School of Retail
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THIS ISSUE: 21 Mar - 28 Mar
Up north, Woolies have intrepidly entered a JV with Nigerian conglomerate Chellarams and is storming that bastille of promise, Africa’s biggest consumer market, with plans to open 30 stores in the near future. Their inaugural store opened in Ikeja, north of Lagos last week, and another opens at The Palms in Lagos, pioneered by Shoprite and Massmart, this week. These two will cost the Dapper One and co-financier EcoBank a cool one and half million US each. Woolies now has presence in 13 African countries and is apparently eager to compete on both quality and price to serve Nigerians – acknowledging “infrastructural issues” along the way.
Comment: So they’ve gone and done it. Good luck with the dark suits up there, Woolies.
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In a bold and perhaps controversial move, the Big Red One has announced that it will be issuing around 27.2million new shares and offering for sale R4.5billion worth of convertible bonds in an effort to raise $US1billion for expansionary purposes and the beautification of its already attractive balance sheet, which is unblemished by any visible debt to speak of. Shoprite is issuing to a hungry market the equivalent of 5% of its total stock, at 127.50 rand per, which has caused the value of the now-diluted shares to “decline by 5%”, words not usually associated with anything to do with Shoprite right now. Shoprite is treating with some urgency the matter of its expansion into Africa, with 12 stores scheduled for opening on the rest of the continent by the end of June, including two more in Nigeria and its first in the DRC.
Comment: For these and other projects, including squaring up to a newly-ebullient Massmart, the new found lucre will presumably come in handy.
Amid the sunblasted stone and aloe ferox in rural northern KwaZulu, small farmers are wresting a living from the begrudging soil thanks in no small part to Pick n Pay’s Boxer Superstores Limited, which has been quietly establishing an unassailable presence in these sorts of areas for well over a decade. Part of Boxer’s mission has been to forge strong ties with local communities, through CSI initiatives, the sponsorship of local teams and other big hearted activities. Now it’s getting 10 community gardens with about 150 members onboard to provide fresh produce to Boxer stores in Nkandla, Nqutho, Eshowe, Hluhluwe, Melmoth and Jozini. These gardens have been brought along in part by the Ackerman Pick n Pay Foundation and Siyazisiza Trust, which promotes food security and small enterprise development in marginalised communities, by providing start-up equipment, training and mentorship.
Comment: Good work, that sport-themed rural, urban and peri-urban retailer!
Farmers’ Weekly 22/03/12
Pioneer Foods aren’t into that whole “release the interims after six months” scene, and have given us the lowdown on the first five months’ performance of the financial year instead. Basically, revenue is up 13% in the period to the end of February, but volumes fell by an average 4%–6%. This reflects the alarming inflation rate across Pioneer’s basket, averaging 18% for the period as well as a slackening in consumer demand on our less than robust economic growth. Getting into specifics, it appears that Pioneer’s share of the standard bread market is down, but its share of premium breads is up, that maize volumes came under pressure although off a high base and that rice and pasta volumes grew nicely. Bokomo’s cereals gave everyone a healthy start to the day but their poultry and egg units were under a spot of pressure. In other Pioneer news, they’ve completed the second, R1billion stage of their BBBEE deal with the issue of 18million-odd shares to black investors.
Comment: And with each new set of results and interims, that Competition Commission fine becomes a painful but fading memory, a bit like Jackie Boone all those years ago.
In June last year, the Consumer Goods Council of South Africa sought an answer from the National Consumer Commissioner (NCC) on the clause governing GMOs in food in the Consumer Protection Act. Did foods containing genetically modified maize, cotton, soybean and canola have to be labelled for full compliance, wondered CGCSA. Or only the commodities themselves, when sold separately? No formal response has yet been received from the Commission, and further attempts at clarification have gone similarly unanswered. In the meantime, confusion reigns among the ranks of the suppliers, some of who make up CGCSA’s 12,000-strong membership.
Comment: The consumer goods industry is a large and potentially powerful economic and political force. Government would do well to heed its representative body.
We’ve occasionally mentioned cassava beer in those “always something new out of Africa” stories we are guilty of running from time to time. A sort of harmless curiosity has been our tone. But we’ve been missing the larger picture – the communities which are for the first time able to turn the rapidly fermenting cassava from a tricky-to-handle subsistence crop to a cash cow, and the dramatically smaller production costs for cassava beer which will enable SABMiller to compete with the homebrew market in Mozambique, estimated at four times the formal market there. At the moment The Big Feller is selling about 11000hl of Impala cassava beer in Moz, but has high hopes for other markets where the root is a staple.
Comment: Oooh we cannot wait for cassava beer to get trendy in New York. And when it does, remember where you read it first.
Business Day 22/03/12
The Consumer Price Index (CPI) for February came in at a lower-than-expected 6.1%, after January’s 6.3%. While the index on food and non-alcoholic beverages was down to the tune of 0.5% month on month, strong gains were made by the likes of the breads and cereals category at 0.8% m/m, because of the increasing price of local mealies, while prices of milk, eggs and cheese were also tending northward. A worry going forward – apart from the fact that having once used the expression “going forward” we may well use it again – is the price of petrol, which having risen 28c/l in March is forecast to rise by another 62c/l in April. Economists remain oddly sanguine about our inflationary prospects, however, predicting that it should all be well in hand and cruising below the 6% upper limit by year end.
Comment: Comment: And nary a rate-hike in sight. Glorious.
Majestic, graceful yet at the same time hesitant and shy, the transformation manager picks its way through the buffalo thorn thicket, its every sense attuned to possible danger. It lifts its head, tests the breeze with flared nostrils. Yesterday, the Trumps came, but now they are gone. Yesterday, the transformation manager took a stand against hunting. Today it is itself hunted. It cannot see them, but it knows that they are there, 250 000 of them, their manly eyes narrowed and their trigger fingers itchy.
And what is this? An old pal with whom we were young midshipmen together, back before Copenhagen and the Nile, is convinced that Woolworths Australia has been holding discussions with Pick n Pay for the acquisition of a largish stake in the Group. The idea would be that the Ackermen retain family control, while the Antipodean retailer would bring some of that international polish to the operation. We shall see.
Business Times 24/03/12
erstwhile28 March 2012 (11:55:36 AM)International polish?! Good lord - have you ever been into an Aussie Woolworths?
Loyalty-programme pioneers Clicks will add funeral cover to the services already available to its ClubCard members, many of whom have been with the programme since the year dot, when it started. While Clicks is not hell-bent on being a financial services provider, it is eager to keep its loyal punters away from the competition, and funeral cover is apparently the way to do it.
Business Day 20/03/12
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