School of Retail
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THIS ISSUE: 09 Sep - 15 Sep
Clicks has just opened its 400th store, and is aiming to hit 500 in the next 3 to 5 years, with somewhere slightly south of 30 being planned for 2012 alone. Of the existing 400, 283 have in-store pharmacies, making Clicks SA’s biggest pharmacy retailer by a long chalk, and 103 of those have walk-in clinics for primary healthcare. Pharmacy is a tricky game in which to earn a crust, but Clicks appears to see it as a lynchpin of its venerable and overarching strategy to achieve customer loyalty. As we speak, Clicks, who pioneered loyalty in South Africa before the Scouts did, has 3.4million ClubCard members, who received a not insubstantial R220million in cash back rewards in the past year.
Comment: So there you have it. Not bad for a spry and chipper 43 year old. That’s Clicks, obviously. Not anyone associated with the business. Although with 6,500 staff, they must have one or two who are 43.
Tatler Reporter 09/09/11
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More on Woolies’ bullish pronouncements on this great continent we call home. You will recall that The Dapper One is pulling back from franchise in order to enter joint ventures with selected partners in Africa. One such is a Mr Ali Mufuruki, himself a one-time franchisee, who will be partnering with them on an existing 4 stores – 3 in Tanzania and 1 in Uganda – and they are together opening another 3 in the next couple of months. Africa currently represents around 3% of turnover, but growth is likely to be rapid – another 16 stores this year, with an increase of 42% of retail space on the continent, where a boom in consumer spending accounts for 60% of GDP, and a planned total of 145% over the next 3 years, for an investment, Woolies estimate, of R130million in a strategy they describe as “low risk, high return”.
Comment: And which we describe as “nice work if you can get it”.
Moneyweb 09/09/11, Business Day 12/09/11
FVC’s Freshtop at Caltex forecourts is proving to be a winner, riding as it does on the elegant tails of a global trend which sees the posher punter doing an increasing chunk of their shopping in the open-late and luridly-lit environs of forecourt stores everywhere. Freshstop borrows with pride from such outfits as M&S’s Simply Food, Sainsbury’s Local, Tesco Express and Somerfield Essentials in the UK, and is rolling out by converting Caltex Star Marts to the more wholesome brand. This has seen sales grow an average of 25% in converted stores, with 60% not being completely out of the question for the more successful ones. Why so, you ask? 24-hour convenience, and a compelling food-to-go proposition according to the boys in green. And if you’re a prospective franchisee, the turnkey solution will be of interest.
Comment: There’s one here by us, and they do an interesting if challenging self-service Lavazza coffee.
Tatler Reporter 07/09/11
The Stripy One is unafraid of the entry of Walmart into the country, if you believe CEO Peter Matlare, and there’s no reason you shouldn’t, although his predecessor needed to be taken with a pinch of salt you will recall. Tiger enjoys a commanding 12-15% share of every basket that makes it to the tills, according to Mr M, and the loyalty of the South African punter is a force to be reckoned with. And, he reminds us, these big multinationals have not had things all their own way: witness the Absa/Barclays project, which has not exactly taken the banking world by storm. This will not prevent Tiger from leaning things up a little and taking out cost wherever they can in order to remain competitive. Year on year, Tiger’s prices are up 6%, in line with CPI, while low food inflation has been putting some pressure on the group over the past couple years. Comment: Comment: Exactly the sort of big, uniquely South African manufacturer which won’t be unduly pressurised by Walmart’s arrival. Those with more exposure in globally-negotiable global brands, on the other hand...
Anon24 September 2011 (08:37:54 AM)Walmart's pressure on said stripy one will be directed via those very globally negotiable global brands...
Back when we launched the Tatler, punching it out in the small hours on our steam-driven Remingtons, Single Exit Pricing for medicines was what passed for big news, with apocalyptic stories about pharmacists on the breadline and boarded up apothecaries every week. Now, you may once again be interested to know, the Department of Health has proposed a freeze on the SEP for the second year in a row, as, they aver, the economic conditions impacting on the pharmaceutical industry do not justify an increase. The formula by which the SEP is determined is 70% dependent on CPI, 15% on the exchange rate and 15% on the purchasing power of the rand, and while the dear old ZAR has weakened somewhat in recent days, you can still buy a heck of a lot of drugs with it.
Comment: Comment: Keeping prices flat while every other sector raises theirs does stick understandably in the throat of the pharmacy people somewhat.
Business Report 12/09/11
In the meantime, in that other great Antipodean struggle for manly supremacy currently underway, Foster’s has rejected SABMiller’s latest offer for the purchase of the business at what it has determined to be the risible price of A$9.25billion. Part of the issue is The Big Guy’s application to review Foster’s statements about earnings forecast and debt levels, which SAB believe to be “misleading and deceptive”. The Australian Takeovers Panel has rejected the application, a ruling that SABMiller has accepted along with Foster’s clarification of its debt position (and don’t let our breezy confidence here mislead you into thinking we have a clue what we’re on about). Foster’s, in the meantime, has said that it remains open to discussing a “sensible” bid.
Comment: Hopefully SABMiller are at home to Mr Sensible, and what promises to be an interesting venture still has legs.
Business Report 09/09/11
South African consumers are gazing at their toes, wringing their hands compulsively behind their backs and double-taking nervously in front of every mirror as consumer confidence drops to its lowest level in two shaky years according to the tweedy boffins down at the Bureau of Economic Research and their pinstriped sponsors up at FNB. Consumers – that’s right, that’s them, the ladies with the trolleys, and the bags of mealies on their heads – account for about 2/3 of expenditure in our economy, which you will recall from last week is growing at a barely-there 1.3%, just behind retail sales which are growing at an uninspiring 2.2%. The BER Index dropped from an unintelligible 11 to an incomprehensible 4 in the third quarter, which as far as we can make out means trouble coming down the turnpike.
Comment: So dust off the old value proposition, boys and girls. You’re going to need it.
If you are one of the right-thinking, tech-savvy futuristas who follow us on Twitter, you would already know that the leathery curmudgeons of the Australian competition authorities are appealing the Federal Court’s rejection of their bid to overturn the sale of Franklin’s to Metcash. Metcash in the meantime has notified the authoriddy that after five business days it would consider itself free to agree with Pick n Pay to waive the condition requiring ACCC approval and to complete the acquisition. Tick, tock.
Business Live 12/09/11
Ex PnP CEO Sean Summers is even cooler than we thought: pointy Italian shoes, fast Italian cars, a suite at the Michelangelo and now this: a gorgeous actress/producer daughter who has done some impressive work on screen here and on stages in New York. And just looking at the pics, she’s got maybe a touch of the old when-Summers-says-jump-we-say-how-high magic in her too. We do pity the fool who has to ask Dad for her hand in marriage, though.
Tesco is opening a 60s styled store in to mark the Tesco Bank sponsorship of the Goodwood Revival, complete with vintage brands in authentic packaging, like Treets, Opal Fruits, Tunnocks Tea Cakes, marathon bars and other things you would only be chuckling about right now if you were a Brit of a certain age.
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