School of Retail
"I find trade intelligence to be extremely helpful in updating information regarding trends in the FMCG trade."
THIS ISSUE: 05 Nov - 10 Nov
Oh, ho, and what is this? Massmart have quietly opened a very nicely branded food store, called Foodco, as a store-within-a-store inside their N1 City Game, increasing the Magenta Marvel’s resemblance in ranging and assortment to, oh, a Walmart, say. Although, as Massmart hasten to tell us, the planning for Foodco was well underway before WakroTM was a gleam in anyone’s eye. Foodco keeps costs down, from staff overheads to decor, offers a tighter range than most other grocers, caters for LSMs 6 through 10 and scarily, will honour Game’s promise to beat any price. It’s unclear whether Foodco will ever stand alone, although it is likely to do a great job at increasing footfall. And as the gimlet-eyed analysts over at Absa point out, it’s a great fit for Walmart, should the Big Deal go through. Comment: And just the other day, we were asking Mr Pattison what his intentions were in food. Forthcoming he was not. For lovely Foodco pics click here.
Business Day 08/11/10
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In Zambia, we are told, the competition authorities are investigating Shoprite over claims that the company is threatening to delist suppliers who do business with Pick n Pay, which is busily establishing its African bridgehead there. Shoprite say they have no knowledge of any investigation. Should the Big Red One be found guilty, it faces fines of up to 10% of its Zambian turnover. Zambia is, formally speaking, one of the better-served African markets – while only 30-40% of punters avail themselves of modern retail, Spar has 6 stores there, Shoprite 19 and Pick n Pay has plans for an initial 5. Comment: Sure Africa has a rising 2 billion potential consumers, but the informal trade has the lion’s share of this market. Competition can be expected to be, shall we say, robust.
Fin 24 09/11/10
The Sunday Times loves nothing better than to tot things up and then publish supplements jam-packed full of the results. The Top Ten Teapots Survey. The Best Hair in Advertising Report. And, of course, the Top Companies Survey, in which it reveals, in all its naked glory, and neatly ordered, the growth you could expect had you invested in this business or that. Our retailers do surprising well, with all of the big boys represented, as follows:
Shoprite (3); Clicks (5); Spar (18); Massmart (24); Woolworths (37) and Pick n Pay (94).
Had you decided to invest in manufacturing businesses, however, you would have had to do a little more homework. Of the hundreds of businesses available in FMCG, only 8 made the grade:
Illovo (31); Aspen (33); Oceana (38); Rainbow(64); Tongaat-Hulett (74); Astral Foods (76); Tiger Brands (77); SABMiller (81) Comment: Salient here is that of the suppliers who made the grade, two are from the volatile sugar industry (although one of the two also does golf estates), and two from the embattled poultry sector.
Business Times 07/11/10
Pick n Pay has announced that it will be opening its first Mozambican store, a 3000m2 affair in Maputo, in a franchise territorial agreement with retail franchising group Retail Masters. This, you will recall, follows hot on the heels of their first opening in Zambia, and is slightly suggestive of their JV approach with TM in Zimbabwe. Le Grand Bleu has investigated sites the considerable length and less considerable breadth of Mozambique, and believe the former basket case holds great potential for the group, being under-represented, they say, in the type of retailing PnP does. PnP plan to support local farmers and suppliers in the venture, and to use logistics experts with proven continental experience. Comment: Pick n Pay seems lighter on its feet, more creative and responsive, as it gets properly going in Africa. Nice one.
Unilever’s third quarter profit leapt by a nimble 19%, with sales growth coming mainly from emerging markets. Overall, sales rose 13.2% to €33.4billion, with double digit volume growth coming from Asia and Africa, and Europe growing only 0.6% in value. This as nervous European consumers tighten their Louis Vuitton belts, while the joyous throngs in the Third World discover the pleasures of washing powder and hair products. Interestingly, Europeans bought loads of ice cream and deodorant, which are surely significant categories on the global warming index. Comment: Long a champion of the emerging consumer, Unilever’s faith in these markets appears justified.
Procter & Gamble have invited businesses with bright ideas to join them in the brave new world of joint product innovation, while helping P&G treble innovation turnover to $3billion per annum by 2015. Current CEO Bob McDonald’s predecessor, the austerely-named AG Lafley, wanted to make the world’s biggest consumer goods manufacturer a more outward-looking business, and set the goal of halving at least half of all new products developed with outside partners. Hence, for example, Glad brand ForceFlex rubbish bags, created with rival Clorox, and Swiffer cleaning products using technology licensed from Unicharm of Japan. Other JV partners include General Mills, ConAgra and the Los Alamos Defence Research Laboratory, Ulp. Comment: We have some great ideas on how to get graphic designers to do the dishes, if P&G would like to hear them.
Financial Times 02/11/10
More on that merger with KWV. If it went ahead, and there’s many a slip twixt cup and lip, ahem, it would create a food and drinks business with an annual turnover in excess of R18billion, and annual earnings in excess of R600million – R550bar of which, admittedly, is currently being generated by Pioneer, who would be the senior partner here. Meanwhile, in the back office, there is more to this proposed deal than just a nice fit. PSG-controlled Zeder investments own a 40% chunk of KWV and a 32% slab of Pioneer, standing thus to benefit from a merger, although it would have to price the transaction very carefully to bring the minority shareholders along. Comment: A time of some consolidation in this jolly old sector we call home.
Business Report 02/11/10
The recession has put the brakes on the rise of the middle class, according to the generally ebullient folk down at the Bureau of Market Research. Hell of a thing, says their Personal Income Estimates study: the income of those earning under R50 000 grew just 2.4% in 2010, while those earning over R750bar earned an extra 13.5% in the same period. Middle income consumers made up a large proportion of those who lost their jobs during the recent unpleasantness, and recovery, as well-documented here, has been thus far jobless. Comment: Middle income earners, you will recall, drove the boom years. May they swiftly rise again.
Parmalat South Africa has just appointed as its CEO Ms Louise Cooke, who comes across from Cadbury, where she has held the position of MD for 7 years. She will be responsible for the executive management of Parmalat’s operations in such African countries as Botswana, Swaziland, Mozambique and Zambia.
Woolies have very cleverly introduced SA’s first recycled plastic sandwich containers, using post-consumer recycled plastic (rPET) which comes primarily from locally collected soft drink and water bottles and is scrupulously ‘super cleaned’ by the local supplier, who has invested some R20 million in a food grade recycling plant. The resulting plastic meets or exceeds international standards for food safety.
Tatler Reporter 09/11/10
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