School of Retail
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THIS ISSUE: 09 Feb - 15 Feb
How is the indigenisation programme in Zimbabwe affecting those South African retailers bold enough to operate in that bread basket case to the north? Let them speak for themselves:
SPAR: “All our outlets are owned by the locals. We only have a small stake in distribution of about 35 percent, which is not in retail. The impact is virtually nothing.”
Pick n Pay: “The group has approval for the company’s shareholding in TM Supermarkets from the Zimbabwe Investment Authority, Zimbabwe’s Reserve Bank, and Zimbabwe’s National Indigenisation and Economic Empowerment Board.”
Shoprite: “We have only one Shoprite store in Zimbabwe and we do not report on revenue contributions by country. Furthermore, Shoprite is currently in a closed period until the announcement of our mid-year financial results.” Comment: So there you have it. Of interest is the fact that Zim is the one market where Shoprite lags PnP to any significant degree.
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The Men in Black are sticking to their shiny little guns when it comes to the empowerment of the pocket-sized supplier, apparently, entering into a joint venture, or JV, with the South African Bureau of Standards (SABS) to certify SMEs to a less onerous and less expensive quality standard than their larger counterparts. The plan is to have passed nine “supplier communities” including plumbing and electrical through SABS quality management training by mid-year, with a view to getting their products certified at the knockdown, entry-level cost of R8,000. The plusher model generally costs in the region of R30k. Some of the standards are compliance, safety, risk assessment, risk management, testing, records, qualifications, equipment, and primary suppliers.
Comment: This collaboration with the SABS, if that’s the word, suggests a cosier relationship with government than stick-in-the-muds like Ebrahim Patel would prefer.
In the race to become SA’s Whole Foods Market, that massive chain of mostly green grocery stores in the US and elsewhere, we have a clear winner: Fruit & Veg City’s Food Lover’s Market, the latest manifestation of which, in the more-Capetonian-than-thou suburb of Tokai, boasts all manner of innovations to delight the aesthete and the epicurean alike. Some of those: an oyster bar to supplement their existing uncooked seafood offering, an Olive Tap with 10 different varieties from around the world, “artisinal” breads in the bakery alongside, somewhat incongruously a “donut robot”, various ready-to-cook gourmet meats in the butchery and a Wine Bar, personned (this is Cape Town) by a Wine Steward/actor. On the green technology side, we’re talking LED lighting, running heat pumps, multiplex refrigeration systems and better use of natural light through correctly-positioned windows, which are catching on big among South Africa’s architects. Comment: Noice, eh.
Apropos the retirement of Nick Badminton as Pick n Pay CEO: Mr B himself said that he was shattered after the long haul and needed a break. Chairman Ackerman the younger corroborated this view. The analysts scratched their expensively coiffed heads, those with hair that is, and said the timing was a little off, given that Nick Badminton had made great strides in arresting the decline which began in the Summers’ years. The punters agreed, and assuming that bad news was coming in the results, dumped the share to the tune of 1.2% the day after the news, with R71million in stock going under the hammer. The one issue which no one has raised – except of course ourselves, obliquely last week – is the role the Ackermen play in the decline – or otherwise – of Pick n Pay’s fortunes, and the difficulty of running the business as CEO under tight family control. Comment: Anyone?
Tatler Reporter 13/02/12
There is more than one way of being a supplier. You can go around putting up massive factories and head offices all over the show, and recruiting every smart young marketing graduate you clap your eyes on. Or you could be Fore Good, who represent existing global brands locally and have, as far as we can discern, been doing so since 2004. Latest business to fall under the Fore Good spell is the UK’s Premier Foods, makers of Ambrosia, Bachelors and Sharwood’s. They will be joining in the Fore Good stable such pedigreed stock as Bioplus, Duracell, Miracle Whip, Tampax and Canderel and will be brought to market by some of Fore Good’s 4,500 staff who offer inter alia procurement, logistics, storage, distribution, sales, merchandising, commercial development, key accounts, information gathering, branding and shopper marketing to discerning partners. Comment: A heck of a business, yet scarcely a household name. Letting the brands speak for themselves as it were.
The Big Feller is increasing its footprint on The Thirsty Continent with a spanking new brewery in Mbarara, Western Uganda, on the banks of the Rwizi River, whence it will draw its water. A caveat here is that the Rwizi, under pressure from poor agriculture and encroaching settlement, is already in the process of drying up. The brewery, a $US80million behemoth, falls under SABMiller’s Nile Breweries subsidiary and will brew most of Nile’s brands including Nile Special, Club Pilsener, Eagle Extra and Eagle Lager, these latter two brewed from sorghum which is sourced substantially from 9,000 small local farmers. This making beer from indigenous produce is something that’s working well for SAB, with cassava beer already being brewed in Mozambique.
Comment: and sold in Cape Town, somewhere, as “artisanal” cassava beer, no doubt.
The ribbon has been cut at Nestlé’s new coffee creamer plant in Potch, and you’ll be relieved to know that the simple but moving ceremony went off without a hitch. The factory is structured around the R106million acquisition of Specialised Protein Products business with its 142 employees, and Nestlé will fork out another R150large in the next year and a half on general upgrades. The idea is quite naturally to up production of Cremora, supplementing the capacity of the Babelegi factory in Gauteng. According to Nestlé CEO Sullivan O’Carroll, the opening of the factory underlines Nestlé’s commitment to foreign direct investment in the South African economy.
Comment: Sullivan O’Carroll. What? Oh, nothing. We just love typing that.
We almost slipped this into the in brief section, so petrified were we of jinxing it, but unemployment is down to its lowest level in 2 years, or 0.2 of a decade, slipping to 23.9% from 25% with the addition in 2011 of 365,000 jobs after losses in the previous two years. In the fourth quarter, 180,000 formal sector jobs were added, with community and social services (66,000), manufacturing (52,000) and trade (48,000) leading the charge. On the downside, this same quarter saw the loss of 26,000 jobs in the informal sector. The trade jobs, to cast a further glass of cold water over the numbers, were mainly seasonal work in the wholesale and retail sector. Comment: But still. And those manufacturing numbers are not to be sneezed at. Bless you.
Business Day 08/02/12
This telling quotation from the editorial pages of ANC mouthpiece The New Age: “The local retail market has become much tighter after the entry of global giant Walmart via a controlling stake in Massmart. The cut-throat competition can only be good for the consumer and the general economy.”
The New Age 10/02/12
SABMiller has appointed a new chief brewer, a decent bloke by the name of Mr Katherine Smart. Mr Smart is currently a professor of brewing science at SAB and is a recipient of the Institute of Brewing and Distilling Cambridge Prize. Mr Smart likes to wear tasteful gold jewellery and sensible work-y skirts, but is definitely a man, or he could not otherwise be head of brewing at SABMiller.
15 years after an outbreak of bovine spongiform encephalopathy – mad cow disease – devastated the British beef industry, that hearty protein could be on its way back to our refrigerators as a UK trade mission heads this way to convince retailers that it’s the good stuff. Prior to 1996, SA was the UK’s biggest non-EU market for beef.
Our missus has just spent a week trundling up and down the byways of Uganda, and she reports to us that everyone buys everything on their cellphones up there, exchanging mobile money for side-of-the-road yams as if they were so many Katy Perry ringtones. This is not happening here yet, although we are daily being promised an impending revolution in cellphone-enhanced commerce, with anything from crowd sourcing of customers to demand driven supply chains to comparative shopping and peer reviews on your device. Right now, we’d take the yams for airtime any day.
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