School of Retail
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THIS ISSUE: 14 Oct - 20 Oct
As the Australian Competition and Consumer Commission (ACCC) deliberates at the speed of continental drift on the proposed Metcash (Aus) buyout of Pick n Pay’s 77 Franklins stores, the Big Blue is casting about for Plan B. This might come, according to Chairman Ackerman the younger, in the form of a series of acquisitions rather than one major one. The business has accordingly been put out to tender, and this might mean the acquisition of some of the stores by smaller players. Given that PnP are anticipating that either way they’ll get the R1.4billion that was on the table, this works out a steepish price per store of R18bar. Comment: A determined bid by PnP to rid itself of an underperforming asset and bring a welcome bit of ready cash back home.
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Clicks will shortly be availing itself of the services as CFO of Michael Fleming, who currently occupies the same slot at Tiger Brands. Clicks are stoked with the hire, as Mr Fleming brings to the business an advanced knowledge of the supply chain, of building brands and of FMCG in general, rather than simply net cash flows and income statements. They are also – somewhat obscurely – excited by the impact Mr Fleming will have on their private label brands, which they are hoping to bring up to 25% of the mix from their current 18%, and closer to the ideal represented by Boots, who have 40% private label. Clicks’ CEO David Kneale also holds up Woolworths as a paragon of private label, where the house brand signifies quality to the consumer. Comment: There are murmurings about a shake-up down at Clicks, of which this appointment might be an early tremor.
Business Day 15/10/10
Freshstop, the very bright idea cooked up by the canny operators at Fruit & Veg City, is opening its first corporately-owned forecourt store at the Stellendale Caltex down in Cape Town, where the granola-wearing hippies like a bit of crunchy goodness with their unleaded. The store includes a dairy and cheese section, a bakery, a self-service coffee station, a fruit and vegetable island, and presumably, a cigarettes and coke section. Freshstop is the fastest-growing C-store brand in the country, with more than 30 forecourts up and running since the 2009 launch, all owned by Chevron franchisees. Comment: Nothing can stand in the way of a freshly-baked whole-wheat roll whose time has come.
Tatler Reporter 14/10/10
What is this, heaving into view? Why, it’s one of SABMiller’s seafaring breweries, invented to bring beer to distressed folk living in flyblown coastal settlements in these times of “Marginal Survival”, where there’s precious little fuel and not much in the way of fresh water to brew an honest draught with. The Big Boy’s scenario-planners have been giving it the old Mad Max, looking ahead to days of meagre fuel or poisoned wells, or both, and figuring out how they could continue to bring the bubbly, amber stuff to thirsty post-apocalyptic punters. And a floating brewery, seriously, is one such way. Comment: Don’t laugh. The petrol really is running out, the water really isn’t getting cleaner, and your business really probably hasn’t figured out what it’s going to do about either.
Business Report 12/10/10
National Brands Limited (NBL) is getting behind an innovative franchise concept aimed at doing the right thing by the informal sector, providing enterprise development funding for the Drink & Snack franchise, an initiative of Innovative Franchise Concepts (IFC), which aims to have 2,000 of the informal emporia established at taxi ranks and train stations across South Africa by 2013. NBL will be supplying franchisees with some of their iconic brands, including Five Roses, Freshpak, Trinco, Frisco and Bakers Biscuits, making the grim morning commute a homelier affair for tens of thousands of ordinary South Africans. NBL’s funding will also be helping each franchisee to set themselves up with a branded trading unit. Comment: Nation building is perhaps best practiced as a function of enterprise rather than handouts.
Imperial Logistics have, if you’ll pardon the expression, advanced a little further down the road of a green supply chain, bringing into the country SA’s first vehicles equipped to Euro V emission standards, which run on low sulphur diesel with additives that further reduce toxic emissions. Imperial Logistics, you may remember, has done some sterling work with Woolworths in the greening of the Fast n Fresh fleet, using a minimum 5% of biodiesel, running trucks with ecoFridge trailers, optimising loads and generally doing its bit, for an estimated saving of an estimated 596 tons of CO2 per annum. Comment: Great but humbling stuff – if that’s the saving, imagine what’s still being pumped out.
Tatler Reporter 11/10/10
After a buoyant June (7.4%) and an absolutely ripping July (8%), retail trade sales were up only 4.6% in August, somewhat shy of the 8.4% forecast by economists, who inexplicably still have those jobs they are fond of telling people are very, very difficult and you shouldn’t try to understand unless you’ve got like, three degrees or something. While sales are overall an improvement on ’09, August represents a decline from July to the tune of 1.4% (seasonally adjusted), as punters are apparently using disposable income to reduce the debt they incurred buying Football Friday shirts and boerewors. Comment: Perhaps Mrs Doubtfire at the Reserve Bank will put us to bed with some nice warm milk and an interest rate cut...
Last week we erroneously reported that it would cost you a flat fee of R9.99 to courier a package from 50 selected Pick n Pays to pretty much anywhere, courtesy of their new drop ‘n go courier offering with Berco Express. The correct, and far more reasonable figure, is of course R999.99. Sorry, R99.00.
Tatler Reporter 20/10/10
The long-running imbroglio between our two biggest retailers and the Advertising Standards Authority grinds on, with the Authority this time supporting Shoprite in its complaint against Pick n Pay for claiming that it was “consistently cheaper” and/or “consistently cheaper every day.” Given the vast amount of advertising Pick n Pay does, and its promise to never make the same claim again, the sanction applied has been lenient.
Tatler Reporter 19/10/10
An apparently leaked document has revealed that Asda (gasp!) attempts to get better prices out of their suppliers, by heartening buyers with the exhortation that manufacturers are “desperate for volume growth”. They are also encouraged to play good cop / bad cop, and avail themselves of Asda’s bank of hardened negotiators. Have fun, they are told, but remember non-delivery is not an option. Whatever next, gay hairdressers?
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