Trade Tatler
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TATLER ARCHIVE

THIS ISSUE:     15 Jun - 21 Jun

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RETAILERS AND WHOLESALERS

Amazon  Whole Shooting Match

So Amazon is set to buy bongo North American grocery retailer Whole Foods for the princely sum of $13.7billion. Knowing what Whole Foods manage to charge for a basic basket of groceries, this is not surprising. But there’s more to it than that: Amazon is busting into the already-crowded home-delivery grocery market, Whole Foods delivers to it a whole supply chain’s worth of logistical problems already solved. Amazon has a loyal customer base; so does Whole Foods, with some overlap but a whole lot of new punters too – many of whom will now sign up for Amazon Prime and start to buy everything including media from the online giant. And Amazon’s Echo smart speaker system is perfectly geared for the making and ultimate delivery of shopping lists. Plus, don’t forget, Amazon has already opened ten physical stores – retail footprint seems to be a significant part of the looming monopoly’s global game plan.
Comment: Good for Amazon, maybe for Whole Foods. For every other retailer on the planet? Not so much. For us? The jury’s out, but you can bet that Amazon’s considering buying them too.

Slate 18/06/17

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Food Lover’s Market  Going Gangbusters

Did we say it was a slow news week? Not anymore! Food Lover’s Market, having trialled its Goodness Gang collection of nutrition-themed plushies in the Western Cape, are rolling them out nationally, and into Namibia too! Here’s the deal: R50 and more of groceries will get you a Goodness Gang sticker, 70 stickers will get you an actual plushy, which you could also pick up for the more reasonable price of R199.99. And the bonus is that your wee ones will be motivated to eat the fresh crunchy stuff you’ve been forking out so lavishly for, just to see the looks on their little faces when you come home with your sticker. And Caltex Freshstops will be offering their own mini-range of Goodness Gang figurines when you swing by there for a litre of milk and a bunch of flowers for the wife.
Comment: We’re a little conflicted about this arms race of trinkets and toys among our national retailers – a situation which is not paralleled to this extent anywhere else in the world, as far as we can tell.

Tatler Reporter 13/06/17

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Retailers  The Numbers Game

Fascinating study over here about how the various retailers square up against each other on a range of measures at the end of the FY. So, for example, while Shoprite is far and away the biggest when it comes to turnover (R130.028billion) and operating profit (R7.278billion), SPAR, which measures its success in DC sales rather than retail turnover, is giving them a run for their money when it comes to SA store footprint. And where Massmart – the best payer at an average of R555,000 per head, employ only 13,000-odd people, Shoprite pay their 137,000 employees an average of R75,000 each annually: presumably this takes into account the lower wages north of the border, where Shoprite has more stores than anyone else. Pick n Pay, incidentally, is now the second smallest of SA’s BIG 5 by turnover (R77.500billion) and the smallest by operating profit (R1.774billion).
Comment: You’re never going to get the full story from anyone’s annual report, and that’s a fact.

BusinessTech 14/06/17

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MANUFACTURERS AND SERVICE PROVIDERS

Unilever  Dah-dah, da-dah-dah, dah-dah-dah-dah-daaaaaah, Wuhu!*

So Unilever have relaunched their stodgily-titled Unilever deals, under the way more dynamic fresh and exciting Wuhu, with something called social media support and Vodacom as a strategic partner. Long story short: Wuhu is a mobile coupon and rewards site, where shoppers get vouchers delivered to their phone entitling them to savings on a particular product, leading not incidentally to increased sales of that very thing. The big goal is for Wuhu to become the biggest FMCG rewards “platform” in the region. And let’s not be too disparaging about the earlier iteration, either: Unilever and its digital agency Thumbtribe got the Gold for Lead Generation at the recent EMEA Smarties Awards.
Comment: Excellent work, Le Grand Bleu, piling innovation upon success like they do. *With full acknowledgments to Blur

Tatler Reporter 18/06/17

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Nestlé  Back to the bottom of the pyramid

Nestlé are betting not on the rise of the middle class in Africa as they have done in recent years, but on the endurance of the poor. We don’t usually quote directly from our colleagues in the business press, but this is important: “The bedrock of our business is really where the bulk of the population resides,” says John Martin Miller, senior VP in Africa, Asia and Oceania. “I would suggest for the next five to 10 years, they will continue to reside lower down on the socio-economic pyramid.” For this reason, Nestlé are focusing on products for the African market that are affordable and accessible, and on serving customers at a time when they are vulnerable to the vagaries of our commodity-driven economies. And this is paying off: for the first quarter of the financial year, Nestlé experienced growth of 4.5% in its Sub-Saharan African markets, tidily outstripping performance in other geographies, by selling such humble products as stock cubes and powdered milks at sufficient scale, which is the heart of the Nestlé model.
Comment: A business which seems to combine pragmatism with a touch of humanity at a time when competitors may be indulging in wishful thinking about a speedy return to growth.

Financial Times 13/06/17

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TRADE ENVIRONMENT

Consumer Spending  Also, synth pop and bad haircuts

Once the bulwark of the South African economy, consumer spending may not in these difficult times be taken for granted. While all sectors contributed to our GDP’s collapse in the first quarter, the decline of the wholesale and retail sector by 2% quarter-on-quarter, and 5.9% year-on-year, was the real shocker. The last time something like this happened was in a mid-80’s apartheid South Africa, with sanctions in full force and inflation and the interest rate both over 20%. So with inflation under control and interest rates modest now, why the decline? Confidence, in a word, combined with a slow decline in borrowing due to this lack of confidence and in the difficulty now of getting credit. And how long will it last? Don’t hold your breath. Back in the 80s, the consumer recovery took somewhere between 18 and 24 months.
Comment: One other factor in common with the 80s: rapacity and corruption in the cabinet, which is never good for the confidence of the people.

Business Day 18/06/17

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IN BRIEF

Shoprite  Investing in Hope

In the spirit of our Youth Day campaign, Shoprite are investing heavily in the future of the Beloved Country, springing R20million a year for bursaries in scarce skills like pharmacy and chartered accounting, and seeing 3,000 beneficiaries find gainful employment in the past decade through the programme.

Tatler Reporter 19/06/17

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Aspen  Bitter Little Pill

Aspen Pharmacare, you will be pleased to know, observed the letter of the law back home, keeping price increases to legal limits on some of the cancer drugs for which it is being investigated for gouging in Europe. This according to research by Business Day.

Business Day 19/06/17

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