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


THIS ISSUE:     14 Sep - 20 Sep

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Massmart  Here comes the sun

Massmart is not messing around when it comes to sustainability: the Strubens Valley Makro has just become the sixth store in the Group to go solar, with a 480kw generator made up entirely of 147 polycrystalline panels that also provide shade for the Jetta when you shop. Together, the six stores generate 4.4million kWh of renewable energy a year, putting them in first place among South Africa’s retailers. The Men in Black are also capturing and reusing rainwater from store roofs and condensation from refrigeration plants, which together have delivered 50 million litres of water in the last three years. A presumably not unintended consequence of all of this virtuous behaviour is a substantial reduction in operating costs.
Comment: In a country with not enough water and loads of sunlight, this is a pragmatic yet no less visionary business.

Tatler Reporter 17/09/18

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SPAR  Compound Interest

South Africa’s gated communities, eh? Where you know your neighbours and the kids can leave their bikes on the lawn. Where you can play a round of golf in your pyjamas, and now, where you can pick up a trolley full of groceries at your local SPAR. The Jolly, Green One, you see, has opened a couple of stores in Midstream and Blue Valley Golf and Country Estates. The large format stores stock the usual range of groceries, including home and personal care and beauty, they also stock a substantial range of deli and takeaway fare for the discerning denizens of those pleasant pasturages. “Having convenience retail at your doorstep in a charming neighbourhood saves you time, reduces interruptions on the journey back home and you are out of nothing when you have surprise visitors,” says Craig Freeman, New Business Development Manager of SPAR North Rand.
Comment: The affluence of the average estate dweller is for SPAR, along with Checkers, PnP and Woolies, a lucrative consideration in a tough market.

Tatler Reporter 17/09/18

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Fairvest  No frills, busy tills

Who on earth is Fairvest, you ask, puzzled. Perhaps you assume it’s some sort of an organic coffee sideline of Brian Joffe. In fact it’s the name of a business which owns R3bn portfolio of more than 40 retail centres that cater mainly for lower-income shoppers in townships and rural areas. And Fairvest is bucking the trend of terrible results in the mall space as currently experienced by such great businesses as Growthpoint, Hyprop, and Attacq. All of these are currently trading in the single digits or even the negative, while Fairvest is trucking along nicely at 10-odd % year on year.
Comment: This Beloved Country of ours never fails to surprise us. Although we do ask ourselves what the real impact of mall developments on the independent trade is and how it affects our ability to keep money within communities.

Financial Mail 12/12/18

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Clover  Down, on the farm

Looking a lot healthier than they were this time last year is Clover, who have recorded a year-on-year jump in operating profit of +94% to R611m – the highest since it listed in 2010. “We re-focused on the basics and took a consumer-centric approach to improve efficiencies and reduce costs,” says CEO Johann Vorster by way of explanation. That, and of course, recovery from the crippling drought which ravaged the green, green hills of Natal back in ’16. On the downside, there’s been a bit of a dust-up over at Dairy Farmers of South Africa, the co-op the business set up to get those erstwhile sons of the soil on board with the Clover programme. A crippling conflict between losing milk producers or losing market share led to losses of R128.8m in that innovatively-structured instrument, and the resignation of chairperson Dirk Reyneke to allow shareholders to appoint their own management team.
Comment: Reading between the lines, it’s our guess that the farmers want more money.

Business Report 13/09/18

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AVI  Bics and mortar

Anglovaal Industries Limited – a name we always get a kick out of pronouncing in the plummy tones of someone reaching for their third brandy at the Illovo Club – just delivered a tidyish set of results, all things considered. Revenue was up +2% to R13.44bn, with operating profit up +7% to R2.55bn. The strongest performer in the Group was the food and beverages division, comprising Entyce Beverages, Snackworks, and I&J, which grew revenue 2% to R10.2bn and operating profit 7.4% to R1.9bn. The fashion brands division grew its turnover 1.5% to R3.1bn, and operating profit 6.2% to R645m, punters not having quite the same appetite for Jimmy Choo’s these days as they do for biccies and juice. The business benefited from a stronger rand during some of the reporting period, and also from “ongoing efforts to reduce procurement costs and improve factory efficiencies” – their words. They do warn of ongoing toughness still ahead though.
Comment: Holding up nicely under trying conditions there, AVI. Have another brandy.

Business Day 10/09/18

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The Economy  Broadly speaking

Amid the sinister gloom of a new recession, some rays of economic hope. One is that despite a modest expected rise in inflation to 5.2% in August, and rand weakness during an emerging currencies bloodbath and some fleeting but unwelcome attention from the American president, the worthies at the Reserve Bank will likely keep the interest rate where it is for the moment, in a nod to embattled consumers. The other is that Lucie Villa, a vice-president and senior credit officer at Moody's, said at a summit this week that she expected the South African economy would make a broad-based recovery, and that the probability of Moody downgrading our status to junk was very low. “There are headwinds,” she opines “but we are of the view that the macroeconomic policy framework that is in place in South Africa is relatively effective in dealing with these headwinds.”
Comment: Broad-based recovery. Roll that around the tongue for a bit. We trust that the base will extend broadly enough to reach the editorial staff of cheeky weekly trade publications.

Business Day 17/09/18

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International Retailers  Deal or no deal?

A no deal Brexit would be even worse for UK retailers than just the ordinary kind of Brexit, bringing as it would a gravely reduced pound and higher costs. It could also raise inflation, put the squeeze on wages and the kibosh on consumer spending, and lead to reduced GDP growth. Which all sounds terribly familiar, can’t think where we’ve heard something similar before. Perhaps in preparation for these times, which will doubtless remind cheerful Brits of the Blitz, and also not coincidentally to see off the German invasion by Lidl and Aldi, Tesco are next week launching a no-frills discounter named Jack, after their erstwhile founder Jack Cohen.

Tatler Reporter 17/09/18

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Pick n Pay  Better never than late

Nice work up north from Meikles, whose retail division, under which Pick n Pay-run TM Supermarkets falls, increased revenue by +15% to R3.4bn for the year through February. Meikles assure investors that group-wide profits were up 321% (yes, you read right), but the punters are not entirely buying it as there has been a potentially questionable delay on the publication of results.

IOL 13/09/18

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Robertsons  The life of spice

Unilever-owned Robertson’s “The Spice People” are dropping a beloved ingredient from the lineup, and also a production process we’re frankly amazed they still practiced. The former is of course monosodium glutamate, the ingredient that puts the “Aro” and also the “mat” into Aromat. They’re also ceasing, forthwith, to irradiate any of their products, news which both pleases and alarms us, in equal measure. And speaking of Aromat – you’ll still be able to buy it, at a loftier price point, sans the MSG, and with added sugar.

Tatler Reporter 17/09/18

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