec Live Better. And how do they all prefer to be rewarded? With cash, is the short answer: 46% of shoppers globally prefer cash back over any other reward. Interestingly, 47% of shoppers like a mix of immediate benefits and allowing rewards to pile up. (Disclaimer: we could buy a modest car with our eBucks… unless they’ve expired). Among economically active users, 78% say loyalty programmes influence where they get their groceries, dropping to 35% for health products and pharmaceuticals, while among mass market shoppers, it’s 71% and 29% respectively.

Comment: No mention of how many shoppers indiscriminately use whatever card happens to be topmost in their wallets. And the health and pharmaceutical numbers are interesting given the heritage and popularity of the Clicks ClubCard.

Also flying the sustainability flag this week is Pick n Pay, which has installed ten more Reverse Vending Machines (RVMs) in stores across Gauteng, Eastern, and Western Cape. When customers deposit recyclable materials such as plastic, glass, and aluminium in the machines, which are run in collaboration with Polyco, they receive rewards in the form of cash or vouchers to spend in the Imagined Earth app with various rewards partners. Smart Shopper points will be introduced later this year, with the machines automatically linking to the Smart Shopper Pick n Pay app for easy redemption. To the formal independents next, where Jumbo Cash & Carry has introduced a new private label maize meal brand, Econo, which it claims retails for 10% less than competitors and is moreover fortified with essential vitamins and minerals. Finally, much has been written about Makro’s Walmart-powered drive into e-commerce. Not much, though, about the fact that Makro.co.za provides a platform for SMEs to market and sell their own brands, leveraging marketing, fulfilment and logistics capabilities of Massmart’s specialist e-commerce to reach a far wider shopper base than they would otherwise be able to access. Massmart is working with Walmart’s Bangalore tech hub and using learnings from Walmart’s e-commerce and marketplace experience to improve its own platforms.

Comment: A surprising – even unintended consequence – of the rise of big tech has been the cracks it has opened up for smaller operators to grow and thrive.

In the UK, small independent grocers – village stores, if you will – are accusing Tesco of using its wholesale business Booker, acquired after a controversial decision by the competition authorities some years ago, to drive them out of business. Booker, they claim, has reduced the range of items available by up to -30% at some sites, withdrawn such British staples as Yorkshire Tea, Rowntree’s sweets and Colman’s mustard, and reduced the availability and reliability of deliveries. Why don’t these retailers simply go elsewhere? Because through Booker, Tesco controls the Londis, Budgens and Premier groups, which are made up of thousands of independent stores tied into buying deals. What’s in it for Tesco? These are customers, after all. One theory is that Tesco is getting into catering and needs to free up warehouse space for that business – something that Booker has directly denied.

Comment: Sounds like an economies of scale issue, with smaller businesses (as usual) falling victim to poorly regulated growth by the majors.

The second annual Trade Intelligence Easter Shopping survey results are in, and they make for a compelling read. Conducted using the proprietary platform provided by our friends at Chirp, the survey reveals that even under this straitened economy, 35% of South Africans are planning on spending R500 or more on Easter weekend shopping over and above what they would spend on a normal weekend, and that 45% have a budget for the occasion. Kudos to the retailer wishing to capture some of that: 50% of punters said they first became aware of Easter promos in March and as for what’s on the menu, 53% of us will be enjoying a traditional braai for the occasion. On average people are shopping for Easter eggs at 2.6 retailers and contrary to everything we’ve read recently about who’s winning and who’s losing, 51% of shoppers will spend cash at Pick n Pay, ahead of Checkers and Shoprite, at 43% and 42% respectively. Sales at Pick n Pay are being driven up by the 40+ age bracket, who also claims to spend less on Easter eggs than other age brackets; the 18- to 24-year-olds are apparently mad for the things. And the traditional marshmallow egg has once again beaten the chocolate bunny by a respectable margin of 39% to 28% as the favourite Easter treat.

Comment: Which begs the question… which came first? The bunny or the egg?

Buried in the Remgro results last week was some not-great news vis-à-vis premium beer brand Heineken, whose contribution to Remgro’s bottom line amounted to a contribution to a loss of R386m, including amortisation and depreciation charges of R178m relating to the takeover of Distell and Namibia Breweries by Heineken last April. This poor performance, notes Remgro CEO Jannie Durand, was largely due to poor decisions taken by management before the Remgro takeover – like, for example, the decision to take a price increase when none was called for, handing market share to competitors such as SAB, or the matter of stock problems at its Sedibeng plant. He also cited delays in getting the Distell deal approved, which left management teams in limbo. Remgro has since taken seats on the Heineken board, with the implication that oversight will prevent future own goals.

Comment: A great brand, hobbled in part by overestimating the appetite of punters to pay extra for this greatness.

Congrats this week to John Manzoni, who assumes the position as Chair of the Diageo board, replacing Javier Ferran, incumbent since 2017. Manzoni served time as a non-exec at SABMiller before its takeover by AB InBev. Moving on, Pfizer has offloaded a 10% stake in consumer healthcare outfit Haleon, which owns toothpaste brand Sensodyne and Advil painkillers, for a cool $3.9bn. This leaves Pfizer, still by far the biggest shareholder, with 22.6% of the stock. Next, congrats also to South Africa Wine, the South African Grape and Wine Research Institute (SAGWRI), Stellenbosch University, and the Chenin Blanc Association of South Africa (CBA), which have launched a R4m initiative called “Premiumisation and Value Growth of South African Chenin Blanc Wine”, aimed at improving the economic feasibility of this South African classic.

Comment: Local institutions putting their weight behind a fine local product. That’s how we do it.

If our peers at Business Day are to be believed, and why shouldn’t they, every JSE-listed retailer and manufacturer in our sector has reported lower volumes sold in their most recent reporting periods. And this, for most experts, means one thing: South Africans are eating less. Shoprite, for example, saw volumes down -1.4% in the six months through December, with both Woolies and Pick n Pay recording similar declines. Researcher Julie Smith from the Pietermaritzburg Economic Justice and Dignity NGO, which tracks food affordability, says people are probably trading down rather than buying less. “People are probably sticking to a very limited diet,” she argues, while pointing out that what a limited diet means differs between social classes. She suggests that poorer consumers are buying more from spazas and other informal retail spaces. In related news, the first in-depth, nationwide study into food and nutrition since 1994, the National Food and Nutrition Security Survey, has found almost half the adult population of South Africa were overweight or obese, and that 69% of obese adults lived in food insecure households where families have little dietary choice and eat food with little nutritional value.

Comment: What can we as an industry do to keep South Africans fed and healthy while maintaining the profitability of our businesses?