School of Retail
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THIS ISSUE: 04 Feb - 10 Feb
According to the Economic Times of India, Shoprite are shutting shop in Mumbai, selling their only non-African operation, a 6 500m2 store, to the Nirmal Lifestyle Group for conversion into a food store. Shoprite and Nirmal are both being cagey about the putative deal, however, and clarity on the issue is not yet forthcoming. While turnover at the shop grew 20% in the year to June 2009, Shoprite have been pessimistic regarding their further prospects on the subcontinent in the face of stiff government resistance to foreign devils making a buck on the sacred Hindustani soil. Comment: How were those Dale Steyn wickets eh?
The Economic Times 05/02/10, Reuters 04/02/10
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According to UNISA’s Bureau of Market Research, up to 33% of small businesses in Soweto shut shop within a year of the arrival of large malls on the retail landscape, being unable to compete with the majors or meet them on their own turf due to prohibitive rentals. While the development of Maponya (at 60 000m2) and Jabulani (at 45 000m2) were initially hailed by residents as the right stuff for the revitalisation of Soweto, smaller malls and independent retailers have taken major strain, with stock holding in that sector down 40% in 2009. Comment: Without small business, developing countries like South Africa are going nowhere – something which the dumb tyranny of the market cannot take into account and which the blind hostility of the majors refuses to.
Business Day 03/02/10
Here’s the lowdown: Woolies launch their social networking ‘Lovebirds’ Valentine’s Day campaign but the silly designer leaves the “s” off the URL on all printed communications, which point to the site www.woolieslovebird.co.za. Woolies, in the meantime, have registered the www.woolieslovebirds.co.za domain. So clever shopkeepers Yuppie Chef register the www.woolieslovebird.co.za domain, and demand that Woolies match every rand donated by Yuppie Chef fans to their appointed charity, Soil for Life. Woolies, and here’s the lovely bit, graciously agree to the terms but let Yuppie Chef keep the domain anyway, provided there’s a link to the real site. Then Yuppie Chef invite other businesses to join in the donation-matching mayhem, and R50 grand later, the well-intentioned shekels are still rolling in. Comment: And then there’s the legal route...
Mail & Guardian 09/02/10
Pioneer Foods has been fined a whacking R195 millions, or around one third of headline earnings for last year, for participating in the bread cartel it ran with Tiger Brands, Premier Foods, and Foodcorp from 1999 to 2006. The general thinking is that the participants profited heftily out of the arrangement, in which they all set similar prices for the basic foodstuff, and that Pioneer should shut up and pay up. Pioneer, however, thinks that it may appeal the fine, and in fact has made no provision for payment anyway. The Competition Tribunal came down heavily on Pioneer in its judgement, saying that, harrumph, its defence had been mounted on a fundament of “manifest falsehoods”. Comment: In the meantime, Pioneer’s brazen response to the saga has been rewarded by the punters, with the share price rising 58% in the last year.
Fin24.com 04/02/10, Business Report 05/02/10
Illovo will spend around R6beeelions on their African expansion in the next five years as land under cane comes under pressure from land claimants and the developers of golfing estates. They are targeting an increase in sugar production from 1.7 million tons to as much as 2.7 million tons, and to achieve this expansion, will need to achieve a minimum of 20% ROI. The growth is being spearheaded by operations in Zambia, where Illovo are investing R1.6 billion to increase their growing area by 10 000ha to 27 000ha. Illovo have disposed of their operations in the Mauritian belt of the KZN North Coast, selling off their Gledhow mill to a BEE consortium and the Pongola and Umfolozi mills to farming boytjies of a paler hue. Comment: The rise of Illovo has been something to watch, these five years past.
Business Day 08/02/10
NGO Foodbank SA is in the process of launching a partnership programme with manufacturers, producers and farmers in order to fight the increasing food shortages in South Africa. The new deal will see Foodbank negotiating partnerships ahead of time and buying food in bulk rather than relying on donations from the food and grocery industry, government agencies and individuals. Last year Foodbank fed more than 20 million people in South Africa – but it needs to produce over 5 billion meals annually in order to touch sides. Comment: Foodbank, clearly, are in the candle-lighting rather than the darkness-cursing business.
A brisk increase in manufacturing activity has marginally improved the prospects for SA’s millions of unemployed. The Kagiso purchasing manager’s index (PMI) rose to 53.6 from 52.5 last month, its sixth increase in a row, driven substantially by an increase in exports and the restocking of inventory – cyclical factors, it is true, but the main thing is that they’re behaving as they cyclically should. The sector, SA’s second-biggest, was particularly hard hit over the recession during which SA lost over one million jobs. Last month, the employment component of the PMI ticked up for the first time since last April – nothing to get too excited about, but hopeful nonetheless. Comment: Cautiously optimistic stuff, for which we should be tentatively grateful.
Business Day 02/02/10
Some of our more excitable young economists are hurtling around on their BMXs and using words like “rad” and “gnarly” to describe SA’s prospects for economic growth, which they also refer to as “totally sick”. There is a definite possibility, they holler, that economic growth could come close to 5% this year, and that the prospect of 6% next year is not completely mad. Whooping, they point out that the government has been sacking up and spending on infrastructure projects, while the private sector has been increasing production capacity, increasing capital formation from 15% to 24% of GDP over eight years, and that in economies where this has happened, economic growth generally follows. Comment: Wicked cool, as we economists are often heard to remark.
After one and a half gruelling months, ABI and Fawu have reached agreement, and the strike is over. According to the agreement, wages and benefits will increase by 8.3%. The minimum wage would go up to R7 235 a month, an across-the-board increase of 7.8%.
The Times 09/02/10
SAB’s BEE deal – cryptically-titled The Scheme of Arrangement – has been sanctioned by the High Court of England and Wales. Under the scheme, new shares will be parcelled out to employees, top black-owned retailers of beer and soft drinks and to the new SAB Foundation, which will benefit to the broader community.
The Times 05/02/2010
SAP really don’t like their unexpectedly outgoing CEO, Leo Apoteker, who in his brief tenure presided over the Impressively Technical One’s first loss since ’03. This from their official newsletter: “Apoteker has had a tough time in 2009 at SAP, under his helm he launched the failed enterprise support pricing increase and caused much dissatisfaction in the SAP user base. Winning back customer trust and putting two new faces at the head of SAP is seen as a mechanism to return SAP to its winning ways.” Ouch.
Tatler Reporter 09/02/10
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