Trade Tatler
“The challenge of the retail business is the human condition.”
Howard Schultz


THIS ISSUE:     20 Jul - 26 Jul

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Massmart  Easy does it

Massmart have a long tradition of talking down their prospects then whipping out the old pleasant surprise come results season, and this interim period is no different: sales up +1.9% for the six months through June for a total of R41.6bn, with like store sales up +0.2%. This modestly pleasing result, analysts believe, can be attributed to rising consumer confidence tempered by the fuel price and VAT increases. The same analysts – or different ones, we don’t honestly know – confirm that Makro and Builders Warehouse contributed the lion’s share of the growth. One thorn in the side of the business is the Shield brand, whose results are no longer included in the reporting, except in the case of margin. Counting Shield, Massmart would have shrunk sales by -2.2% for the half.
Comment: Still, solid stuff from a business weathering the economic storms while still serving poorer South Africans.

IOL 20/06/18

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Dis-Chem  Chemical romance

We didn’t know that a third of a year was a thing, but Dis-Chem seem to have made it one, reporting that sales for the first four months of the financial year increased +11.1% to R6.4bn from R5.7bn in the prior period, also of four months. “The continuing increase in the fuel price along with the 1% increase in the VAT rate continues to put pressure on consumers which was evident in our April and May retail sales,” reports CEO Ivan Salzman, singing from the same hymn sheet as everyone else in retail. They’ve opened six new stores so far this year, adding R79m to the coffers, and are apparently pleased with their EDLP strategy, which, they say, has enabled them to win market share in all key categories.  Although, like all pharmacists, they can’t stop bellyaching about the single exit price for drugs.
Comment: Nice work, this plucky recent addition to the JSE retail index, which we are quite sure will continue their growth trajectory – an innovative operation, clear on what makes them a go-to health and wellness shopping destination, supported by significant investment in distribution infrastructure to ensure its future growth.

Business Day 19/07/18

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Shoprite  Bushed

Not exactly stratospheric stuff for Shoprite, which increased sales just +3.3% to R145.6bn for the 12 months through June. In a rare bit of bad news from the Big Red One, Shoprite have let it be known that sales for the year through December 2018 are likely to be hit hard by hyperinflation in Angola and the devaluing of its Kwanza, which has lost 50% in Jan against other currencies. Shoprite has 30 stores in Angola, where it has recently bought a DC, and they still believe that growth prospects are good in that challenging geography. Beloved retail analyst, Syd Vianello, has some sage words for the business. "The situation can turn around quickly, they’ve just got to ride it out," says the man who defines the terms “doyen” and “maven”. Supermarkets in SA grew sales a more wholesome +5.7%.
Comment: This will be a speedbump. But still, it’s a bit of a shocker from SA’s traditionally most bullish retailer.

Business Day 18/07/18

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Woolworths  Down, under

The ongoing performance of Woolworths was something we ourselves once came dangerously close to taking for granted. But now this: the Dapper One has let it be known that profits for the year through June would likely come in at -20% under last year’s haul, on poor trading conditions back home and the ongoing woes of their Antipodean venture with David Jones. Fashion, beauty and home sales for the year will come in at -1.5% down on last year, while food grew at a way above market rate of +8.4%, with like store sales growing an inflation-matching +4.8%, and net retail space for food up +3.5%.
Comment: Woolworths continues to deliver innovation and excellence in food, where it is more than capable of competing globally, and this shows in the results. Perhaps this is where it should focus the main part of its efforts going forward.

IOL 20/07/18

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Boxer Superstores  250*

Congrats and kudos to Boxer Superstores this week, who celebrated the opening of their 250th  outpost, in Jeppe Street, Jozi. Situated in the iconic building that formerly housed the Johannesburg CBD Post Office, Boxer’s 250th  addition boasts 2,300m2 of its latest new generation specs on offer. The discounter’s arrival also brought traffic to a complete standstill with a tickertape parade of stunt bikers as customers ran in to fill their trolleys. The rise of Boxer as a home-grown power of retail in response to the demand among Southern African shoppers for a place where they will find value, services and the dignity of a pleasant and modern place to shop has been one of the great stories of the last decade.
Comment: 250 not out – a score that Faf’s boys would have loved in the sub-continent this week.

Tatler Reporter 23/07/18

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GS1  We must have standards!

True story – we at Trade Intelligence used to produce a magazine on data standards in the supply chain, and learnt a heck of a lot more about barcoding than we expected to. These standards are developed and managed by GS1 globally, and they have recently launched a new catalogue, ProductDNA, with a view to getting everyone to list their product data in that. This catalogue, which (we assume) replaces the old Product Data Catalogue (PDC) is considered to be the culmination of the retail industry’s attempt to standardise product data. Launched in May this year, the service is operated by suppliers inputting product data into the catalogue which once is independently verified, will enable the data to be used along the supply chain which also includes by retailers and consumers. The good news is that Nestlé and Unilever have already signed on.
Comment: Standards, eh. That’s the ticket!

Tatler Reporter 23/07/18

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Sustainability  Future perfect

The fact must now be recognised that leadership in sustainability initiatives is coming from the private sector, particularly in this great industry we call home. More than 430 companies have set science-based targets to cut their emissions, and nearly 140 have committed to be powered 100% by renewable energy. Self-imposed targets are one thing: what the world needs now is policy commitments from business. Enter the Sustainable Food Policy Alliance, an initiative by Danone, Mars, Nestlé, and Unilever, aimed at advancing public policies that improve transparency for consumers, support farm communities, and tackle climate change.
Comment: Sustainability initiatives have been driven by consumer demand, and led by visionaries like Unilever’s Paul Polman. Slowly but surely, shareholders are recognising the survival of environments and communities as integral to their own success. Bringing government along is the fourth leg of the table.

Forbes 17/07/18

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Retail Trade Sales  Wholesome

Retail Trade Sales were in for the occasionally merry month of May, and happily exceeded the expectations of economists, coming in a +1.9% rather than the widely-predicted +0.8%. (This means that the economists were technically, over 100% wrong about this, but let’s let it go.) Interestingly, wholesalers sold R168.5bn worth of goods in May, twice the total sold by retailers, although actual growth in the sector was muted – just 0.5% up after two months of contraction. On the downside, the Reserve Bank has reduced its GDP growth outlook by half a percentage point, from 1.7% for the year to 1.2%. Back to the upside: with inflation ticking up just 0.2%, the Bank has decided to keep the repo rate unchanged at 6.5%, a win for punters still reeling from the VAT increase and the fuel price madness.
Comment: Wholesalers – and the independent retailers they serve – are truly an under-appreciated pillar of our economy.

Tatler Reporter 24/07/18

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International retailers  Cloudy with a chance of gain

Last week we reported on Pick n Pay’s cloud computing deal with Amazon’s AWS service. This week: Walmart have announced a similar partnership with Microsoft, which will provide them with the technical capacity to meet the demands of cloud commerce, mobile applications and location analytics: i.e. the capacity to give every shopper a tailor-made experience, every time they enter a store or order online. Are you worried yet Amazon? Just throw another Prime Day, then, what the heck. In kinder, gentler news of the international retail scene, Morrison has joined retailers like Sainsbury’s and Superdrug in offering a “Quieter Hour” – a more muted sensory retail experience for shoppers on the autism spectrum.

Tatler Reporter 23/07/18

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Pick n Pay  Open hearts, open hands

Good work to all those who participated in the Madiba Day activities, particularly our friends at Pick n Pay, in a partnership with FoodForward SA, whom we joined in helping package some of the 540,000 meals they put together for South Africans in need. The event has become a global festival of meaningful service and generosity, and South Africans invented it. Love.

Tatler Reporter 23/07/18

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