THIS ISSUE: 24 Nov - 30 Nov
A week of contrasts – SPAR battles on, Malmesbury booms, Black Friday isn’t a bust, Woolies wins, Walmart delivers, Atlantis co-operates, Aldi innovates, Transnet implodes. Much to be hopeful for, much to despair of. But we believe the South African spirit of excellence and creativity will one day win through. Enjoy the read.
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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SPAR Profits of doom
The SPAR results came out this morning, and though we’ll be bringing you the low-down in greater detail next week, here’s a taster. Headline earnings per share – a measure of profitability – were -47.7% down for the year through September. They further report that operating profit is R1.6bn lower than last year’s R3.4bn haul. This on the heels of the unexpected resignation of two non-executive directors last week – Andrew Waller and Jane Canny. The chief culprit for the results, suggest pundits, was the disastrous SAP rollout in KZN, which led to the resignation of CIO Mark Huxtable in September, and which has seen the decline in DC volumes in SPAR’s biggest region, as member stores go direct to suppliers or other wholesalers. And a R433m increase in finance charges, largely on debt in its Irish and Polish operations, hasn’t helped.
Comment: A rough start in a tough economy for the new team.
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Black Friday Freaky Friday
OK, the final numbers won’t be in for a while, but this time last week, the Bureau of Economic research (BER), was predicting that Black Friday sales would be up by as much as R7bn on last year, from R19bn to R26.6bn – a big chunk of that online; last year’s online sales accounted for 15% of the total. How confident can we be of these numbers? “The net impact of Black Friday/Cyber Monday on retail income is challenging to calculate accurately because of some shift in holiday spending from December to November,” says Anton Hugo, retail and consumer industry leader at PwC SA. “Nonetheless, South African retailers have increasingly designed the shopping holiday to focus on a Black November period, providing a larger volume of smaller sales during the month, rather than solely on the four-day Black Friday/Cyber Monday weekend.”
Comment: We look forward to giving you more detail on those numbers, as soon as next week.
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In Brief Pining for the fjords
Improving hydration for gig-economy workers this week is SPAR, which provided free 500ml bottles of SPAR-branded water to all delivery drivers, irrespective of the retailer or delivery service they work for, during the recent heatwave. Moving on, a brand new Food Lover’s Market in Malmesbury, with the addition of 119 jobs to the economy of that bucolic outpost, as well as a bountiful fresh-produce section; the biggest gourmet butchery in the stable; a classy wine department; a Health & Happiness dried-fruit and nut bar will delight the health-conscious food lover; and a Seattle Coffee Co, as well as other attractions too abundant to fully enumerate. Also doing its bit for the good burghers of that pastoral conurbation is Shoprite, which on the same day opened a Checkers supermarket, Checkers Outdoor, Little Me, and Petshop Science at De Zwartland Werf shopping centre. Finally, do you like cheese? Not as much as Woolies, evidently, which picked up no fewer than 13 World Cheese Awards in Trondheim, Norway, including three gold, three silver and eight bronze. Also Woolies’ interim appointee CFO Zaid Manjra has assumed the position permanently, replacing Reeza Isaacs, who exited in June.
Comment: Good things are everywhere. Especially in Malmesbury.
MANUFACTURERS AND SERVICE PROVIDERS
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International Retailers The Refillution will be televised
In the US, Walmart, in its relentless quest to catch up with Amazon as the world’s biggest online retailer, has leveraged its massive stores, using them as fulfilment centres for online ordering. Now it’s going a step further, rolling out parcel stations – effectively mini-post offices – to 40 of its stores, enabling the dispatching of delivery orders even more effectively and making next-day delivery more attainable for the retail giant. Oh, and by the way, it already has in-store police stations in some of its outlets. In more news of the new, The UK Refill Coalition – constituting GoUnpackaged, Aldi UK, Ocado Retail, and CHEP – is piloting an in-store refill system for dry goods at Aldi’s Solihull store in Glasgow and online, in a move to reduce single-use plastics. The solution is a reusable bulk vessel designed to deliver refills at scale for key food staples like cereals or pasta, as well as cleaning, personal care, and other household products. In turn, it is set to reduce the products’ prices by removing single-use packaging from the equation and enhancing efficiencies.
Comment: If we can get used to refill culture, we have a shot at reducing the plastic packaging we’re pouring into the environment at an exponentially growing rate.
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Atlantis Foods A bit on the side
Atlantis Foods is a supplier of seafood wholesalers, food service clients, and retailers. And as of the first of December, it will also be supplying these customers with plant-based chicken, through a strategic partnership with On The Green Side, a plant-based protein business that specialises in High Moisture Extrusion techniques to produce surprisingly convincing meat substitutes. “Our vision has always been to focus on a sustainable supply of affordable protein that is accessible to consumers worldwide,” says On The Green Side GM John Uys “We believe there is room for both, and we feel that by combining our cutting-edge technology with the production, sales, marketing, and distribution resources of a reputable company like Atlantis Foods, we will be in a better position to execute our goal.” As part of this collaboration, Atlantis Foods will undertake the manufacturing and processing of On The Green Side's crumbed products in their partner factories.
Comment: : An excellent model, using an existing network to bring an innovative line of products to a public that is increasingly demanding meat substitutes.
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Heineken Right, what did we miss?
Heineken’s Taverns of the Future initiative is aimed at transforming licensed taverns into sustainable, responsible and sociable enterprises, by upgrading tavern infrastructure with security CCTV cameras, new toilets, additional fridges and the ability to serve food, which provides additional revenue stream for the liquor outlet. The initiative has been piloted in all provinces barring Free State. Problem is, the programme appears to be news to the 35,000-member Gauteng Liquor Traders Association, which learned about it in a tweet from Gauteng Premier Panyaza Lesufi. “The issue is that communication by producers, in terms of consultation or partnership with the industry or communication with the industry, is very poor,” complains Jongikhaya Kraai, deputy spokesperson of the association.
Comment: Great stuff, but it’s probably a good idea to sit down with the association stat.
TRADE ENVIRONMENT
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Logistics Any port in a storm
Testing the limits of the South African economy this week is (check notes) the Port of Durban, whose shambolic incompetence has seen 71,000 containers – the equivalent of nine days’ worth of cargo – stuck on ships outside the harbour. The 96 ships waiting to be unloaded outside Durban and other South African harbours, according to Dr Juanita Maree, CEO of the SA Association of Freight Forwarders, is costing South African businesses and consumers R98m a day in direct, sunken (pardon the pun) costs, at least R26m a day in indirect costs, and impeding at least R7bn worth of goods from moving every day. Oh, and the way-more efficient port of Port Louis in Mauritius is eating our lunch, attracting the trade that actually wants to do business with South Africa. Significantly to blame is of course Transnet, currently facing substantial challenges due to an aged fleet and historical underinvestment in strategic equipment. The acquisition of new equipment is in the pipeline, however, as are a series of hopefully productive partnerships with the private sector.
Comment: Pathetic. Exhausting. Entire sectors that seem determined to outdo each other in dishonesty and incompetence. While others wait in the wings to show the world exactly what our great country is still capable of.
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