School of Retail
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THIS ISSUE: 01 Oct - 14 Oct
The Crazy Store is one of those businesses where the name alone makes you forget that behind the madness there’s a board, a business plan and a whole bunch of shareholders maniacally demanding their annual dividend. Turns out it really is quite a serious business – R1billion in turnover, 27% annual growth for the last ten years, and big plans for a little place we like to call Africa. Plus a 50,000m2 DC in Epping, which it opened at the cost of R65bar, and which stocks around 8,000 product lines, including goodies from Mars, Wrigleys and Lindt and a whole bunch of people you’ve never heard of who make assorted novelties, tools, gifts and homeware. The Crazy Store is owned by Melbro, who have big plans for growth in homeware, in Africa, and through at least one major acquisition.
Comment: Under the radar, over the top, round the bend...
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Renee17 October 2011 (02:02:58 PM)Just don't think of them as cheap. Saw a homeware product on sale for R5 that an rather upmarket deli that originated in the winelands has on sale for R14.95
Massmart’s second long promotion hit the broadsheets a couple weeks ago, sharing many of the features of a Walmart Rollback, and The Men in Black have been so kind as to share their vision for the future of the activity. The promotions will be spaced at about 60 days and will run for eight weeks, over which period, they say, it is easier to predict sales than over a week. They are not importing cheap stock for the rollbacks, nor will they take a loss in the cause of merely driving footfall. They are finding that this way, you achieve economies of scale on the marketing and advertising, and that suppliers love it. 91% of the 317 food brands on promo in the last one were locally made.
Comment: One fairly major step in Massmart’s campaign to increase its ±10% share of the local food market.
The Citizen 02/10/11
Last week’s trading update in which Pick n Pay announced that while sales had grown, profits would halve for the six months to August was accompanied by a somewhat more chipper letter to customers pointing to the investments The Big Blue have made in the supply chain and the Smart Shopper loyalty programme, which just about says it all. Sales are indeed up, but the business is clearly not yet running as lean as it would like, with supply chain efficiencies not yet coming though to the old bottom line, and a further expensive investment in rejigging the buying structure currently underway – something that will have repercussions both within Pick n Pay and among its suppliers. And of course for shareholders: earnings before tax etc will be 10-20% lower, at which news the share price took a 4% hit.
Comment: PnP is deep in the trenches right now. But the successful disposal of Franklins should see the onset of a long slow recovery.
Business Day 06/10/11
Eighteen months in and fears that Kraft would not only swallow venerable Brit business Cadbury but also – gasp – digest it have proved well founded. The Cadbury’s acquisition, you see, was just the first move in Kraft’s campaign to become a “Global Snack Powerhouse” before anyone else knew there was such a thing. Now Kraft is looking at creating two independent publicly traded companies. Global Snacks will encompass Kraft Foods Europe, developing markets and the North American snacks and confectionary business, with brands under its belt like Oreo, Lu and Cadbury, while the North American grocery business will bring to market such classics as Oscar Mayer meats, Philadelphia cream cheese and Miracle Whip.
Comment: A shake up which will no doubt have its repercussions in the RS of A.
Food Review 09/11
Plucky poultry producer Sovereign Foods reported a 15.7% increase in revenue to R610millions for the six months to August, although earnings were down due to an increase in non-feed costs, among them a R8.4million golden handshake to its outgoing CEO. Overall, these costs were up around a buck fifty a kilo compared with the same period last year. Another issue was that a lot of chickens died (prematurely, obviously) from a nasty early-winter illness. And those imports continue to take their toll. On the upside, they’re confident that plans to aggressively reduce production and discretionary costs will kick in in the next six months, and they’ve also reduced their exposure in individually quick-frozen chicken pieces, which is for some reason not a space you want to be right now. Comment: Who would be a chicken guy? The last time we dressed as any kind of poultry at all and went out in public, small children kicked us in the knees.
Business Report 04/10/11
On the one hand, as economists love to say, terrible unemployment, with over 6.6million South Africans out of work. And on the other, almost a million vacancies to fill – and no one skilled enough to do so. These included 260,000 managerial positions, 430,000 technicians, 100,000 plus sales and service people and 180,000 professionals. Effectively, then, we don’t have the people we need to create the jobs few need, would be one way of looking at it. The unemployed, according to StatsSA, are predominantly young, with 72% of them under 34, and most have never had a job, and will thus never have a CV to hawk around. And to add insult to a social time bomb, the National Skills Fund is sitting on almost R5billion of unspent cash it just couldn’t bring itself to give to the Setas.
Comment: And who, with the state some of them are in, could blame it?
Business Report 09/10/11
Seems as if those cheeky monkeys over at SABMiller knew what they were doing when they bought Foster’s: fattening themselves up for purchase by Anheuser-Busch InBev if the latest round of irresponsible speculation is to be believed. Such a merger, if successful, would create a beer business that would technically be bigger than God.
Philippa S14 October 2011 (01:45:30 PM)Very entertaining thanks
Adcock Ingram has appointed a Ghanaian national, Kofi Amegashie, to head up its Africa Operations, which it is taking pretty darned seriously these days, but then, aren’t we all. The idea for Adcock is to have major regional businesses in each of the continent’s four corners, if that’s how many there are.
Tatler Reporter 07/10/11
Le Grand Bleu has begun chatting to Indonesian palm oil producer Sinar Mas again, a year after Greenpeace accused it of clearing peat swamps and endangering forest species, issues which were independently audited to mixed results. Nestlé has apparently resumed trading with the company, which is looking creatively at mending its ways and growing more sustainable oil palms.
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