THIS ISSUE: 29 Jun - 05 Jul
YOUR NUMBERS THIS WEEK
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Shoprite They brand cattle, don’t they?
According to the wild-eyed visionaries over at TNS, 12% of Shoprite’s market share – or R28billion per annum – comes from people who shop there for reasons of price or geography rather than a fierce and burning loyalty to the brand. For Pick n Pay, the number, still substantial, is around R12.7bilion. Brands like Woolworths and Food Lover’s Market enjoy vastly greater loyalty, according to TNS, whose spooky mathematics reveals that if shoppers shopped on preference alone, Woolworths would treble and Food Lover’s would double their respective market shares. Is Shoprite worried? They are currently not: with the scale of the operation and their geographic footprint, they will be winning on convenience and price for some time to come.
Comment: And once you’ve got the brass tacks in place, you can build a fancy papier-mâché palace on top of them any time you like.
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Pick n Pay A jolly good read
Our hardbitten hacks down in the Tatler bullpen generally don’t have much truck with feel-good stories. But when it comes to feel-good stories involving the written word, they’re a bunch of dewy-eyed softies. And so it was they drew our attention to Pick n Pay’s Mandela Day book drive, in which from now until 17 July all stores will have collection points for children’s books, which will be handed over to the Nelson Mandela Centre of Memory on 18 July, Mandela Day. The books will find their way to the Mandela Day container library initiative which itself is linked to the 94+ Schools infrastructure project, which commemorates Mandela’s 94th birthday by promoting education. Bronwen Rohland, Pick n Pay’s Director of Marketing and Sustainability, is mustard for the initiative, pointing out that it was reading which in large part sustained the great man during his incarceration.
Comment: With some of their other challenges, the Big Blue’s sustained commitment to building a moral business is commendable, as indeed it is among our other retailers who have learned that doing good is good for the legs of the table, or something.
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Nakumatt Digital Safari
Kenyan outfit Nakumatt have placed an ornately-carved stake in the ground of African retail with their expansion plans. But it is not their intention to erect a series of inexpensive corrugated iron sheds for the purveyance of basic commodities, oh no. Witness the launch of Planet Media, a new retail format which will be the region’s go-to venue for a wide selection of DVDs, CDs, toys, books, home entertainment units and related gaming gadgets. The first store will be located in Nairobi’s Westgate Mall and will feature displays of home entertainment and gaming hardware from such major brands as Samsung, LG and Sony. Down the line, they’re looking at a BOSE store and even a mini Apple store.
Comment: Thus getting there first. One imagines that in the fullness of time, with its presence established in various growing markets, Nakumatt might be a tempting target for acquisition.
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Walgreens Nylons and Hershey Bars
US Drugstore Walgreens has taken a 45% stake in European health and beauty group Alliance Boots Holdings Ltd for $6.7 billion in cash and stock (specifically $4billion in the former) in a surprise move which indicates weakness on the home front according to some commentators rather than a long-term strategy to expand offshore. A nice deal for Boots which will get the American toehold it has sought for years for its Boots No. 7 Cosmetics brand. The combined business will have over 11,000 stores in 12 countries and more than 370 distribution centres delivering to more than 170,000 pharmacies, doctors, health centres and hospitals in 21 countries.
Comment: A big deal, in every sense of the words.
MANUFACTURERS AND SERVICE PROVIDERS
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Senwes Kom kuier bietjie by Tant Sennie
We suppose we must have known that ‘tuisblad’ was Afrikaans for ‘homepage’. But somehow, we’d forgotten, and when we found our way to the Senwes one, we imagined we were going to the website of an obscure Platteland weekly, probably owned by Caxtons and filled with news of champion sheep and freakish hailstorms, patterns for crocheted antimacassars and winning melktert recipes. All by way of informing you that Senwes increased turnover a luxuriant 73.5% to R13bn and profit after tax a positively verdant 21.6% to R265m for the FY we must call 12. The meteoric rise in commodity prices has been kind to businesses like Senwes in recent months, with their Senwes Grainlink division contributing the lion’s share to profit and Senwes Village, their equipment division, doing nicely as all those recently flush farmers brought spanking new tractors and grain elevators.
Comment: We thought you’d like to know.
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Astral Playing chicken with the markets
Poultry producer Astral is looking at the unfortunate prospect of job cuts in a difficult market. Part of the problem is that yellow maize prices rose 67% in the past three years while chicken prices have remained the same as four years ago, which makes it damnably difficult to get competitively priced chicken to market while turning a reasonable profit. Poultry imports rose to a record 39,461 tons in April this year, mainly from Brazil if the 2010 trend is anything to go by – in that year, 73% of imports came from that excitable but strangely together country. All of this led the International Trade Administration Commission of SA (Itac) to impose additional import tariffs of as much as 63% on shipments of some cuts of chicken from Brazil from February this year until August 10. Brazil has kicked up a predictable stink about this, but the attitude among South African producers seems to be “too little, too late, too liberal.”
Comment: The perils of globalisation and untrammeled free marketry.
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Inflation Suckers!
According to the bowtie-wearing handkerchief-brandishers at the Bureau for Economic Research, inflation expectations have remained unchanged at an average of 6.1% during the second quarter. These expectations are gleaned from a survey taken among analysts, trade unionists and business executives, with the analysts favouring the half-full glass and the other two groups tending towards the half-empty scenario. In other words, a group of thumb suckers has asked several interested parties to suck their thumbs in turn. Prospects going forward are that food prices will remain stable or perhaps tend southward on pleasing news from the grain harvest, and oil prices will do likewise on the encouraging news that the world is in fact awash with oil after all.
Comment: The one thing all groups agree upon is that half-empty or half-full, the glass contains Johnny Walker Blue.
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SPAR Condolences
Our thoughts and prayers go out to the family and colleagues of Paul Androliakos, manager of the Jukskei Park SPAR, who was murdered during a hold-up on June 10. SPAR have taken out full page newspaper ads offering a substantial reward for information leading to the arrest of the gang, who are thought to be responsible for at least eight similar crimes in recent months.
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Woolworths A good fit
Turns out there is truth in the rumour that Woolies’ Country Road division is looking at acquiring the Witchery Group, another Australian fashion business with an understated line in gear and a classy black and white logo. Current owners Gresham Private Equity have been looking to unload Witchery since the year six, and with more urgency one imagines since failing to list it last year.
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