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

TATLER ARCHIVE

THIS ISSUE:     07 Sep - 13 Sep

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RETAILERS AND WHOLESALERS

Independent Retail  Fake news

After last month’s tragic spasm of xenophobic violence – sparked by some mealy-mouthed pronouncements from the government about fake groceries, although let’s be frank any excuse will do – the Health Minster has announced that the fake food story was in fact fake news. Subsequent research among 470 spazas and independent retailers has turned up nada and niks. There were some products past their best before dates, sure – but the same could be said for some corporate-owned stores too. There was also some tap water sold as branded spring water. And interestingly, there were some fake Robertson’s spices. But not a single instance of rice made from plastic or devil-bread that wouldn’t dissolved in water. 100 of the stores surveyed were closed, however, for failing to produce the requisite permits, or because their owners were illegal immigrants. 
Comment: SA’s consumers are entitled, of course, to vote with their wallets if they’d prefer not to shop at the establishments of these gritty, hardworking retailers serving in the heart of our poorer communities. It seems the majority of these communities feel well-served by the foreign national traders – clean stores, competitive pricing and good customer service is what is driving their success.

TimesLive 04/09/18, Tatler Reporter 11/09/18

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Massmart  It’s aliiiiiive!

How’s Massmart’s migration to the misty enchanted uplands of omnichannel going? Well, for starters, online sales across four Massmart trading formats – Game, Builders Warehouse, DionWired and Makro – increased by +47% this last FY, according to Kuseni Dlamini, Non-Executive Director of Massmart. And if you don’t believe him, and you have no reason not too, you should check out our own report on all things Massmart, available soon. We’ll keep you posted.  But back to them, the intention is to further invest in back-end development to support and prepare each division for the growth of the Massmart omnichannel platforms, achieving improved inventory accuracy, master data, extended assortments and improved fulfilment, inter alia. “We are alive to the growing presence of online shopping and digital activation in our customers’ lives and the effect it has on their shopping behaviour and needs,” says CEO Guy Hayward.
Comment: Leveraging Walmart’s massive and growing online presence might be the smartest move and the biggest differentiator for Massmart right now.

Tatler Reporter 09/09/18

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MANUFACTURERS AND SERVICE PROVIDERS

Colgate Palmolive  White from wrong

Does Aquafresh offer the discerning denture-about-town ‘24-hour sugar acid protection’? It might. But it’s not a claim that its makers, the woefully under-punctuated GlaxoSmithKline are allowed to make any more, according to the retired ponytails of the Advertising Standards Authority, who ruled in response to an objection on the part of GSK competitor Colgate Palmolive on the grounds that the claim “was unsubstantiated, was misleading and exploited consumers’ lack of knowledge and credulity.” Originally the Authority ruled in GSK’s favour, but Colgate appealed, and appealed again, even after GSK had added, in very small letters, “follow a healthy diet and brush twice daily for cavity protection” after the offending statement. The fight has followed GSK from the UK, where Colgate won a similar case back in the one five.
Comment: Fascinating stuff, in a category where what one is able to claim about the product makes up a bigger than usual chunk of the equity of the brand.

The Citizen 08/09/18

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Libstar  Pure potential

Libstar’s maiden interims, to use a term which should surely by now be retired. Debut? No, we’re still seeing dewy lips and white chiffon. How about “first set of results since listing on the JSE?” That should do it. Unlike the results themselves, sadly: while revenue rose +14.2% to R4.5bn, operating profit fell -13.8% to R223m. Libstar, you will recall, owns such prized South African businesses as Cape Herb & Spice, mushroom business Denny, and dairy outfit Lancewood inter alia. It was Denny which bore the brunt of fortune’s disfavour this round: mushroom oversupply caused the business to discount heavily, contributing to the decline in profitability. However, the recent acquisition of yoghurt specialist Sonnendal Dairies should help the business in its move into high-margin premium dairy products, so all is not lost for the year.
Comment: A heck of a time to list one’s business. But Libstar has a compelling mix of brands and we shall observe its progress with interest.

Business Day 05/09/18

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Cadbury  “You’ll just have to grow some more kid”

Cadbury has been in South Africa for – take a guess? – a sprightly 80 years, that’s right, although it was initially available much earlier, in 1903, when the brothers Cadbury, Richard and George, appointed an agent to sell it to an eager market. The business broke ground in its first factory, in PE, in 1930, and just eight years later the first slabs of Dairy Milk rolled off the production line. Flake, Crunchy and Lunch Bar followed at a leisurely pace as did Chomp, the tiny, waxy bar that some genius decided to market as absolutely enormous. The business, under the ownership of Mondelez, now controls a commanding 37% of the South African chocolate market. And Cadbury’s Dairy Milk slab remains the leading brand, with an overall retail value share of 19%.
Comment: Congrats to our friends in that great business, which we suspect – given that it provides disheartened punters with one of life’s more indispensable little luxuries – may be better positioned than most to ride out the recession.

Tatler Reporter 09/09/18

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TRADE ENVIRONMENT

GDP  Receding hopes

Last week brought the deeply unwelcome news that we had entered our first recession since 2009. What is this likely to mean for the already embattled South African consumer, and the businesses which serve her? For starters, the immediate weakening of the rand will see a jump in the price of imports, which occupy significant space in the grocery basket. Secondly, the fuel price is likely to head north, perhaps over R17 to the litre in October. Thirdly, as these costs find their way into the CPI, the Reserve Bank could up the interest rate, kicking up the cost of debt to already overburdened households. If the worst comes to the worst, our deepening economic woes could lead to a further downgrade by the ratings agencies, the loss of further foreign capital and a further weakening of the rand.
Comment: This is awful and there doesn’t seem any way of softening the blow in the short term. Except to remember the resilience and inventiveness of the people and the businesses of this nation, and the historic adversity we have already overcome.

IOL 09/09/18

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IN BRIEF

Comings and Goings  Bittersweet

Big shout out to Sydney Mtsambiwa, who, as an interim measure, takes over the reins from Peter Staude over at Tongaat Hulett. Mtsambiwa heads coastwards from the verdant sugarlands of Zimbabwe, where he has been heading up Tongaat’s operations and serving as CEO of Hippo Valley Estates, in which the business has a 50.3% holding. Staude leaves the business after 40 years before the panga, man and boy, 16 of them as CEO.

Tatler Reporter 09/09/18

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International Retailers  Lovely jubbly!

Tesco has a new face and its boyish if a little baggy. That’s right: Jamie Oliver is the “new face” of Tesco, in a campaign that is aimed at advising customers on how to stay healthy by improving their diet. And in the US, Target has enjoyed its best quarterly growth in like 13 years. This affects us how exactly? Not much, admittedly, although if you were Game, for example, you might want to have a look at how this discount department retailer was doing it. And that’s a wrap, all being quiet on the international retail front as well.

Tatler Reporter 09/09/18

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RCL Foods  Look and peel

Nice one, RCL Foods, fostering young talent while doing the right thing by a venerable and beloved brand. RCL’s Number One Mageu Art & Soul Competition challenged young South African graphic artists to create a unique design for the Number One Mageu's iconic banana packaging. Winner Hannah Smith and runner-up Rapule Mathonsi are both from Durban, SA’s undisputed incubator of design talent. Check out the gorgeous results on Instagram at #ArtAndSoul.

Tatler Reporter 09/09/18

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