School of Retail
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THIS ISSUE: 02 Apr - 07 Apr
Pick n Pay’s stock has taken a knock to the tune of 4.72%, dropping to R46 per share, on the announcement that profit for the year to February will be sharply lower than it was this time last year, and that headline earnings per share would suffer by as much as 25%. This they attribute to the effects of last year’s strike during their peak trading period, to higher operating costs and to the deleterious effects of lower inflation, driven particularly by lower prices in food commodities, which was not compensated for by volume growth. Part of the problem on the costs side is that while initiatives such as Longmeadow have consumed capex, they have not yet delivered in terms of efficiencies, as DC infrastructure is only a third of the way through implementation, and catch-up, when it happens, should be decisive. Some of the less kindly analysts have suggested that the erosion of share by Woolies at the top and Shoprite at the bottom might bear some of the blame. Comment: Tough times for The Big Blue.
Business Report 01/04/11
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In Zambia, some 3,000 workers at Shoprite stores and some Hungry Lions last week embarked on an illegal strike to secure payment of funds paid into an earlier pension scheme before the implementation of a new scheme. After dismissing 1,800 of these workers, Shoprite reinstated them and came to a snappy though complex arrangement for the payment of the monies when the government, in its oddly interventionist way, intervened on the workers’ behalf. Also in Zambia, The Big Red One has been cleared by competition authorities of threatening to blacklist suppliers who provided goods to Pick n Pay, who are currently dipping a toe into the tepid waters of the Zambesi. In Mozambique, sadly, a Shoprite store in Matola has been caught selling expired goods to the value of $6,500US – for which they are being fined around $20,000US. Comment: Woah, there, big guy. Time to build some bridges as well as new stores.
30/03/11 allafrica.com, 30/03/11 lusakatimes.com
In Namibia, Walmart is suing the Competition Commission for adding new conditions to its purchase of a majority stake in Massmart operations in that arid paradise. The NCC as it is cheekily known in those parts has demanded a certain level of participation by local suppliers should the deal go ahead. It has also been reported that The Big Guy is considering a similar approach to our very own competition authorities – which seems at odds with the view of our Uncle Sydney that Walmart might consider downscaling its share in Massmart while retaining its operational input, or pull out of the deal altogether. Comment: Losing a fight with either the global union movement or the local competition authorities is not a precedent the world’s biggest retailer would necessarily like to set.
Freshfruitportal.com 29/03/11, fis.com 29/03/11
Durban-based and globally-operational retail marketing specialists Barrows have won in the “Energy Minerals and Industrial” category of the Climate Change Leadership Awards, beating down Group 5 and Goldfields to get there. Barrows, you should know, are an almost supernaturally innovative business, able to make sheets of plastic metal and cardboard do their bidding in the service of brands as if they were so many pixels. And they’ve been known to manipulate the odd pixel also. Sustainability, now, is very much their bag – for e.g. a retail display for Coca-Cola consisting substantially of recycled 2 litre Coke bottles. And similarly for their own endeavours – last year the business grew 25%, while reducing emissions by 7.5%.
Comment: Nice one, those sharply dressed retail marketing fellers.
Tatler Reporter 05/04/11
Kraft’s five year plan is a little thing called “double in five”, by which they yes, intend to double the size of the business in that period, and this they mean to achieve by putting lashings of mayo on absolutely everythi… what? Oh sorry. By expanding more aggressively into sub-Saharan Africa. Phase one is an ambitious programme of skills development, in which it has already invested R160millions, and which it has pioneered in Gaborone, where competency levels went up from 9% to a more staggering 52%, and output from the same technology platform increased by 40%, made up of a 25% improvement in productivity and a 30% reduction in cost.
Comment: You can do it with a business, you can do it with a nation, provided you have some windows in the classrooms first.
Adcock Ingram has just, we are informed, taken delivery of Nutrilida, a Joburg based vitamin, mineral and supplements (VMS) outfit, for an undisclosed sum. Among the Nutrilida products consumed in our household are ViralGuard for immunity, particularly as the seasonal mists roll in and Bestum, a multivitamin which when swallowed with a mouthful of Johnny Walker Black in the morning puts an extremely positive complexion on the day ahead. Nutrilida’s turnover last year was a, dare we say, healthy R212bar, and the acquisition fits neatly into Adcock’s aspirations for, ahem, VMS, where it has grown its presence in recent years.
Comment: So now you know what VMS is, and may fling the expression around with confidence on the cocktail circuit.
A rousing Tatler welcome to the Consumer Protection Act, which has been widely hailed by our readers in the retail and manufacturing sectors as a bright new dawn for this great industry we call home, as it will enable consumers to get a refund on products they never actually bought at your store, or something. Suppliers, of course face fines of up to 10% of turnover for the distribution of products which fall under the broad legal definition of “dodgy”. And in a real first, businesses in Malaysia are no longer permitted to market erectile dysfunction medication and premium-brand wristwatches to you over the internet, which has sent many of them scurrying to re-examine the old business model.
Comment: So as of last Friday we have the most empowered consumers in the world. Now can we concentrate on the enforcement of those other basic rights like education for clever, hardworking kids, and safety in one’s own home?
Business Times 03/04/11
Some of those numbers: by 2050, the world’s population will grow from 6.9billion to 9.1billion. This means food production will have to increase by 70% to meet demand, in the face of an existing shortage of arable land and rising pressures on food and water. Take sugar: prices rose fourfold from 2002 to 2006, then tripled again from 2007 to early 2010. Similar stats for coffee and cocoa. When you start to do the maths for things like rice and maize, it starts to look really grim – especially for the 900million people going hungry every day, or the 44 million people who sank below the poverty line since June last year as food inflation just got too much for them.
Comment: A new paradigm of both production and consumption is getting shoved down our throats. What’s our plan for this, as businesses and individuals?
In China, Unilever has followed businesses like McDonalds and Caterpillar into the “dimsum” bond market by launching an offshore renminbi-denominated bond on the Hong Kong stock exchange in order to raise €32million to help fund its war on P&G in China.
Financial Times 28/03/11
Michael Fleming, who replaced Keith Warburton as Chief Financial Officer down at The Clicks Group in March, is to take his rightful place as Executive Financial Director on that august company’s board with effect from 31 March inst. (an archaic expression meaning “in the current year”). A youthful appointment; he can’t be much more than forty … forty five … forty … thereabout …
Tatler Reporter 04/04/11
The Big Feller, you may have heard, is involved in what may become the biggest class action lawsuit of all time, as it fights allegations of discrimination from a number of women who allege they were treated differently to male colleagues – getting promoted more slowly, getting paid less, being asked to “doll up” – that sort of thing. Walmart are arguing that such instances would be isolated at worst. 500,000 to a 1.6 million women of Walmart are watching proceedings with growing interest.
Business Report 29/03/11
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