School of Retail
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THIS ISSUE: 25 Feb - 02 Mar
The first team at Massmart Boys High have reported solid sales growth of 13.3% to R27 billions and some change for the 26 weeks to December ’10, and an operating profit (beforeforeignexchangelosses) of 12.7%. Trading in Africa has its complications, including, these last six months, a foreign exchange loss of R79 and a half bar. Doing a deal with Walmart, as Captain Pattison rightly points out, will also take it out of a business. No matter though. Like store sales were up 7.3% and net trading space was up 8.7%, and the Foodco experiment in the Western Cape is roaring along, with a third store-still-within-a-store to open shortly. On the downside, the chaps believe that the second half of the year might echo the worrying slowdown in growth over December and subsequently, and are tightening ship, reducing stockholding and so forth in order to better ride it out. Comment: Deals like Wakro can be distracting. But at the heart of the exciting Massmart business is hard-nosed realism and an ability to stick to the basics of retailing, which has seen them through tougher times than these.
The New Age 25/02/11
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As part of its good business journey, the Dapper One is sending some entrepreneurs on journeys of their own. Take Mr Goodenough Ngcobo, for instance. Latterly an employee of Woolies in Pinetown, he now owns a small but growing fleet of vehicles which deliver used pallets from Woolies to the provider down in Isipingo – a business funded in part by Woolworths itself. And Mr Graham van Rooyen, once a shuttle driver ferrying Woolworths folk to their far-flung parking bays, now the owner manager of Ikhozi Shuttle & Tours, a thriving Western Cape business, the expansion of which Woolworths has recently enabled with a loan. Development of black-owned enterprise within the supplier base is integral to Woolies’ sustainability initiatives.
Comment: A blueprint for big business eager to embark on some meaningful job creation.
Tatler Reporter 02/03/11
OK Supermarkets, no relation, is this year’s retail super-brand winner, according to the Zimbabwean All Media Products Survey (ZAMPS), emerging as both the most preferred and most often visited outlet ahead of rivals SPAR, TM and the Chinese-owned Afro-Foods Supermarkets. You will recall that Investec recently bought a chunk of OK, denying at the time that it was doing so on behalf of anyone at all with offices in Brackenfell. TM, on the other hand, is very much related to SA’s own Pick n Pay, which owns a controlling chunk in the business, while Afro-Foods is simply another division of the Red Army. Massmart, in the meantime, has expressed nothing but relief at their recent exit from Zim, where its two Makro stores paid no dividends and were described by the Men in Black as having only “nuisance value”.
Comment: Although the rumblings we’re hearing from up north, Mugabe’s pre-election grab threats aside, are that the turnaround is in full and vibrant force.
Bizcommunity 21/02/11, Business Live 25/02/11
Kimberly-Clark South Africa has adopted a bold new five-year expansion strategy aimed at stretching its brand, expanding its territory and perhaps even making the odd acquisition along the way. This has involved restructuring the business, devolving decision making and operational control form Gauteng into three Geographical Business Units (GBAs) around the country, each with its own mini-country managers, who will lead multifunctional teams in areas such as sales, marketing and supply chain. One Dion de Graaf has been appointed to drive the business’ expansion into East and West Africa, where establishing commercial operations has been identified as a priority. The heads of the GBAs are all internal appointments.
Comment: Exciting and decisive stuff from a business whose future we shall observe with keen interest.
Tatler Reporter 28/02/11
South Africa, you will be pleased to know, is a priority market for Coca Cola, with consumption growing at a slightly fizzy 2%, but with potential to grow to a teeth-curlingly sweet, caffeine fuelled, spray-it-out-your nose bubbly 6%. The key, of course is the townships, where Coke doesn’t enjoy the penetration you might imagine it does. Currently, Amalgamated Beverage Industries sell the good stuff to only 70,000 retail customers, but believe there could be as many as 200,000 out there. Trouble is, to reach these sturdy men of commerce and their parched punters will require a bit of wedge, which would be invested in more reps on the road, more trucks, more signage, and more fridges, increasing the density of these latter from 40 to 80 per 10,000 South Africans.
Comment: Now there’s a number we bet you never knew.
Business Report 28/02/11
Should you be wishing to do business with Pioneer Foods, and there’s no real reason you shouldn’t, you will find that their BEE rating has gone and upped itself to Level 5 while no one was watching, as verified by the evocatively-named AQRate Verification Services, who make it their business quite literally to know a thing or two about these sorts of things. Since 2004, apparently, there has been a positive shift in the shape and racial profile of Pioneer’s income per capita pyramid, which we gather, reading between the lines of the report, is a good thing. This has in part been achieved not by the ceaseless toil of thousands of peasant labourers, like the other sorts of pyramid, but by having a bang-on integrated talent management strategy in place, with all manner of career grids, talent pools, learning academies, total reward value propositions and mentorship programmes. Comment: Or so we are given to understand.
Economic growth for the fourth quarter of the year 10 was up by 4.4% year-on-year, compared with 2.7% in the third quarter. Star performers here were agriculture and mining, which might yet get its act together and ensure we don’t miss the commodities bus as it hurtles towards an uncertain future which nevertheless involves China in one way or another. GDP growth is expected, admittedly by economists, to average 3.4% for 2011, although the government insists with a sort of fantastical fatalism that it needs at least 6% to make a dent in joblessness. Comment: That or fired-up leadership and a can-do culture, which has worked for economies as diverse as Singapore and Brazil.
The Times 23/02/11
Here’s an angle which you hadn’t considered, kindly pointed out to us by Imperial Logistics: Government transport spend will total R66billion in 2011/12, increasing to R80billion by 2013/14. And as the government intensifies transport infrastructure spending, Logistics Service Providers (LSPs) have an important role to play in ensuring we’re getting bang for our logistical buck, bringing critical skills to the table to assist national and provincial departments and municipalities with planning, budgeting and contract management. In last week’s budget, Pravin “Flash” Gordhan announced plans to modernise infrastructure and transport logistics, accelerating further education and skills development and supporting research, technology and industrial investment. Comment: LSPs, as Imperial have pointed out, are substantial beneficiaries of the coming investment, and have a role to play in how it is optimised.
The Devil’s arithmetic of food, fuel and weather is doing its thing again, leading hoary old sages like Azar Jammine of Econometrix to predict – direly – that inflation will not be chained down for a second longer and it’s set to take glorious flight, perhaps breaking free of the govt’s 3–6% target band, and playing merry hell with Mr Gordhan’s budget and your Busby wallet alike.
Walmart would surely have been a little buoyed by Massmart’s results, because let’s face it, their own were not all that, with The Big Feller posting its seventh quarterly drop in sales in a row at established US stores. It’s facing stiff competition on price from dollar stores, and is recovering but slowly from its disastrous decision to cut its range, in a market which loves variety more than life itself.
Business Day 28/02/11
Coca Cola is tweaking its sizing and pricing strategies in the US, offering bigger and smaller sizes in order to juggle the price sensitivities of strapped consumers with the increasing costs of such commodities as plastics and sweeteners.
Wall Street Journal 25/02/11
Happy birthday, best wishes, here’s to a great year ahead and all of that to Tatler’s editor-in-chief. And in the words of The Bard of Avon: “With mirth and laughter let old wrinkles come.”
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