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Ongoing fallout resulting from the flurry of revelations from – or rather about – SPAR. As we reported, board chair Graham O’ Connor is stepping down after a number of questions in the public domain about governance at the retailer – including conflicts relating to O’ Connor himself. Now it’s been announced that CEO Brett Botten will be taking early retirement at the end of this month. A report compiled at SPAR’s behest indicated potentially “fictitious loans” being used to “inflate the profitability” of the South Rand DC, dating from the time of Botten’s management of that facility. Other issues are allegations of discrimination against certain franchisees, the surfacing of a couple of fictitious loans, and an ongoing battle with SPAR’s largest franchisees, the Giannacopoulos brothers of Empangeni. Two new independent directors have been appointed to the SPAR board – Shirley Zinn, who was head of human resources at Woolworths and at Standard Bank SA and Pedro da Silva, ex-MD of Pick n Pay Retail.

Comment: A slow-rolling disaster for one of SA’s most iconic businesses. Full disclosure and a vigorous clean up seem indicated.

A Clicks trading update, which popped up as if from nowhere, for the 20 weeks to 15 January, and it looks legit: retail sales across all trading brands, including The Body Shop and GNC, and excluding COVID-19 vaccinations were up +12.2%, with like-store sales up +8.9% outstripping selling price inflation of 6.8%. UPD presents a more complicated picture: while turnover managed for bulk distribution clients grew +27.2%, wholesale turnover was down -0.6%, for a total of +9.9%. Group turnover was up +7.8% to R15.6bn – or +2.9% including vaccinations. Beauty, personal care and baby were strong performers as punters come back into stores post-COVID. “In this disrupted environment Clicks continued to focus on its strategic growth drivers of value, convenience and differentiation in response to the needs of our customers throughout our expanding store, pharmacy and online presence,” says CEO Bertina Engelbrecht.

Comment: Those COVID vaccinations don’t look like much of a windfall for the business. We’re looking forward to the interims in April for greater detail on that.

In the six months from July to December last year, more than 25 million South African shoppers swiped their Xtra Savings cards over 238 million times at Shoprite and Checkers supermarkets, saving themselves more than R7bn on their grocery bills in the process. Not surprising, then, that the programme picked up another million members in the same period. Next up, another trading update, this time from Woolies, who saw Food sales increase +7.6% for the six months through December, with the revamped Fashion Beauty Home (FBH) division growing turnover somewhere northward of 11.2%. Online food sales grew a more muted +4.5%, while the financial services book grew +17.2% on the back of improved consumer spending, new business, and credit card advances. They’re expecting a, get this, +80% increase in HEPS for the period, with festive and Black Friday sales really coming to the party. Finally, Pick n Pay has selected Arizona-based Blue Yonder to help with its inventory, ranging and space planning capabilities, and will implement Blue Yonder’s SaaS-based category management solution for its grocery business, and allocation and assortment management solutions for the clothing business.

Comment: Nice work Woolies; we anticipate a solid year for the business as it shrugs off its Antipodean debacle.

In the UK, a supplier of fruit and vegetables is suing discounter Lidl for £2.7m for “destroying” his business. Deane Proctor of Proctor and Associates, a Lincolnshire wholesaler, has filed a claim at the High Court accusing the German supermarket chain of cancelling or reducing orders at short notice and poaching his own suppliers, after a 20-year relationship in which he claims he was instrumental in persuading often reluctant farmers to work with Lidl, and delivering up to £29m worth of produce to Lidl per annum. Closer to home, French grocer Carrefour is celebrating its third birthday in Uganda, where it already has seven operational stores, selling a line of 20,000 products, 98% of which are locally sourced. The operation is run by UAE-based Majid Al Futtaim, which operates over 375 Carrefour stores in 17 countries. Finally, in the Metaverse, a number of consumer advocacy groups are taking Walmart to task for stealth marketing to kids in their two Roblox games, the super-fun Walmart Land and Universe of Play. The groups say that the giant retailer doesn’t sufficiently distinguish between marketing and organic content.

Comment: A brave new world, with complex new challenges. Especially for parents.

A quick round up of what’s up, down on the farm, this week. For starters, the South African Poultry Association (SAPA) estimates that about 10% of South Africa’s 200 smaller eggs producers have closed their doors in the past six months as they struggle to pass increasing feed and electricity costs to cash-strapped consumers. While there is not an oversupply of eggs, they’re staying on the shelves and in fridges, causing retailers to promo the conveniently packaged protein with greater regularity. Moving on, the first audit of steak bought in SA’s supermarkets and butcheries has been conducted by a team of perhaps too enthusiastic experts from the universities of the Free State and Stellenbosch, who have found that only 40% of beef loin cuts tested were tender enough to meet retail quality standards, and only 20% were of restaurant quality. Consistency of products from one purchase to the next was also an issue. Interestingly, supermarkets tended to perform better than butcheries. And it’s not like shoppers don’t care, either: over 70% of South Africans prioritise appearance, colour and freshness when buying beef.

Comment: An interesting starting point for beef producers wishing to differentiate themselves in this space…

Starting overseas, Danone has announced its intention to cut methane emissions in its fresh milk supply chain by 30% by 2030 – equivalent to 1.2 million tons of carbon dioxide. It has already reduced its methane emissions by 14% between 2018 to 2020, mainly by working with farmers to implement regenerative dairy practices and develop innovative solutions. It will also be working with governments to improve methane policies, data and reporting. Also abroad, P&G have had a so-so quarter, with volumes sales declining -6% in the three months through December as inflation bites and shoppers make things go further, finishing what they have in their cupboards before restocking, and cutting down on the use of such products as paper towels. And speaking of hard times, back home British American Tobacco (BAT) has been forced to retrench over 30% of its workforce since 2020, with another 200 jobs under threat as it struggles to deal with the ongoing fallout of the Covid lockdowns, where tobacco bans saw it lose irretrievable market share to the purveyors of illicit cigarettes.

Comment: From P&G to BAT and beyond, we’re still reckoning with the forces of geopolitical and social disruption and their economic impacts.

Some (dim) light at the end of the (very long, dark) tunnel that is South Africa’s 15-year and counting power crisis. The National Energy Crisis Committee, by the office of the President, has announced some promising measures which if successful will ease the burden of load-shedding on families and businesses. For starters, the first of over 100 privately owned new power plants will connect to the grid by the end of the year; together, the proposed units will generate as much as 9,000 megawatts. Secondly, contracts for the construction of plants that will produce 2,800 megawatts of renewable energy have been signed and construction will soon begin, and we’ll soon begin importing 1,000 megawatts of electricity from neighbouring countries, some of which used to buy from us, and another 1,000 will be purchased from private producers. Finally, six of Eskom’s 14 existing coal-fired power plants have been targeted for measures that will cause them to perform more reliably. And as a bonus, the Government is developing emergency legislation to make it easier to get new energy into the grid, and reducing the time to complete regulatory processes for new plants.

Comment: Let’s see. But these measures are at least specific, and the urgency seems real this time.