
THIS ISSUE: 29 Nov - 04 Dec
YOUR NUMBERS THIS WEEK
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Massmart Brick by brick
Watch out Cashbuild, Massmart are hammering a big old stake into the dusty earth of Gauteng, launching its new Builders Superstore brand in two locations, Tembisa and Evaton. The format is aimed at competing aggressively for the lower-income homebuilder’s and home improver’s buck, specifically in the areas of price, assortment, in-stock, customer experience and convenience, and differentiating itself from the other Massbuild brands with a range of fit-for-purpose quality products. The rollout is also going to be on the aggro side: five test stores in Gauteng townships in the next 12 months, then another five the year after that, reaching into Limpopo, the North West and Mpumalanga, then 60-plus nationally within five years.
Comment: A business which taps into the DIY spirit of SA’s poorest citizens seems like a worthwhile way to go, commercially and socially.
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Shoprite The Red Army
Shoprite has just launched its 1000th supermarket (and 1460th store), a spanking next-generation Checkers in Langverwacht Plein in Zevenwacht. More of those numbers: 70% of adult South Africans now shop with Shoprite Checkers, which lays claim to 26 million shoppers annually in one form or another. All of this adds up to R93bn ront in turnover and a market cap of R100bn, and jobs for 114,000 souls. Langverwacht Plein itself is an expression of Mnrs Basson and Wiese’s appreciation of both their fabled Dutch heritage and their enjoyment of owning the properties in which their other businesses trade. It will also contain Shoprite’s 209th standalone liquor store.
Comment: Hearty congratulations to a home-grown phenomenon. We know whereof we speak when we say that the South African grocery sector has much to be proud of, and can compete with the very best, anywhere in the world.
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Woolworths Is Sir perhaps suffering from a mild case of the munchies?
Perhaps not a big 1000th Supermarket milestone like Shoprite, but more than a baby step: Woolies has just opened its 50th Engen Foodstop, bringing relief and delight to those souls in Seapoint who find themselves inexplicably peckish in the wee small hours. And more are to come: 45 Foodstops will be opened between now and mid 2016, with turnover expected to grow in the format from R600m to over a billion. The acceleration of the Foodstop rollout is a tactic on the part of The Dapper One to establish footprint in areas where they are under-represented.
Comment: Unencumbered by its final recalcitrant franchisees, and possessed of a certain canniness when it comes to packaged meals and convenience as Woolies is, there is no reason this tactic should not pay off.
MANUFACTURERS AND SERVICE PROVIDERS
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Adcock Maybe they’re just not that into you…
Bidvest are starting to look a little stalky on the whole Adcock buyout thing. The most recent development is a two-pronged challenge the Vesty One launched on Monday, comprising an attempt to acquire a third of Adcock’s shares while launching a court order against Chilean Romeo CFR’s R12.6bn bid to buy the drugmaker. If Bidvest manage to up its current shareholding from 4%, it could edge a little closer to scuppering the deal, which requires buy-in from 75% of shareholders. The Adcock board has said outright that it believes the CFR is a better deal for the business and its shareholders, and that Bidvest “has not clearly articulated the benefits of its offer.”
Comment: What do you mean you don’t want to be bought by Bidvest? We’ll make you want to be bought by Bidvest.
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SABMiler You’ve had quite enough!
SABMiller is feeling a little bloated after its 15-year acquisitions bender and has decided to stick to organic growth for the next little while, according (the second bit at least) to CEO Alan Clark. Among these acquisitions, you need hardly be reminded, were the Miller Brewing Company and an outfit from Australia which manufactures slightly off-colour fizzy water. Among the brand it has added to its portfolio are Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft and Grolsch, as well as beers no one but a billion or so people have heard of, from China. But the beer market is now somewhat consolidated, with few large businesses remaining to be snapped up, so future growth will come substantially from existing operations. Back home, the picture looks promising: for the six months to September, local subsidiary SAB grew sales organically by 7% to R17.9bn, with EBITDA (that’s your cue to nod sagely) up 8% to R3.8bn.
Comment: Damn. We’ve always enjoyed the fireworks and the fizz accompanying SABMiller press releases: “Brewer acquires own South American country”. That sort of thing.
TRADE ENVIRONMENT
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Inflation Basket case
While the CPI is rolling along nicely at just under 6% year on year last time we looked, the actual price of things is positively ripping up the old macadam, with the price of the average shopping basket up 9.2% according to ETM Analytics, who have been tracking a basic 20-item basket of goods for eight months, comprising mainly the basics – milk, bread, tea, coffee – and a couple of luxuries like toothpaste and soap. This basket has risen from R515 to R565 over the period, which stretching bit for another four months would bring it to annualised inflation of 14%. This presents a perhaps less nuanced picture than StatsSA does with its own (contested) basket, but may well speak to the daily reality of SA’s embattled middle and lower-income consumers.
Comment: And the reality is that their spending power is eroding across the board, and the safety net of lower-priced goods getting thinner at the bottom.
IN BRIEF
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Spazas Watch this cyberspace
Mpho Raborife is a PhD student in Computer Science on a €15,000 Women in Science scholarship from L’Oréal and Unesco. Her thesis is entitled "Themed Operational Formalisation and Optimisation in a Virtual Buying Co-operative”, which basically means helping spazas form ad hoc purchasing groups on their cellphones – with businesses they don’t even necessarily know - to benefit from bulk buying. This is going to be unbelievable.
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Pick n Pay Hello Africa, tell me how you’re doin’.
Next SA retailer up against it in Zambia is Pick n Pay, who we thought had tapped into the local zeitgeist with greater delicacy than their competition had. But no. Authorities in Lusaka have ordered a Pick n Pay closed which had started trading before building operations were, technically, concluded. And in other news from the frontline states, TM Supermarkets, jointly owned by PnP and Meikles, are bullish about their prospects and contemplating an expansion drive, while in Namibia, in flagrant disregard for the natural order of things, The Big Blue has treated its major suppliers to a handsome sit down dinner.