
THIS ISSUE: 27 Oct - 02 Nov
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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Shoprite Here is now a thing
When the time comes, we will embark on a 12-city retrospective tour, with bejewelled elephants, sword swallowers, troupes of performing monkeys and, this being Africa, a highly-regarded Mbongi to tell of the man’s feats. But we’re not ready to go there yet, so we simply note here that the Shoprite Group has announced that Whitey Basson will be retiring at some unspecified time in the relatively distant future, after a leisurely handover period with his appointed successor Mr Peter Engelbrecht … what? What?!! In fact, he is bailing at the end of December, of this year nogal, which tells us one of two things: 1. That the decision has been taken in some haste, for reasons which are not yet clear, or the more likely 2. That Shoprite decided on the transition a decent while ago and conducted the handover with typical (and enviable) discretion. Engelbrecht has been with Shoprite for 20 years, most recently in the role of COO. Whitey will be on tap to help him and the team through any rough spots.
Comment: Whether Engelbrecht – or anyone – could match The Great Man’s turn of phrase at an analyst presentation is doubtful.
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Clicks Vital signs
A fine set of numbers from Clicks this week: turnover up 9.5% to R24.2billion, with headline earnings per share – something that seems to be reported these days rather than trading profit – increasing by 14.2%. This on the back of good individual performances across the Group: retail health and beauty sales – including Clicks, The Body Shop, GNC and Claire’s – increased by 13.5%, with Clicks adding 25 new stores for a total of 511, the ClubCard picking up a million new enthusiasts and – this perhaps the biggest achievement of all – the addition of 1,200 new jobs. Pharma distributor UPD grew turnover by a relatively modest 6.1% in a tough market. In the new financial year the Group plans to spend a record of R577million in CAPEX on 20 to 25 new stores and the supply chain and IT infrastructure to support the growth.
Comment: Solid stuff, the sort of performance which will be needed to keep the soon-to-be-listed and loaded Dis-Chem at bay.
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FreshStop Stop, making sense
FreshStop have launched their biggest ever forecourt store, a 400m2 monster on the N2 at Caledon. What’s the thinking? According to FreshStop Director Joe Boyle, “Changing consumer lifestyles have led to the emergence of convenience stores as a shopping destination. There is a growing demand for one-stop fuel and food purchases.” The numbers bear him out: 1,000 forecourt store outlets have opened in the last six years, with Gauteng, the Western Cape and KwaZulu-Natal growing fastest. And sales across all categories in forecourts are driving along at 13%, or 2% faster than traditional retail. One of the innovations at the Caledon FreshStop is the Diner, a contemporary traditional American Roadhouse where
Susan Sarandon herself, in a mustard-yellow 50s waitress outfit, will bring you flapjacks for breakfastyour kids will enjoy access to an outdoors play area while you eat. And that’s not all: the store will provide you with various ready-to-eat exclusives like Crispy Chicken, Grill to Go and Angelberry frozen yoghurt, the largest Seattle Coffee outlet ever, and the newest in-store brand, Doughnut Delite.Comment: South Africa is truly a global leader in the area of convenience – in fact in retail innovation generally.
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Boxer The stuff that dreams are made of
Once again tapping into the zeitgeist and giving South Africans not just what they want but always what they need, Boxer Superstores and partner Sunlight have just completed a phenomenally successful run of their promotion/TV show/CSR Project “Dreams Come True at Boxer with Sunlight”. By purchasing any two Sunlight products from Boxer stores nationwide, shoppers were able to enter the competition, which saw winners receive assistance in making their personal dreams come true, from the relatively humble, like a once-in-a-lifetime holiday in Durban, to the truly inspiring, like a R50,000 makeover for a childcare centre in Lusikisiki. Over the duration of the campaign, the “Dreams Come True at Boxer with Sunlight” competition received almost 50,000 unique entries and every one of those dreams were listened to by the dedicated “Dream Team” at Boxer. For more on this great campaign, click here.
Comment: Excellent work, which comes from the heart of a truly great South African retail brand.
MANUFACTURERS AND SERVICE PROVIDERS
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Coca-Cola In the red
Globally, Coca-Cola has seen sales decline for the sixth straight quarter, a fact they are attributing to a slowing global economy. Revenues fell in the quarter through September by 7% YoY to $10.6billion, with Latin America and Europe-Africa-Middle East hit particularly hard. Net profits came in at $1.05billion, a major drop from $1.45billion a year ago. On the upside, the US, Japan and Western Europe delivered standout performances driven by innovation and excellence in marketing according to chairman and chief executive Muhtar Kent. Back home, in the meantime, Coca-Cola South Africa is giving more than a nod in the direction of the government’s pending restrictions on sugar with the reformulation of products to keep existing customers and maybe gain some new ones.
Comment: Does economic stagnation alone account for Coke’s difficulties? Or is it also the vast and increasing healthy plethora of competing beverages?
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Unilever Down on the farm
Unilever reported that its brands with a sustainability focus grew at almost 30% in 2015, contributing almost half of the business’ total growth for the year. And three of these brands – Knorr, Lipton and Hellman’s – are engaged in sustainable agriculture. According to Jonathan Atwood, VP of Sustainable Business: “We made a commitment to mainstream sustainable agriculture because we believe it’s the best way to achieve food security and improve nutrition. Consumers increasingly want to know where their food comes from and how it’s made, and are rewarding brands that show leadership in this area.” Accordingly, for example, over 90% of the veggies and herbs Knorr uses for its sauces, soups and seasonings are sourced sustainably, and packaged with messaging such as “made with sustainably grown tomatoes.” Along with Nestlé, Unilever was recently identified as a global leader in sustainable agriculture in a survey of 150 businesses conducted by Pure Strategies.
Comment: Strength to strength here, The Big Blue. Under the stewardship of Paul Polman, Unilever is showing what a business can be in these hard but promising times.
TRADE ENVIRONMENT
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Private Label Private investigations
According to the Nielsen ‘State of Private Label in South Africa’ report, retailers’ own brands now account for R38.4billion, or R10 out of every R50 spent in supers and hypers. And even better, 63% of South Africans now believe that private label quality is “as good as that of established name brands”. This is borne out by the fact that posher punters – from households of LSM 7 and above – now account for over 50% of private label sales. Where is the cash coming from? Some of it from competitor name brands, sales of which have been squeezed by private label, which has grown its value share of the SA market from 18.8% in 2014, to 19.4% in 2015 and 19.6% in 2016. Value remains the big driver, though, with 83% of consumers believing that it’s important to get the best price on a private label product, 62% believing that they’re” good value for money”.
Comment: The renaissance of own brands has been one of the big stories in our great industry these last five to ten years.
IN BRIEF
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Pick n Pay Sticking it to the Man
So the Stickeez relaunch didn’t go as hoped, with the Two Oceans Aquarium pointing out in a self-righteously Capetonian drawl that it doesn’t have any truck with bits of plastic that could end up in the world’s oceans, much less co-sponsor them. One assumes that they sell no plastic dreck whatsoever in their own gift shop (great, if they don’t.) And in a Trumpworthy bit of trollery, Checkers are launching their own range of collectibles, named – entirely unactionably – Stick ’Ems. In all fairness, proceeds from the sales of these trinkets will go towards The Lunchbox Fund.
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Rhodes Food Growing the whole pie
Still hot on the acquisition trail this week are Rhodes Food. Flushed with the acquisition last week of Pakco, they’re keeping it ZN with the purchase for R212million of Maritzburg-based Ma Baker pies, which distributes its baked goods nationally to major retailers, independents and convenience stores through DCs in Johannesburg, Bloemfontein, Port Elizabeth and Cape Town.