THIS ISSUE: 20 Jan - 27 Jan
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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Clicks Paging Dr Clicks...
Clicks increased sales 10% to R4.7 billion for the crucial 18 weeks to January, thank you very much, and has suggested that it may spend a bit of the extra wedge on some new stores. CEO Mr Kneale believes the group is good for another 150 stores at the rate of 20 or 30 a year, for an eventual total of 500-odd, or what we gambling men call a monkey. He also believes that the government should consult with pharmacies on the rollout of National Health Insurance, that pharmacists should be allowed to prescribe and dispense a greater variety of medicines, and that chains like Clicks, which plans to have a dispensary in each and every one of its stores, offer value of which independent pharmacies are incapable. Clicks currently has 220 in-store pharmacies.
Comment: Independent retail is what makes our industry so vibrant and exciting, surely. We’re just saying.
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Woolworths And the winner is...
Woolies, would you believe, who boosted by the sales of classy yet inexpensive gear, delivered one of the very few trading updates that didn’t disappoint. Sales for the six months ending December were up 9.3% with comparable store sales up a solid under the circs 4.4%. These numbers were helped along by a bit of spatial expansion, and were not hindered, for a change, by sales at Country Road, the posh clothing retailer in Aus, where there is apparently a demand for apparel other than Driza-Bone coats and Blundstones. While Woolies recently warned shareholders that earnings per share are likely to be 15-25% down on last year, canny analysts remind us that last year there was that whopping payout from Absa for the Woolies debtors book which artificially boosted things.
Comment: There is absolutely no truth in the rumour that Woolworths will be replacing Christina Storm on the set of Celebrity Survivor.
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Shoprite The mad scientist department
Stay with us here, but Shoprite are testing a nitrogen-powered transport refrigeration system, which, get this, has no moving parts. The system, known as ecoFridge, is imported from the EU, where it is manufactured by Ukram Industries. It produces no harmful emissions, uses no CFCs and is absolutely silent. It also promotes moisture retention in food and thus reduces wastage. If successful, the system will be deployed in Shoprite’s fleet of over 500 trucks. Nitrogen is completely inert and harmless, although in its deadly frozen liquid form it may be used for the disposal of supervillains in action adventure movies.
Comment: The fools! They said it couldn’t be done! Now they will know my genius! Bwahahahahahaaaaah!
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Hawkers A sheep’s head, a comb, three mangoes and a medium fries
Innovative Franchise Concepts, a business which specialises in innovative franchise concepts, is trying to get South Africa’s street vendors signed up in what would be the country’s biggest franchise group. The first brand on offer is Fast Forward Café, which offers hawkers infrastructure, supply chain and other business support. The idea is to establish 6 500 franchises nationwide, each with a fully-equipped kitchen including a gas fridge. Catch is, the business needs R700 million to launch, monies which it is hoping to attract from government and big business. The Metropolitan Trading Company has already given IFC the nod to start the cafés in Jozi.
Comment: Cheeky, idealistic and smart – which are of course three essential characteristics of a franchise outfit.
MANUFACTURERS AND SERVICE PROVIDERS
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SABMiller Why don’t we chat about this over a beer?
Notorious teetotalers the Competition Commission have set their sights on a local brewer SABMiller for anticompetitive distribution behaviour back in 2004, when, it is alleged, a bunch of independent distributors, either wholesalers or franchisees, had no independence to set their own prices or select their own customers, and perhaps still don’t, thus dramatically reducing competition in the marketplace. These distributors, huffs the Commission, are not allowed to operate beyond their allocated territories. This reduces competition between brands in the downstream market, which is exacerbated by SAB’s ownership of 89% of the SA market in the first place. If found guilty, the large one could be facing a fine of up to R400 million.
Comment: Which in industry circles is what is known as a “whack”.
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ABI Now they have got the bottle
The Fawu/ABI imbroglio rages on, and things are getting nasty. Both sides have accused the other of responsibility for some of the incidents of violence which have been reported, the CCMA have failed to get Fawu on board for ABI’s 7.8% offer, and Fawu have now taken the dispute to the highest authority, FIFA’s Danny Jordaan, whom they are petitioning to drop Coca Cola from FIFA’s list of official sponsors for the event whose name may not legally be mentioned. Fawu believe that their concession of a 45-hour workweek and their compromise on the discussion of labour brokers should have been enough to get ABI to pony up, but no.
Comment: The determination, if not the power of organised labour remains undiluted.
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GlaxoSmithKline Finding themselves in India
GSK has provided a powerful argument for Eskom to revisit its business model: they’ve taken a big chunk of their manufacturing offshore, to the town of Nashik in the province of Maharashtra in far-off India. The proposed 35% tariff increase was simply too much for them to palate. A GSK representative informed the panel at Nersa’s Cape Town hearings that it was the role of a parastatal like Eskom not merely to turn a profit, but to create an environment in which South African businesses could achieve an advantage over low-priced competitors elsewhere in the developing world.
Comment: Perhaps with their savings on electricity, GlaxoSmithKline could invest in some punctuation...
TRADE ENVIRONMENT
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Retail Sales And the good news ... oh, wait ...
The bad news last week was that retail sales dropped for a tenth consecutive month in November, by 6.6% according to the pipe smokers over at StatsSA, even worse than October’s revised 6.1% drop. The big culprit here is unemployment – while South Africa, like the rest of the world – is edging tentatively out of recession, the million jobs we lost last year aren’t going to come back anytime soon, which suggests that retail sales will be slow to recover, despite the traditional uptick in December. The beard tuggers will have us believe that sales will begin a slow recovery mid-year but will not scale their pre-2009 heights before mid 2011.
Comment: SA’s unemployment problem is vast – of the 62 countries surveyed by Bloomberg, we are rated last.
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Online Shopping Virtual Light
In 2009, 13% of adults shopped online for groceries, an increase of 63% on 2006, according to research published by British boffs IGD, who predict that £7.2 billion in sales could be made online in 2014. One of the drawbacks is the difficulty for people to migrate from retailer to retailer (What was my password? Where was my best holiday ever? My mother’s maiden name?), although 24% of respondents in the survey expressed their intention to try alternative online outlets in the next year. The future of retail, says IGD, is a multi-channel approach, with people mixing in a little online with their hyper as and when.
Comment: Locally, of course, Pick n Pay and Woolies are both wearing shades to protect their eyes from the glorious brightness of the online future.
IN BRIEF
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Cadbury Listen to Mr Grumpy!
While the Brits are mourning the loss of the Grand Old Lady of Chocolate Lane to the Yanks, Warren Buffett, the Oracle of Omaha, has lambasted Kraft for its profligacy in offering Cadbury £11.6 million for their assets, saying it was a bad deal against which he would vote if he could. Kraft have offered 60% to Cadbury in cash and the rest in Kraft stock, which is apparently as rich and creamy as their mayonnaise.
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Carrefour The girl from Ipanema goes shopping
Le Français Retaileur Grande, Carrefour, are taking in a little ‘ow you say, ‘oliday atmosphere in Brazil, where it is their intention to fork out $1.4 billions in the next couple of years on expansion in order to compete more aggressively there with that badly dressed American of no culture whatsoever, Walmart. Part of the planned expansion is a move toward online retail.
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SAPICS Oh look, a rhino. And there’s a M.A.N. rig and trailer
SAPICS service-provider Kent Outsourcing Services, inspired no doubt by the Botox safari, have come up with a cracker of an idea for aspiring supply-chain professionals – condensed supply-chain management courses in the dear old Mother City, which may, should the attendees wish, be accompanied by a few days of sightseeing.
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