School of Retail
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THIS ISSUE: 02 Sep - 08 Sep
Woolworths has offered, if that’s the word, to buy back all 76 of its South African franchise stores at fair value, in order to save on operational costs and to remove complexity from the business, according to the official line. Some of the franchisees, who see the move as a hostile takeover, would prefer a higher purchase price, while certain snide analysts have pointed out that under the incipient Consumer Protection Act, a franchisee is considered a customer of the franchisor, with all the obligations and headaches that that entails. Specifically excluded from the arrangement, which should be complete by June ‘11 is the relationship with Engen, where, you will recall, the burly petrol ous run those dinky little triangular Foodstops. Comment: Word on the street is that the CPA is going to cause all sorts of businesses to look more seriously at vertical integration of this nature.
Business Day 03/09/10
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Once the target of acquisition by Pick n Pay, Fruit & Veg City is now doing a little acquiring of its own, in the form of a partnership with (read partial buyout of) Everfresh, a fantastic little chain of 10 fruit and veg shops in the highly-underrated Province of KZN. The Everfresh stores will become Food Lover Market franchise ops, and the Luizinho boys who started the chain will continue to play a management role in the operation. FVC brings more buying power to the table than the local lads have managed to muster, and of course a shiny new DC looking for franchisees to supply. Comment: A shame, in a way. Everfresh would have been an interesting national competitor for the FVC behemoth.
In its drive to target the better-heeled punter with the troubled conscience – and, obviously, in order to do the right thing – Pick n Pay will be stocking an increasing number of Fairtrade products. Fairtrade is of course the Germany-based NGO that certifies products according to how sustainably they’ve been produced, in terms of both the environment and labour practices. While many Fairtrade products hail from South Africa and are sold globally, few – a paltry R5.7million worth out of a global total of $3.4billion – are actually consumed here. In other morally responsible PnP news, Le Grand Bleu is encouraging its Botswanan franchisees to buy more produce from small local farmers. Comment: Great stuff. If you have an LSM 8–10 heartland to defend, Fairtrade’s the chap to help you do it.
Mmegionline 06/09/10, Business Day 02/09/10
Cipla India has decided to take a 25% stake, thank you very much, in the manufacturing division of Cipla Medpro SA, which posted a very nice set of interims last week, with revenue up 29% to R714.3million, and profit up a healthy (groan) 59% to R108.7million. Cipla is currently the third largest pharmaceutical manufacturer in SA after Aspen and Adcock Ingram, and is making inroads – while the market grew at 10% by value and 7% by volume over the period in question, Cipla’s numbers were 24% and 16% respectively. For the South African operation, the deal will mean more volume as well as access to lucrative World Health Organisation (WHO) and US Food and Drug Administration (FDA) approvals, which will also result in increased orders. Comment: There are worse things to be than an economic staging post for the Asian economies. Thank you Cipla.
The Times 01/09/10
Hmm, what to call Afgri? They’re essentially a diversified agricultural services business, offering everything from agricultural derivatives on the SA Futures Exchange (SAFEX) to handling and hauling services to retail outlets in the rugged shape of Farm City and the more svelte profile of Town and Country, as well as handing out the readies to perennially cash-strapped farmers from the deep pockets of Gro Capital Financial Services. And out of all of this bucolic activity, they make a fair old whack raising a profit of 32% for the year to June, with cash holdings up 43% to R690 bar. A feature of the medium -erm future for Afgri is a continued investment in the grain value chain, food generally and chicken specifically, and expansion into Africa. Comment: Where you can’t swing a traditional hoe these days without klapping some ou in short Teesav shorts, a two-tone khaki shirt and a leather Commando hat.
Slightly-less-troubled-than-previously logistics crew Supergroup are going to the International Court of Justice in the Hague to seek redress for a mugging they received in Angola at the hands of certain high-profile and connected yet nevertheless nameless individuals, who received vehicles and parts to the tune of some R197million for which they neglected to khokha. Oddly, Supergroup has made little headway or in fact achieved “any sensible legal process” in that slightly-less-troubled, substantially-more-loaded yet nevertheless still-out-of-control West African country. The vehicles in question were 350 Chinese powerstar trucks which were handed over to a relative of one of Angola’s most powerful generals in 2008, by two Supergroup executives who bypassed the board’s directive not to expose the business to any credit risk in Angola. Comment: So good luck with those trucks, then...
Business Report 31/08/10
The pharmaceutical price saga is now officially older than Egoli was when it shuffled off the set for the last time, and only slightly less predictable. Bottom line: a new plan which if brought into law will see a four-tier system of dispensing fees, with massive pharmacy fees built in. Medicines costing less than R75, for example, will have a fee whacked on them of no more than (thanks for that) 46% of the Single Exit price (remember those?) plus an apparently arbitrary R6. SA currently has no structure for dispensing fees, and the Department of Health in its wisdom believes that this will somehow make medicine more affordable. In the meantime, under the unregulated system, Clicks, for example, charges R26 for drugs under R100, and 26% on items over R100. Comment: Pharmacists, it must be said, are not what you’d call disappointed with the proposal, which in effect means doubling the dispensing fees they may charge.
The Times 06/08/10
Those business boytjies are tucking in the boeps, squaring their jaws, putting their shoulders back and meeting the future with renewed confidence, if the BER/RMB Business Confidence Index (BCI) is anything to go by. The index rebounded from 36 to 47 in the third quarter of the year after falling in the second. The score indicates that almost half of all respondents believe that business conditions are satisfactory, with many of the upbeat ones coming from the motor trade and our very own retail sector. In the latter, confidence came up 14 points to 52, wiping out the previous losses. On the downside, actual economic activity in these sectors did not rebound as strongly. Comment: Meaning, it would seem, that the new found confidence is based on expectations of a near-term recovery rather than actual feet through the door.
Private sector credit, you will be heartened to know, especially if you sell inexpensive furniture, rose by an “encouraging” 1.9% year-on-year in July, up from 0.9% in June. For the year to July, consumer credit rose by R36.5billion, mainly in the form of mortgages, so expect a flurry of eager new homeowners coming in looking for white plastic jug kettles and two ring stoves.
Financial Mail 03/09/10
Tesco are getting into the whole drive-thru thing with a new system whereby you can order your groceries online as usual, then hop into the jammie to fetch them from the shop during a specified two-hour window. Friendly Tesco staff will load up your boot for you as you enjoy a meditative Woodbine and a read of the Sun.
Marketing Magazine 05/09/10
Those clever hipster kids over at trendwatching.com have just released their new report, and brace yourselves for some pretty, shall we say, adult stuff on the shelves if their views on Maturialism are to be believed. Anything from wine-flavoured sorbet to pornographic baguettes to gay marriage ice-cream to extra-strength Marmite is coming your way right now, apparently. Their advice to brands? “Loosen Up.”
Tatler Reporter 08/09/10
And back due to popular demand (insert drum roll) – MyCustomer 2.0! The programme has proved so popular that we’ve decided to add in another two dates this year, to get your team ready and motivated for your 2011 customer plans. The dates are as follows:
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