School of Retail
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THIS ISSUE: 25 Mar - 01 Apr
Pick n Pay has opened its second store in Zambia, this one in Ndola, after launching in Lusaka last year. The Big Blue plans another seven in the next four years, buoyed no doubt by the enthusiasm with which the first has been greeted. The store – including opening stock, cost around $3.5million to open, is 800m2 bigger than the previous outing and includes a clothing section. Pick n Pay has guaranteed the Zambian government that it will source 50% of its stock by turnover from local suppliers and are in fact ticking along at 65%, from 230 suppliers including agents for imported product. The two stores stock a total of 10,700 lines, and not incidentally, employ 300 something Zambians.
Comment: An impressive stake in some very fertile ground after a slow start.
Tatler Reporter 28/03/11
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The Men in Black have taken on their chiselled chins the decision by the Competition Tribunal to delay the remainder of its hearing into Wakro until early May – which would result in a de facto postponement of the deal by seven months – although not without the odd well-crafted riposte, such as this one from Mr Pattison: “We are fully supportive of local manufacturing, but it would be disruptive of the completion process championed under the Competition Act to impose local procurement targets on one retailer to the exclusion of its competitors,” as neat a bit of dramatic irony as we’ve seen since Standard 4, when Miss Konigkramer reprimanded us for swearing at Bingham. Chairman Lamberti has weighed in with the view that while “the Competition authority cannot allow any dissenting voice to be ignored,” “the international perception of how this transaction is handled will be more important to South Africa in the long run than the transaction itself,” a warning tone as impressively dire as any you would find on a reading of our Standard 8 report. Comment: Although the broad view is that Walmart is as yet undeterred.
The press has been crawling this week with reports that suggests that Metcash South Africa may be closing 51 stores as a result of financial pressure. The source of these numbers is SACCAWU, which may be indulging in a bit of pre-emptive pressure following the closure of 13 stores last year and the recent sale of the franchise division to Shoprite, and which is suggesting that the CCMA will be holding discussions at some unspecified time on the retrenchment figures. Last year’s closures cost 500 jobs. No comment on the subject has yet been forthcoming from Metcash itself, which does indeed seem to be in the process of rationalising the business for a swing back into action.
Comment: The return to rude good health of Metcash is an outcome sincerely to be desired in a wholesale sector with a relative dearth of major corporate players.
Tatler Reporter 31/03/11
Tiger Brands has taken Adcock Ingram to the Advertising Standards Authority over what it claims is a striking similarity between the packaging of Adcock Ingram’s TLC-brand camphor cream and Tiger’s own (confusingly named) Ingram’s Camphor Cream. The origin of the imbroglio, which is another word for a confused or complicated disagreement, is of course the 2008 unbundling of Adcock’s from Tiger, during which transaction it was agreed that the Adcock Ingram name would from time to time be used as a trademark. Tiger holds 82% of the camphor cream market, worth a whacking R207million last year, R12 bar of which it spent on marketing. TLC is currently on 2% and counting.
Comment: In these cases, you will often find one or both of the parties behaving in a manner which may be described as “disingenuous”, a word meaning “giving a false appearance of frankness.”
Sake 24 28/03/11
Le Grand Bleu has once again swept the boards at the annual Sunday Times Product of the Year awards, winning in each of the 12 categories in which its brands were nominated. These included, for e.g. Sunsilk in the Hair Care category, Vaseline PJ in Skin Protection and Rama in Spreads. The survey, you will recall, is run by AC Nielsen, who quiz 5000 households on their preferences. Unilever attributes its success in the awards to the piles of research it does and the market-by-market approach it takes to brand development. Comment: The success of Sunsilk in particular would have been a landmark victory in Unilever’s epic war of attrition with another haircare brand, the name of which is known to the editors of this publication.
In another game of Which Brand is That, this time being played out in the Cape Town High Court, Sea Harvest’s Oven Crisp brand of crumbed hake fillets, resplendent in royal blue packaging with cheerful yellow type and served in six 100g portions, has brought an urgent application to prevent rival I&J’s Oven Crunch brand of crumbed hake fillets, resplendent in royal blue packaging with cheerful yellow type and served in six 100g portions, from hitting the shelves. Sea Harvest lead the frozen fish market at 46%, with I&J coming in at a suspiciously-similar 44%. Comment: Ahaargh! This time we shall beat ‘em at their own game, me hearties!
The Times 28/03/11
The nimble-fingered number-crunchers over at international ratings agency Fitch reckon that the steady recovery in retail trade sales is underpinned by improving market fundamentals that point to a sustainable recovery in the South African economy, which was trundling along handsomely at 4.4% GDP growth for the last quarter of the year ten. While retail sales grew only 1.5% year-on-year for January, they perked up more demonstrably by 7.7% for the three months to January. A cautionary note for our own great industry was that food retailers reported an increase of only 0.4% for January. According to Fitch, the pace of improvement in retailers’ operating margins is also likely to be gradual because of the high levels of competition that, ahem, prevail in the industry and wage increases over inflation that our HR directors have been gritting their teeth and parting with. Comment: We’re sure we spotted some good news in there somewhere…
Last year’s Brandhouse Drive Dry ads were something of a shocker, suggesting that if you went to jail for drunken driving you would be taken against your will by various unsavoury characters (who would, nevertheless, write poetry to make you feel better about it.) Consumers complained to the ASA that the ads condoned prison rape and suggested that only men drove drunk, inter alia, and these complaints were duly dismissed. What is truly shocking, however, is that the South African Correctional Services were neither willing nor able to sue for what, presumably, was an accurate depiction of the state of things in our prisons.
Illovo Sugar has said farewell to its chairman, Robert Williams, who was due to retire at the next AGM anyway, and who will be handing over to ex-CEO Don McCleod. They are also losing the services of FD Karin Zarnack, who is leaving to pursue other things. With a name like Zarnack, one of these could feasibly be the establishment of an evil intergalactic empire.
Word from our sources is that Nataniël, for several years the face, as it were, of Shoprite boerewors, has been elected to the board of The Big Red One with immediate effect. He will be replacing Mr BR Weyers, who, it is understood, is to pursue a career in musical theatre.
Tatler Reporter 01/04/11
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