Trade Tatler
“Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
Ronald Reagan


THIS ISSUE:     03 Sep - 08 Sep

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Pick n Pay  Freedom! Freedom!! Freee-hee-hee-hee-dommah!!!*

Unlike generations of pickpockets, spivs, nadgers, card sharps and sheep-stealers before them, Pick n Pay have managed to escape the hard, dry clutches of the penal colony down under and will soon be taking to the shark infested seas around its grim and joyless shores in a rudimentary raft, hope in their heart and US$225million secreted about their person, proceeds of the soon-to-be-concluded sales of Franklin’s to Metcash. They will spend this windfall, we are told, on the rollout of an unspecified number of new DCs. Metcash, in the meantime, will be selling Franklin’s hand over fist to their IGA retail group members, and generating w/s sales out of the deal to the tune of $US500m plus, which is a result by anyone’s standards. In other PnP news, The Big Blue has continued to deny any truth in the rumour that it is in any kind of negotiation with Tesco.
Comment: Should there be a negotiation, and we aren’t saying there would, PnP’s 369 franchise stores, however profitable, would be an unattractively complicating factor.

*with apologies to Aretha

IOL 31/08/11

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Nakumatt  Nakking down the door

Kenya’s Nakumatt supermarket chain has announced that the confines of its home country are becoming uncomfortably close, and that it has continental ambitions to rival those of Sir James W.B. over at Shoprite. Nakumatt are owned by those Kenyan Oppenheimers, the Merali family, who are looking at opening stores in Botswana, Zambia and Nigeria. While rivals Shoprite are well-positioned in the mature Zambian market, with 18 stores around the place, Nigeria – where the Big Red One only has 2 shops – remains the big prize and the big challenge: 150million consumers, sure, but a supply chain that is 100 days long and beset on all sides by blokes with outstretched hands and geezers in baggy trousers with leashed hyenas. Nakumatt are raising the wedge for the expansion by selling equity in the business to the tune of roughly half the shares, which should raise around $100million USD dollars.
Comment: With a brand like Nakumatt, they should consider having a crack at Europe, home of the oddly-named retail business.

Daily Maverick 31/08/11

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Woolworths  Mr Black likes to work alone

Flushed with the successful but acrimonious buyback of its South African franchise operations for a total of around R600bar and a return thus far of R450million in additional retail margin, The Dapper One has donned its pith helmet and is looking to achieve something similar elsewhere on the continent, where it has 40-odd stores, in geographies (ahem) like Kenya, Botswana and Zambia. The idea is to run these businesses as JVs, with Woolies owning at least 51% of each store, and putting its stamp more markedly on the continent as a coherent and efficiently-managed brand. What it emphatically will not be doing, however, is attempting to wrest back control of any of its Engen Food Stops, and will in fact be rolling out more of these little late-night emporia for curiously hungry youngsters this year.
Comment: Is that the flash of a stiletto in the black silk Woolies glove?

Finweek 08/09/11

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Unilever  Footing the bill

In India, Unilever has developed a unique route to market known as Shakti, by which women in the remoter regions hawk sachets of shampoo and skin cream door-to-door. Shakti began with 17 vendors in two states, and now has 45,000 women on the road, or indeed dusty footpath, at any one time, hitting 3 million households. And now Le Grand Bleu is trialling the scheme in Nigeria, where the foot remains the primary mode of transport, and in Kenya, which has its own share of neglected rural byways. As women have their hands full in those countries pretty much holding up the entire agrarian economy, teams are likely to consist of both men and women. Another challenge in Africa is that of credit – in India, Unilever has assisted its Ammas with micro-finance, but in many parts of Africa formal banking for all remains a distant dream.
Comment: Still, nice work that fancily-logo’d multinational.

Financial Times 31/08/11

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Standard Bank  Pharaohs at the bottom of the pyramid

Standard Bank, you will be interested to know, has a strong presence in the informal retail sector, with spaza-based services that currently include airtime sales and money transfers. Now they’re stepping it up somewhat, with deposits being added to the service from next month. Standard is currently the biggest player in the prepaid market, and will be adding insurance to its bundle of prepaid products. Next year, they will be looking at the loan market, too. Spaza banks, of which there are 8,000, consist substantially of a Standard-branded under-counter POS device, with the whole project running under the standalone Beyond Payments division.
Comment: Competitors and analysts alike are sceptical of the bottom line benefits to Standard in the strategy. Let’s see what they’re saying in five years time, shall we.

Financial Mail 08/09/11

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AVI  Snacks and the city

Former randlords Anglovaal Industries (AVI) have posted a tidy set of numbers, with revenue from continuing operations up 5.7% to R7.69biljoens, and operating profit up a handsome 25% to R1.1billion. Tea, coffee and creamers grew nicely, but biccies were down, due in part to increased sales prices and competition from dodgy Brazilian and Chinese imports, whose HACCP compliance might, shall we say, be a little unresolved, ahem. I&J’s volumes were in line with those last year, although higher quota volumes were balanced by a reduction in purchased raw material, anyone have a clue what that is? The real winner, however, was that odd little division that incorporates upper-crust cobbler AD Spitz and the Jimmy Choos side project, which in less charitably-disposed minds than our own might point to an unusually developed interest in ladies footwear.
Comment: A tidy little earner, though. And you can get a whole lot of biscuits for a pair of Jimmy’s. Or so we’re told. Not that we’re interested, or anything.

Fin24 06/09/11

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Inflation  That shrinking feeling

After some faffing and paper-shuffling among those arch ditherers, the economists, inflation is back in full force, especially for poorer South Africans. While officially consumer inflation for July was 5.3%, at the upper limit of the government’s targeted band, it was 11.6% in rural areas, where prices, ironically, are higher for the food that is grown there. And the commodity categories have also been particularly hard hit – oils are up 24.1% year on year, meat 11.4% and bread and cereals 9.5%. The only good news is veggies, down 0.3% which will be of cold comfort to homesteaders who largely grow their own anyway. In other horrible news, the strike season, the strong rand and general unease has seen economic growth for the second quarter shrinking to 1.3%, a rate at which we will continue to shed jobs.
Comment: Perhaps it’s time to try out a new economic paradigm before one is thrust upon us?

Business Report 30/08/11, 31/08/11

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Denny  Into the wide blue fungus

The merger has been approved between Blue Falcon and the more prosaically-named Denny Mushrooms. Blue Falcon is, you will recall, an investment business controlled by RMB Ventures Six, the investment banking arm of FirstRand, who might wish to “invest” in some punctuation. Denny is being flogged by AVI, the mushroom category being “no longer strategically aligned to their growth ambitions.” 02/09/11

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Tesco  The mad orientals department

Tesco have come up with a cunning plan in South Korea, where people seem to spend most of their lives at work or on the underground: a virtual store of products depicted on a massive wall-sized poster at Seolleung subway station, with each accompanied by those pixelly square barcode thingies. The idea is you aim your Samsung phone at the products you want to buy, and they’ll all be delivered to your front door before you get home and slump into an exhausted workaholic stupor.

Korea JoongAng Daily 31/08/11

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Carrefour  Carre on up the Congo

Second-biggest retailer in the world Carrefour are in a spot of hot water, with profits predicted to drop 15% as retail slumps in France and French shoppers opt to spend their long, pointless afternoons smoking Gauloise and discussing Derrida in the dimly-lit apartments of their illicit lovers instead. In the meantime, is Carrefour one of the two French retailers Shoprite are eying edgily as they scramble for turf in Angola?

Business Day 01/09/11

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Trends  Pop off

Call us a bunch of curmudgeons who just don’t get it, but does anyone else hate pop-up shops as much as we do? Back in the day, before the clever brand-y chickens with their black-framed glasses and pointy shoes got involved, we used to call them school fêtes, flea markets or boerewors stands. We’re just saying.

Tatler Reporter, 07/09/11, live from Tatler stand

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