School of Retail
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THIS ISSUE: 19 Aug - 25 Aug
A barnstorming set of results this week from The Big Red One – turnover up 13.6% to R67.4biljoens, trading profit up 18.7% to R3.5billion, with trading margin up a tad to 5.18%. Market share, hm, tricky. The official number for the year is 32.6%, up 1.2% on ’09. But the number for June is an unofficial 34.4%, after Nielsen’s VAT mistake – adding for some retailers, not adding for others – has been taken into account. And all of this in a heck of a year, with nearly 800,000 jobs lost, and Group food inflation now in negatory territory. Africa, as usual has been quite a help, and the other big story is Usave, 1,400 rockbottom items per store and a new one opening almost every day now. The bad news is all circumstantial – shaky prospects for recovery, the hideous cost of electricity to retailers and consumers (and hence retailers), the strength of the rand, which elsewhere in the continent has been something of a bonus. Comment: Excellent stuff, that beefy chap. Not you, Nataniël. The other one.
Tatler Reporter 24/08/10
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Woolworths is now sourcing 68.6% of its produce from suppliers who subscribe to its Farming for the Future principles, which advocate a move away from traditional farming methods to new methods which improve soil and plant health, preserving soil and water, and promoting biodiversity. The idea is that by 2012, it wants to be sourcing 85% from Farming for the Future suppliers, 6% from organic suppliers and only 9% seasonal exports, like those Israeli avos we swear are not in that salad, even though it’s August. Woolworths pays for annual assessments of farms which subscribe to the guidelines, which include such arcane measures as soil microbe and mineral management and wastewater management. Under this initiative, farmers are attempting where possible to use compost in the soil for example, rather than using an excess of chemical fertilisers. Comment: Dear old compost, eh, rather than petrochemical derivatives? Revolutionary stuff, which the bigger chaps would do well to emulate.
Engineering News 20/08/10
Massmart’s strong second half performance suggests that the SA consumer economy is out of the recession, reckons Grant Pattison, who has a growing sense of confidence that the worst is behind us. After two horrible years, the numbers are looking up, with total sales up 10% to R47 billion although operating profit increased a scant 0.1% to R2,031 million. Massmart’s R1 billion investment in growth has seen store space increasing by 8.5%, of which 3.1% is in new stores and 5.4% from acquisitions, while excellent control of expenses, margin and stock protected the income statement, enabling the Group to maintain operating profit. The World Cup generated an additional R200-300million of additional turnover, welcome in a tough year. Comment: Hang in there, big guy.
Tatler Reporter 26/08/10
Fry’s Vegetarian, once a mom and pop shop, still based in Durban, produces thousands of tons of vegetarian meat-substitute products annually, from very realistic polony to non-specific but nevertheless delicious schnitzels, stocking 12,000 stores locally and as far afield as the UK, Australia and Dubai, international sales accounting for 25% of the total. Now in a stroke of the same genius that led to the realisation that many vegetarians hankered after something that tasted more or less exactly like meat, they have decided to launch in India, home to the world’s largest population of meat-hankering vegetarians. For this bold endeavour they have enlisted the services as spokesperson of Indian cricket vice-captain Yuvraj Singh, as red-blooded a vegetarian as ever strode up to the crease with a steely gaze and a well-muscled forearm. Comment: Brilliant. 25%, you say? How about 75%?
Supermarket & Retailer 07/10
Unilever has announced its intention to source 75% of its packaging paper and board from recycled material or sustainable forests by 2015, with an ultimate goal of 100% by 2020. This as part of the Big Blue’s broader vision of doubling the size of the business while reducing its environmental impact. This bold move is a first for the industry, where good intentions abound, but timeframes are few. Comment: Great stuff. But please, people, bear in mind that many sustainable forests were planted on the graveyards of indigenous grasslands.
Bad news if you’re a truck driver, obviously, but Supergroup has managed to cut its workforce by 2,600 people to 8,200, in a major restructuring, recapitalising and cost-cutting exercise that has allowed the still-troubled logistics crowd to report a much-improved performance this year – revenue down just 2% to R7billion, operating profit down 10.5% to R490.2million. This as a result of some pretty arcane stuff – the disposal of the Industrial Products and Mica businesses leading to reduced procurement activities within the international operations unit in Mauritius, to give just one example. Comment: Tricky times for a business which has seen its share of those, yet whose trajectory seems now to be trending positive.
Business Report 19/08/10
“What, that?” they said, feigning nonchalance. “Can’t imagine it will affect us much.” Hmm. Retail trade sales for the month of June were in fact up 7.4% for the month of June, with most retailers and economists anticipating something closer to 4.5%. Now that they’ve seen the effect of the World Cup on June, most of the beard-tuggers believe that the event will have a similar impact on July also, but thereafter we’re pretty much on our own, looking to higher disposable income and lower interest rates to carry the retail sector through. Comment: A bit of perspective though: Shoprite sold a total of 1.2 million World Cup items out of a total of 8 billion items sold monthly.
On education: “It is difficult to explain gross margin and operating profit to people who didn’t go to Stellenbosch University.”
On fashion: “They say that brokers have pin stripes in their suits in order to hold up their egos.”
On the importance of investing in The Brand: “Our ads look terrible. They look cheap, because they are cheap.”
On literature: “We’re not going to take The Sun off our shelves. I quite like that newspaper.”
On the beautiful game: “A lot of food money went into soccer, and it is now probably in the German Stock Exchange.”
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