School of Retail
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THIS ISSUE: 15 Mar - 20 Mar
Much has been made by its competitors of the fact that Massmart is still a relatively minor player in the food market. But the indications are that this will change rapidly, with the Foodco experiment – and we use the term advisedly – being given priority as a vehicle for growth in this area. And speaking of priority, Walmart have been dishing that out in spadefuls to Massmart, making available all manner of toolkits, jampacked with ways to make the business more efficient in areas like logistics, customer service, merchandising, planning, product packaging and energy usage. Ten Walmartians have been ensconced with Massmart permanently since June last year, and Massmart execs have been flitting hither and thither to observe best practice firsthand. How to compete with all this scale and effort? Service, says Aki Kalliatakis, managing partner of the Leadership LaunchPad, and expect the other retailers to start upping their game in this regard.
Comment: That was Your Week in Wakro.
Business Report 14/03/12, I-Net Bridge 19/03/12
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Smarting from its recent defeat at the hands of the Competition Appeal Court, the Department of Economic Development is taking aim at all the other retailers for their allegedly monopolistic practices in the sale of alcoholic beverages, which, it claims, drive the smaller retailers out of business. The instrument with which they are taking this aim is a possible addition to the Gauteng Liquor Act which if amended will stipulate that the Liquor Board may refuse an application if it “may cause a harmful monopolistic condition to arise or be aggravated”, which is a soothing broad expanse of legal scenery as one might like to contemplate of an evening. Pick n Pay, as they do, are taking up cudgels on behalf of everyone, averring that “the four major grocery groups, including Pick n Pay in South Africa, own less than 10% of the total off-consumption liquor sales.” Liquor City are giving it right back: “We deny all the allegations which have been made against Liquor City” while SPAR are pointing out that they own only 11 liquor outlets and ahem, six DCs, and that their members are the very independent retailers that the Department wishes to protect from, well, SPAR.
Comment: Pour yourself a double scotch and settle back into the chesterfield. This is going to be good.
Clover have argued for consolidation in the dairy industry, saying that the exorbitant prices you and I are paying for a litre of the good stuff (starting at R8 and hitting anything up to R12!) could be dramatically reduced with less duplicated expenditure by secondary businesses (like, presumably, Clover’s smaller competitors) on stuff like capex and technology. They have in word and deed indicated that they are always open to another acquisition or two. In the meantime, they’ve had a respectable six months – revenue up 7.2% to R3.6billion for the period to December 2011, and operating profit up 6.8% to R187.7millions. Efficiencies are of pressing concern to the group, which is seeking to make its distribution network hum more harmoniously under the Cielo Blu project, and which has increased margin to a healthy 27.6% in the six months under question.
Comment: Cielo Blue – wasn’t that the aftershave we wore to our matric dance? A dewy-lipped girl in a strapless turquoise dress, us in our snappy red cummerband, Duran Duran and Kiwifruit Esprit ...
Business Day 14/03/12
Small Guy20 March 2012 (06:23:06 PM)Have you as a small producer of dairy products ever tried to buy say 5000litres a day from Clover/
they wont even entertain you if you could even get them to tell you who to talk to
Have you ever tried to buy milk from a dairy farmer who supplies Clover/you will find he is more tied up than a ball of string
Nothing iffy about AVI’s interims: revenue from continuing operations up 8.6% to R4.49billion, with operating profit up 26.8% to R855million. I&J turned in a good performance, with good catches and profitable processing, as did Snackworx, which adjusted prices downward and recovered lost share from grateful punters feeling the pressure of the pricy teatime treat, while Entyce had a rougher go of it – high raw materials prices and a recovery among the competitors who had experienced supplier difficulties last year. Indigo and Spitz benefited from a softer import exchange rate, while Jimmy Choo didn’t have much to say, because, hey, we’re Jimmy Choo and if you have to ask you can’t afford.
Comment: A refreshingly diverse and reassuringly robust business. Although that skateboard business they’re rumoured to be looking at is probably a bridge too far.
Plummeted, is that the word we’re after? Nose-dived? Plunged? Let’s settle for declined sharply shall we, in respect of retail sales which while trucking along nicely at 8.7% year on year last December came in at a less than rosy 3.9% for the month of January, when traditionally the major retailers play mournful, whistly music over the PA and perch paper mache vultures on the gondola ends anyway. The problem, as it turns out, is that December’s spike was a bit on the sharp side, to be honest – unsustainable in an economy growing at only 3%, and skewed by virtue of it having come off a low base. So while economists aren’t ringing any death knells for retail, they aren’t seeing much in the way of high single-digit growth in the near future either.
Comment: So January could mark the start of a lean period for retail, which at least means they’ll be able to squeeze into that little black number again.
Following its acquisition by SABMiller, Foster’s has lost the rights to brew and distribute Mexican-night staple Corona, the parent company of which, Grupo Modelo, is partially owned by Annheuser Busch. Corona accounts for 3.3 or 4.2% of the Aussie bee mahket, depending on who you talk to, and the ownership of the brand by Heineken’s Australian JV partner Lion will put Lion in the driver’s seat, with 47% of the market compared with Foster’s 45.8%.
Red Bull founder Chaleo Yoovidhya has died fabulously wealthy in Thailand, aged 89. He first bought the bubbly shot of undiluted fun to a market of exhausted truckers and labourers in the 70s, as Krathing Daeng, or Red Bull. Much is now explained. Fly on, you wonderful, crazy man, and thanks for all those all-nighters at Bean Bag Bohemia.
Tatler Reporter 20/03/12
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