Trade Intelligence Logo

Pick n Pay Clothing, in apparently non-COVID-related news, now has a designer range, contributed by Cape Town designer Julia Buchanan, under the stewardship of industry doyenne Gavin Rajah. And that range includes masks, and a kimono. Don’t know about you, but that pretty much describes our wardrobe for the last four months. In Namibia, in the meantime, PnP has retrenched 229 staff as the COVID economy takes its toll. Dis-Chem has reintroduced drive-through COVID testing, with SMS results in 48 hours, having overcome its backlog. Rival Clicks has said that it’s well-positioned for a post-COVID era, with 70% of its 700 stores situated in the small local shopping centres that people now prefer to humungous malls. And franchise operation Overland Liquors, with 360 stores and two DCs, is raring to start recouping the enormous losses the business has suffered over the recent prohibition.

Comment: Stage 2 is indeed a welcome relief to many businesses and the people who shop there.

In support of its Money Market counters, and upping its dominance of the value-added services space, Shoprite has opened a transactional Money Market Account, available on the Shoprite app, enabling shoppers to send and receive money and transact online, opening up e-commerce to a whole new market. Money Market is essentially feeless, with no debit orders, giving punters full control over their finances, and requires no FICA, allowing anyone to open an account. It also allows businesses to process bulk payments, including rewards, incentives and grocery vouchers. In other Shoprite news, a Nigerian business, AIC, issued a summons against Shoprite in 2011 for being in breach of a JV agreement the businesses allegedly concluded in 1998. In July, a Nigerian judge issued an injunction against Shoprite preventing it from “hurriedly carting away its intangible assets, intellectual property and receivables from Nigeria”.

Comment: This seems to suggest that a hasty exit from Nigeria could be more complex for Shoprite than anticipated.

Woolies have issued a profit warning to shareholders, letting it be known that headline earnings per share (HEPS), an accurate measure of profitability, are likely to fall by as much as -70% for the year through June as COVID-19 hit non-food sales and the Australian operations struggle to find their footing. Back home, Food was up +8% for the year, while Fashion, Beauty and Home sales fell -10.9%. In Australia, sales at Country Road declined -50.4% for the months of March and April. Analyst Shane Watkins of All Weather Capital has a reputation of telling it like it is: “Investors really just want food and tolerate the balance of the portfolio,” he says. “The strategic imperative is to separate David Jones from the balance of the group [to avoid contagion risk] and then separate food from the rest of the operations.”

Comment: We’ve said it ourselves: Woolies Food is a world beater and giant killer. The rest? Do the numbers.

“Taking on Amazon” has come to be shorthand for anything that doesn’t involve an actual exchange of hard cash at the cash register. By this measure, Tesco are “taking on Amazon” by offering free home delivery to members of its premium Clubcard Plus loyalty programme. Amazon has in the meantime launched Amazon Fresh in the UK, offering such categories of comestibles as fruit, veg, dairy and meat to its 15 million shoppers there. In the US, in the meantime, Walmart is “taking on Amazon” by partnering with Uber-for-personal-shopping Instacart to provide same-day delivery services in trial stores in Los Angeles, San Francisco, San Diego and Tulsa, Oklahoma. Instacart works with such retailers as Target and Costco, but no longer with WholeFoods, which Amazon bought back in the ’18.

Comment: Not sure if anyone else has noticed, but it seems to us that things sure have changed in the industry.

A fairly solid set of interims from Libstar, owner of Denny Mushrooms and Lancewood cheeses, which has managed to trade as a provider of essential services these last grinding four months. Revenue was up +1.9% for the six months through June, with demand for snacks and confectionery, and baking and baking aids up by +20%. Predictably things didn’t go quite as well for its food service operation, which includes beef, chicken and related meat products, soft and hard cheeses, and tortilla wraps. And despite the uptick in overall sales, HEPS are down somewhere between -6 and -12%, on the back of extraordinary costs of R44m some change incurred during the pandemic. These included R3.5m in CSI, R18.5m in staff benefits and R22m in direct operating expenses.

Comment: Businesses like Libstar are the foot soldiers of our troubled economy. It’s touch and go in the trenches right now.

According to Nielsen, consumer confidence, you will not be surprised to discover, is down by 20 points to 68, its lowest level in fifteen years, and the biggest quarterly drop since their survey was first conducted. Breaking it down, punters views of their finances have dropped 29 points to 34, and only 17% have a favourable view of their job prospects for the year. Immediate spending intentions are down by 12 points, with only 21% of South Africans saying that now is a good time to buy anything. On the upside, a perhaps surprising 79% of respondents said they had cash to spare, although this would go mainly on serving debt or on saving. And 87% said that they had changed their spending patterns compared with last year, with 64% saying they are spending less on clothes, and 45% switching to cheaper grocery brands.

Comment: Illuminating stuff. Not entirely dispiriting, providing some useful action points for retailers and suppliers.