School of Retail
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THIS ISSUE: 16 Oct - 21 Oct
Sustainability is the hottest ticket out there right now, and Woolies has got itself a fistful. The latest step on the Posh One’s Good Business Journey is the rollout of recycling depots for paper, cardboard, glass and plastic at eight Engen sites in the Western Cape where, we are told, the folk are especially keen on recycling because of the Marntain, hey. Also involved are Nampak, who collect the waste on their regular recycling routes. The initiative is a pilot which will determine the rate of national expansion for a recycling campaign. Comment: And a stroke of genius, as most recycling sites are located at an inconvenient distance from where you can buy a litre of milk, some cellophane-wrapped croissants and a box of ciggies.
Tatler Reporter 20/10/09
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Last week, you will recall, Shoprite suspended its bid to buy into OK Zim, citing “socio-economic and political uncertainty”, with speculation suggesting that the freezing of the assets of Kingdom Meikles, which owns TM Supermarkets, may have rattled the generally imperturbable one. Another view is that the two parties could simply not agree on price. The freezing of the assets has its origins in a dispute between the Kingdom and Meikles factions of the business, and the two have agreed to split, more or less amicably, and relist separately, under pressure from none other than a Mr RG Mugabe, who is keen to now punt Zim as an investment destination, whence, presumably, the American and the British are no longer obliged to “go to hell”. Pick n Pay, in the meantime, is considering upping its stake in the Meikles-owned TM supermarkets from 25% into something a little more chunky. Comment: Which would give le Grand Bleu the jump on Shoprite in Africa’s easiest-reached market.
Sunday Times 18/10/09
Pick n Pay’s turnover for the six months ended August ’09 increased 12.3% to R26.6 billion, although gross margin was down to 18.6% from 18.8% last year, with trading profit margin down 0.1% to 2.8%. Turnover at Boxer and Pick n Pay stores was up by a pleasing 15.3%, resulting in a market share gain of 0.4%. And in other news, the Chairman has announced that he will retire in March next year, to be replaced in a non-exec capacity by Gareth Ackerman, who has grown up in the business, having served in almost every capacity from store manager to MD most of his life, in addition to running his own business in corporate finance. Raymond Ackerman listed the business in 1968; if you had invested R100 back then, you would be sitting on a tidy R1 million right now. Comment: A lion of South African business takes a well-earned stretch under a cool acacia. What a career.
Tatler Reporter 21/10/09
Gail Klintworth, Chair of Unilever South Africa, is sounding a little like an Old Testament prophet when the Children of Israel have been up to no good, and suggesting that our economic recovery may prove to be L-shaped, and not in a good way like an expensive sofa. Speaking at the Durban Chemicals Cluster, which is not nearly as illegal as you may imagine, she drew attention to the effects of unemployment on South Africans and their economy, revealing that sales of margarine are down by 25%. The problem, she said, was that the recent boom years were substantially fuelled by debt, which is now depressing disposable income. Internationally, Unilever’s view also tends toward the L. Comment: Refreshing honesty from a formidable business leader at a time when everywhere there is talk of springtime in the economy and the healing power of football.
Business Report 15/10/09
Tiger Brands shareholders have rejected the company’s proposal to transfer 10% of its shares into previously disadvantaged hands – the deal did not crack the nod of 75% of the cigar-puffing chesterfield dwellers, and the new recommendation is that 9.09% of shares be transferred in the second phase of the empowerment transaction. Under the new deal, empowerment consortium Brimstone will hold 1.01% of Tiger’s total shareholding, while the Tiger Brands Black Managers Trust will have 4.03%. The General Staff Share Trust will own 1.86%, and the entire deal will cost Tiger around R300 million, or 1.2% of its market value. Comment: It’s sometimes difficult to know what motivates a shareholder ... oh, wait ... no, it isn’t ...
Now, no one likes a beer more than us. Just thought we’d make that perfectly clear. Where were we? Ahh, yes, SABMiller, after releasing a gloomy trading statement for the six months to September, in line with their apparently deflated expectations, might be on the verge of turning a corner. While lager volume growth figures were negative down here in the Dorstland, and not much better elsewhere, they were up by some 3% in Africa, with Uganda up 18%, Zambia up 23%, Mozambique up 7% and soft drinks up 5%. In Europe, volumes were down 6%. Of greater concern in Mzansi is the loss of market share as Heineken readies itself to start brewing on these shores. Comment: By one definition, a recession is any time SABMiller admits to taking strain.
Business Day 16/10/09
Reports of the death of the Mall have been greatly exaggerated apparently. Retailers, in anticipation of the upswing, are keen as mustard for as much retail space as they can lay their hands on, and the retail property guys in their mauve shirts and chalk-striped navy suits, are responding by throwing cash at refurbs all over the show. In these cautious times, you see, retailers prefer a tried and trusted old warhorse with a bit of extra room to some flashy new temple of consumerdom out in the sticks. Thus you’ll find the old Joshua Doore mall in Welkom transforming into the more catchily-named Goldfields Mall, with 34 000m2 of retail space, West Rand’s Clearwater Mall being expanded into an 87 000m2 behemoth, Woodlands Boulevard in Pretoria ballooning up to 71 000m2 and the Ballito Junction next door to Durban’s spanking new airport also upping its m2s by a meaningful number. Comment: The flash lads are betting on an upturn. Hopefully the odds are not too long on this one.
Retail trade sales declined 7% year on year for the month of August, compared with 3.9% for July, and despite the predictions of the more buoyant beard-tuggers that they would fall only 4%. This is what is technically known as a worry, and reflects poorly on a number of macro-economic trends – tanking consumer confidence, high levels of unemployment and a decline in disposable income. Comment: This announcement marks a bad start to the festive season, and a further argument for a weak recovery from the recession.
SA’s Milk Producers organisation will not involve itself in the increasingly bizarre acts of European dairy farmers, who dumped about 3.5 million litres of milk into the fields to protest against an EU plan to end production quotas, which could drive the price of milk down further. While the local chaps sympathise, they cannot, in the light of Africa’s food shortage, approve of such wanton destruction. It’s also possible that less protected farmers in the EU might make for a more hospitable market for our own product.
Only 4% of punters in the UK have switched grocery retailers in the past year, according to international research boffs Mintel, although they have become more aware of prices and promotions, with 54% of them buying more food on special offers and multi-buys, 36% trading down and buying more budget private label, and 28% cutting back on treats and luxuries.
Unilever is focusing on exotic destinations for growth, like Vietnam, the company’s fastest growing market and China, where the plan is to double turnover to $2 billion in the next four years. Since 2004, the contribution in turnover from the developing world, where the U-shaped one does 50% of its business, has grown 16%, comfortably ahead of competitors. Nice one.
Financial Mail 12/10/09
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