Trade Tatler
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TATLER ARCHIVE

THIS ISSUE:     10 May - 16 May

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RETAILERS AND WHOLESALERS

SPAR  Poles apart

Nice set of interims from the Green One, with turnover up +8.6% to R54.3bn, despite “tough trading markets across all business geographies,” according to CEO Graham O’Connor. SPAR Southern Africa contributed growth in wholesale (DC) turnover of +7.7%, with food price inflation rising +1.9%; TOPS came in at +19.3% and Build it at +8.3%. Not so great was interim profit after tax, which declined -2.7% to R1bn. Normalised HEPS, though, was up +7.5% and store numbers went from 2,236 to 2,308 – a pleasing haul. Ireland solid, Switzerland not turning profit yet, so no surprises abroad either. Except, perhaps, this one: the business is in the final stages of talks which would see it buying a controlling stake in Polish deli and supermarket chain Piotr i Pawel group, as part of its European bridgehead. Piotr i Pawel operates 77 delicatessen and supermarket stores, plus a wholesale distribution network in a country rejoicing in good economic growth and record low unemployment. For a more detailed breakdown of the numbers, have a look at our handy one-page summary here.
Comment: An interesting set of results: silver linings amid hard times here at home, a couple of patches of cloud, and some banging news to finish off with. Nice.

Tatler Reporter 15/05/19

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Woolworths  Fashion this

Decisive action from Woolworths on their troubled clothing offering: they’ve appointed ex-Marks & Spencer style director Belinda Earl as an independent non-executive director, presumably with an eye to sorting out the well-intentioned but confusing morass that is the garment section, with its classy Country Road and Studio W lines, its bland and uninspiring David Jones import, its fast-fashion attempts to keep up with Zara and H&M, and its brave championing of local designers. Marks & Spencer were in a similar spot when Earl took over there, and were similarly besieged by H&M and Zara. She also did a spell at Debenhams, where she introduced a range of designer collabs, which bodes well for one of the smarter bits of Woolies’ current offering.
Comment: Some weeks ago, we wondered idly if it didn’t behoove Woolies to shut clothing down entirely to focus on the food they do so well. This seems like a better idea. And interesting that their ties to M&S endure, after so long.

Business Times 12/05/19

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Massmart  Masters of hindsight

The analysts have been having a field day with the resignation of Guy Hayward as CEO over at Massmart, as they do, taking this as an opportunity to weigh in on Walmart, the economy, and even the tenure of Mark Lamberti, two CEOs ago. It’s generally, if not universally, considered that Mr Hayward was handed a tough job when he took over in 2014, after 14 solid years of growth for the retail sector, and just before things went belly up for just about everyone. Some kinder prognosticators noted that under his tenure the organisation has made significant strides in the areas of efficiency and organisational structure consolidation, and on Walmart, the sharp-suited ones were divided, with some suggesting that had the Competition Commission allowed The Big Feller its full 100% of the business, Walmart might have had free rein to run things according to their own terms and we’d be looking at a different story right now. Others, pointing to Walmart’s less than impressive performances in Brazil and the UK, say thank goodness it was only 51%.
Comment: Can fingers be confidently pointed right now? We hold judgement in anticipation of the potential positive impact that the efficiencies and consolidation could bring going forward.

Daily Maverick 08/05/19

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International Retailers  Aisle be seeing you…

In its battle against the encroaching forces of Aldi and Lidl, Tesco is fighting the discounters, not just on price but on ranging: since 2014, CEO Dave Lewis has overseen the removal of 50% of all SKUs off the shelves; now he’s going after 8,000, or 20%, of the remaining 40,000, in order to give shoppers the ease of choice and navigation they seem to be after these days. Last year, you will recall, Tesco launched its own trading brand, Jacks, to take on the discounters; now it’s launching Jack’s private label products in Tesco stores too. Across the pond, Walmart is launching an online pet pharmacy, beefing up its in-store range of pet medications, and opening clinics for cash-strapped pet owners in 100 of its existing stores – with prices up to 60% off the basics like tests, vaccinations, and treatments for minor illnesses.
Comment: Two developments in which local retailers might display more than a passing interest. The South African market is ripe for the entrance of well-branded discounters: are our Big Six ready?

Tatler Reporter 13/05/19

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#DoingGoodisGoodBusiness  Engage!

Nice work from Food Lover's Market, which has launched its annual Hunger Month initiative – a month-long in-store campaign aimed at raising awareness and funds for meals by encouraging consumers to purchase selected partner products. The campaign raised enough money to facilitate the distribution of 733,179 meals last year through FoodForward SA. And from our friends at Unitrade Management Servcie (UMS), whose Lungisisa Indlela Village U12 Boys Rugby Team is hard at work and training four times a week ahead of their trip to Monaco for an international rugby tournament. “UMS emphasises the importance of integrity, diligence, discipline, respect, honour and gratitude,” says CEO Jad Pereira. “We see the children of LIV being armed with these values, which can only benefit them and our country in years to come.”
Comment: There is a sincere and escalating sense of mission in our industry, and indeed in our country.

Tatler Reporter 08/05/19

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MANUFACTURERS AND SERVICE PROVIDERS

Danone  The milk of human kindness

Not content with fattening up the international influencer set on Evian Water and Activa Yoghurt, French consumer brands business Danone are going all-in on the healthy eating market. They’ve just bought US outfit WhiteWave as part of their strategy to go from €1.7bn turnover from plant-based foods today to €5bn by 2025. This as demand for organic, plant-based and GM-free food grows, and punters look to live their best lives. They also want to go bigger into non-dairy ice cream, vegan cheese and vegan baby food, and to widen their distribution of non-dairy dessert brands Alpro in Russia and Silk in Latin America. Why? This from CEO Emmanuel Faber: “If we don’t pay for sustainable agriculture, if we don’t pay for regenerative agriculture, there will not be agriculture. Right now we are paying dividends, we are defining profits in a way which is simply not sustainable. We are shortening the cycle.”
Comment: A new food business model is being born. Time to get on-board.

Financial Times 08/05/19

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AB InBev  Beerly making ends meet

SA’s macroeonomic woes have dented sales of the fizzy amber stuff here in the Beloved Country, where volumes were down, sales-per-hectolitre flat and margins skinnier in the first quarter. The lower end of the market has been particularly unpredictable for the beer giant, which had been expecting great things of the SABMiller takeover here in Subsaharia. They claim they’re over-indexed on low-value beer in South Africa, which we take to mean they make an awful lot of it and people aren’t drinking as much. This is why they’re premium-ising their portfolio here, with the addition of global brands like Beck’s and Heineken to local standards Castle, Lion and Black Label, which make up the ‘erm, lion’s share of sales. Difficult local conditions suggest, say analysts, that Anheuser-Busch didn’t get quite what they paid for when the merger with SABMiller went ahead, and that shareholders of the latter have merged as the winners of that very big deal.
Comment: Tough at the top. We always had a feeling that the deal was bridge too far for an already highly-consolidated industry, at a time when the real value was being created by independent and artisanal brewers.

Business Day 09/05/19

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TRADE ENVIRONMENT

The Economy  It’s electrifying!

Barely has President Cyril settled anew into the iron throne after a diminished but still solid victory, and this: the floodgates are open on independent power generation, and anyone with a clapped out bicycle and a dynamo is free to sell the power they generate into the national grid, as Energy Minister Jeff Hadebe has instructed Nersa to start processing applications from business. Not only will this, in due course take the pressure off (and indeed the power away) from Eskom, but it will no doubt give rise to the wellspring of South African ingenuity which so amazes the world when it bothers to pay attention. This might also prove a tidy little revenue stream for those retailers – and there are more than a couple – who have invested in energy savings and alternative generation over the past decade. Speaking of retailers (and we speak of little else, morning, noon and night), ours are hoping for a post-electoral boost. Pick n Pay’s Mr Brasher: “Anything that gives us stability of exchange rates, stability of government and consistency of message will result in people feeling better.”
Comment: We couldn’t have put it better ourselves.

Business Day 14/05/19

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