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Pushing pause this week is Pick n Pay, which has decided not to go ahead with the purchase of 60% of its new R2bn distribution centre in Eastport (Midrand) from developers Fortress. The DC was developed to consolidate the existing Longmeadow facility and three smaller warehouses and will serve a store network in Gauteng, Mpumalanga, the Free State, North West, and Limpopo provinces, as well as selected stores in the Northern Cape. Pick n Pay took occupation of the DC on 1 June. “The distribution centre will help Pick n Pay deliver logistics and supply chain innovations, achieving efficiencies and growing market share at a time when faster and cheaper service of our stores has never been more important,” says Pick n Pay CEO Pieter Boone. Pick n Pay will now rent the DC on a 15-year lease, picking up all its running costs. “The decision to amend the nature of the financing agreement was driven by the company taking a more prudent approach to its capital investment, partly driven by the impact of load shedding costs on the business,” explains Boone. Fortress specialises in the logistics and retail property sectors in South Africa and owns premium logistics assets in Central and Eastern Europe.

Comment: One of many such decisions, one suspects, driven by our currently challenging circumstances.

The South African Development Community (SADC) – our own version of the EU, if you will – is vast, spanning 16 countries and home to 400 million people. Equally massive – and its chief raison d’être perhaps – is the bloc’s potential for cross-border trade, only now really beginning to take off. But to get goods and services flowing between countries, you need to be able to enable payments across geographies with wildly different currencies and at various stages of economic development. Enter Bankserv, the largest automated payments clearing house in Africa, whose new white paper ‘SADC Regional Payments Interoperability’ explores the value of mutual digital infrastructure to drive more formalised, accessible and inclusive payments in the region. “With exciting innovations and new product launches, payments is an exciting space in the region. However, these fall short of the one critical need: broad-based and all-to-all interoperability. Achieving this is key to solving the cross-border payments dilemma in the SADC,” explains Ruhling Herbst, Executive Head: Africa Business Development at BankservAfrica.

Comment: The machinery of regional commerce. For a look at that report, click here.

Back to Pick n Pay whose expansion to offer financial services at its till points last year has led to a 60% YoY increase in cash withdrawals in store, with over 84 billion transactions associated with cash withdrawals, according to Executive Head for Value-Added Services Deven Moodley. “We hope that our banking services are also responsible for some of the increased footfall we are seeing in stores,” he says. And sticking with financial services, Game has launched something it’s calling myVirtual Credit, which allows punters to apply for credit and make credit purchases directly from the website. The solution, which will be enabled by technology from long-time partner in consumer credit RCS, is in line with Massmart’s drive for digital innovation within its banner brands, to increase credit availability to more shoppers. Sticking with Massmart, Makro has at last settled its longstanding wage dispute with Saccawu, with the parties agreeing to a multi-year series of increases ranging from 4.5% to 5%. And still unsettled is Woolworths’ dispute with online activists, who object to its recent Pride campaign and merchandise range and have now taken to spreading fake news to the effect that Woolies no longer wishes to serve significant portions of its customer base.

Comment: Regarding the financial services developments – a long-term strategy for Pick n Pay pays off.

Oh yay, ChatGPT has come to retail, at Carrefour, in the form of three innovative tech solutions (their words) based around the technology of which you are heartily sick of hearing round about now: an advice robot for shopping on carrefour.fr, description sheets for private label products on its website, and support for purchasing procedures. The third of these will involve the automation of some processes for its non-retail buyers, such as drafting invitations to tender and analysing quotes. In India, Reliance Retail is laying off 1,000 staff of its online shopping platform JioMart, with plans to cut as many as 9,900 more jobs, as the retail giant seeks to improve margins. This as it beds down its acquisition of German retailer Metro AG’s Indian cash and carry business for $344m and begins to eliminate some of the overlap in resources. JioMart will also close over half of the150-plus fulfilment centres that supply to neighbourhood stores.

Comment: Whether it’s AI or restructuring, headcount is always the first thing to go. Naïve, we suppose, but isn’t there a better way?

The Premier Group, which brings to market such brands as Blue Ribbon, Snowflake, Iwisa, Mister Sweet, Manhattan, Lil-lets, Dove Cottons and Vulco, has posted a splendid set of results for the year through March – which was also the month in which it listed. Revenue was up +23.4% to R17.9bn with operating profit climbing +28.2% to R1.3bn. It wasn’t easy, they averred, what with an operating landscape defined by exceptionally high commodity prices, unprecedented levels of load shedding and social instability. “In response, our focus remained on the continuous training and upskilling of our people, internal cost saving initiatives and the delivery of material operational efficiencies across both manufacturing and the Group’s logistics and merchandising channels,” they said in their consolidated financials. One of the signal achievements of the year was the operationalising of its new mega-bakery in Pretoria within budget – the facility is operating at maximum production levels, delivering cost savings and improved bread quality. It has also spent a cool R32m on diesel generators, which are no doubt helping keep the ovens on.

Comment: Refreshing to see a business highlighting the people it has trained rather than those it has sacked.

Congrats to Klaus Plenge, who has taken over as MD for Southern Africa over at multinational food packaging and processing company Tetra Pak. Plenge has more than 16 years of experience in sales, product management and marketing in multinational companies across South America, Central America, and other regions, beginning his journey with Tetra Pak as an intern in 2005. And condolences to the Diageo family who have lost their talented and beloved CEO Ivan Menezes, who has died after a brief illness. Menezes was behind the iconic “Keep Walking” campaign for Johnnie Walker when he was marketing head. Finally, big up to Fair Cape Dairies, which has become the first dairy in Africa to produce and process all of its milk off grid using solar energy during daylight hours. “We are investigating a biodigester that can deliver power 24 hours a day, seven days a week,” says CEO Melt Loubser. “It is an absolute must.” Fuel from the digester would be used to power its delivery fleet.

Comment: Excellent work from Faircape, whose bottom line will no doubt benefit as much as its ESG record.

Some of those big economic indicators for you this week: GDP grew +0.4% for the first quarter, which means that we have technically dodged a recession, but are on track for just +0.3% growth this year, or 2% less than we would have been, were it not for load shedding. Globally, we could be looking at a short and shallow recession later on in the year, and that cannot be good for us here in the South. CPI was up +6.8% YoY for April, meaning (a) things are getting more expensive and (b) we’ve been outside of the Government targeted 3-6% inflation band for a full 12 months now. Food inflation was up +13.9% for the same period and is likely to end up at +10.8% for the full year at this rate. The Reserve Bank, which has increased rates 10 meetings in a row now, has pegged the prime lending rate at 11.75%. Consumer confidence plummeted to -23 in the first quarter, indicating that the rebound in the fourth quarter of last year might just have been seasonal euphoria. Finally, retail trade sales were down -1.6% for the month of April, following a drop of -1.5% in March.

Comment: Bleak stuff but illuminating. For more have a look at this excellent summary provided by our analysts.