Trade Tatler
“Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
Ronald Reagan


THIS ISSUE:     08 Oct - 15 Oct

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Top Retail Awards  Not won by actual retailer

Plucky outsider KFC won the Grand Prix in this year’s Sunday Times Top Retail Brands Survey, would you believe it, with Edgars next and Shoprite blustering home in third, and Clicks in fifth, after non-retailer Spur, narrowly pipping Pick n Pay in sixth. In the Overall Grocery Shopping experience, however, it was Pick n Pay in pole, with Shoprite, Checkers, Woolies, Spar and Game screaming up the straight in that order. Game (first), Makro (third) and DionWired (fifth) delivered the goods for Massmart in the Electronics category, while Woolies Food Stops came in at a creditable third in the forecourts division.
Comment: Oddly enough, Pick n Pay came nowhere in the Favourite Family Restaurants category.

The Sunday Times 11/10/09

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Shoprite  The horror ... the horror!

Shoprite has bombed between R350-400 millions into the Democratic Republic of the Congo, where it intends opening stores in Kinshasa and Lubumbashi, but has suspended its bid to buy into OK in Zimbabwe – word is that it has been spooked by the de facto nationalisation of the Meikles Group, owner of OK rival TM Supermarkets. Also, the deal on the table would have given Shoprite minority share in OK, a position with which, how shall we put this, it is not traditionally associated. In India, in the meantime, Shoprite has no immediate plans to open any new stores, given the Indian government’s disinclination to open up wholeheartedly to foreign direct investment.
Comment: Shoprite’s move into the DRC has had certain hoary analysts scratching their grizzled curls and wondering how anyone could make a buck in that currently stable country.

Business Report 08/10/09

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Massmart  We’ll take the Jimmy Choos as well

Massmart has mentioned that its shopping spree will continue next year, with half of its projected R760 bar Capex earmarked for acquisitions and new stores and the rest going on the maintenance of existing operations. According to CEO Grant Pattison, the plan is to acquire more large independent retailers serving the lower LSMs, and typically located around commuter hubs. Forthcoming additions include a new Game in Malawi in October 2010, and expects the store to contribute between R100-R200 million in annual sales. It is also looking at the DRC, Angola, Cote d’Ivoire, Rwanda and Senegal, and expanding its operations in Ghana and Nigeria.
Comment: So far, Massmart’s vehicle for a continental footprint has been Game, should it go hybrid on the continent, it will be placing itself more obviously in competition with Shoprite.

Reuters 09/10/09

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Woolworths  Would sir like a little credit with that?

Last year, you will recall, Woolies sold a 50% plus one share stake in its Financial Services Division to Absa. How’s that working out for them? Pretty good, actually, they assure us in an old Etonian drawl. It’s looking at launching a range of products for upper-income punters, as it shifts gear from a period of consolidation after the sale into something a little more exciting. The JV with Absa allows it to leverage Absa’s funding, credit risk, customer value and marketing capabilities combined with Woolies’ distribution channel and customer base – which in financial services totals 1.8 million of the better-heeled among us. Pop your head into the stores sometime soon and you will see them resplendent with advertising for a trio of metallic credit cards.
Comment: So the Absa thing was in no way a bailout then but something of a devilish move by two astute operators, who just happen to speak in different accents.

Business Day 08/10/09

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Clover  Glass half empty

90 workers have been retrenched at Clover with another 300 to 500 under threat as the milk giant reviews its business model to deal with tight trading conditions in the dairy industry. Clover’s annual results made worrying reading: while operating profit seemed to be up 154% to over R750 million for the year to June, one of those once-off accounting adjustments, to do with a “transfer” to sundry reserves meant that the number was actually 60% below the takings in ’08, and that the business showed a net loss for the year of R70 million. Clover is a labour-intensive business, with staff costs for the year up 10% to R1.1 billion, and has also become victim to low international commodity prices, the effects of the recession in which one household at least has been dabbling with private-label dairy products, and high stock levels which have made exports impossible.
Comment: A rum old game, dairy, where it seems possible to stay in business by providing something everyone needs without ever being able to truly sit truly back, wipe the honest sweat off your brow and enjoy a cold glass of milk as the numbers tick upward all by themselves.

Business Report 12/10/09

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Adcock Ingram  Parents just don’t understand

Unbundled by Tiger, separated from their personal care lines like Ingram’s Camphor Cream, coldly rejected like a spotty boy at matric dance time by smaller rival Cipla Medpro in a takeover bid, Adcock Ingram is having an awkward adolescence. Rebellious teen that it is, it has decided to compete with Tiger in some areas of personal care, and to stray widely in search of cooler friends, in India and Africa perhaps. The long-term goal, apparently, is to get personal care contribution up to 20% of turnover, to expand its offering of branded OTC lines in Africa, and to look at opportunities in India, home of Cipla. There’s also a big BEE deal coming, they tell us, to be announced by the end of this year.
Comment: Bursting with youthful energy, and spurred on by competition with the likes of Aspen, Adcock is one to watch.

Business Day 07/10/09

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Interest Rates  The Gini’s out of the bottle

The Gini’s out of the bottle The decline in the prime lending rate over the past year or so should have given the embattled South African punter a shot in the arm if international trends are anything to go by. Unfortunately, for interest rates cuts to boost your budget, you need to actually be in formal debt – something for which many of us simply don’t qualify – only one in six South Africans have any debt in the formal market. So growth, when it returns, returns unequally, playing hell with our Gini coefficient, which is the measure of the gap between rich and poor. The bad news there is that South Africa has now outstripped Brazil as the most economically unequal nation in the world, and while the interest rate cuts have boosted consumer confidence in the upper LSMs, they have whacked it in the lower income groups.
Comment: The devil’s own mathematics, and something in need of urgent solution in a country where 39% of us live on less than R388 per month.

Bloomberg 12/10/09

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Electricity  Shocking

Did anyone else rip the wireless from the wall last week when ex-Anglo boytjie Bobby Godsell gave his patronising “come on, ous” speech about how we’re just going to have to change our lifestyles, cook on gas and install solar water heaters? Next year, electricity will go up between 40% and 146% in order to fund Eskom’s hopelessly late and ill-conceived capital expansion programme, which will push inflation up between 3.5% and 12.7%, and put pressure on the Reserve Bank to hike the interest rate. In the meantime, there’s grandiose talk of free electricity for poorer consumers, who will pick up the tab anyway in what they pay for a loaf of bread.
Comment: The wilful incompetence and lack of planning at our sole power supplier threatens our livelihood as a country. Time for direct action, by business and consumers, surely.

Business Report 09/10/09

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Shoprite  The wors is strong in this one

And the winner of The Shoprite Checkers Championship Boerewors competition is housewife Mrs Elizabeth Lesley of Kuruman, who waltzes off with the prestigious title for her traditional sausage as well as a spanking new Toyota Hilux Double Cab, even though she is not a man.

Tatler Reporter 05/10/09

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Promotions  The Mightly Wobbler

According to the number crunchers over at Nielsen, 42.8% of all sales achieved in US supermarkets are on products on promotion, up from 40.4% a year ago when everyone was still loaded. This amounts to a staggering 1.3 billion purchase decisions being influenced by in-store promotions.

Nielsen Business Media 09/10/09

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Aspen  Learning to fly

Aspen’s share soared on angels wings to a record high of R63,61 last week, partly boosted by short covering and technical buying (well, obviously) and the fact that the blue-eyed boys of pharmacare really can do no wrong at the moment – making money, saving lives, you name it.

Business Day 07/10/09

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