
THIS ISSUE: 09 Apr - 16 Apr
YOUR NUMBERS THIS WEEK
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Woolworths Blurred lines?
Jangly-wristed pop sprite Pharrell Williams has in a combination of serendipity, marketing genius and (no doubt) long, long moola, been appointed Style Director of Woolworths. According to Mr Moir, Pharrell is “a global icon for social cohesion, advancement through education and environmental awareness,” values which the Dapper One itself holds dear. And not only that, he knows a bit about the fashion business, too, with a couple of his own labels and collaborations with the likes of Adidas, luggage-label Moynat and G-Star Raw jeans under his quirkily-stylish belt. And he himself is excited by this deal with Woolies: “To have a corporation like Woolworths understand [the importance of environmental issues] and for them to have the kind of matching initiative in South Africa, in the middle of that precious gem of a continent... I have to be a part of that,” he says.
Comment: It is to be fondly hoped that Woolies will now be making men’s shirts of a suitable length to wear untucked.
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Pick n Pay Imagine there’s no P&L…
Going large in Namibia this week are Pick n Pay, who have just opened their 20th store in that arid paradise, a Mega Centre store in the Windhoek suburb of Kleine Kruppe. This, Nambian MD Norbert Wurm tells us, in the convoluted way all corporates now have of mixing up the imperative to make profits with doing right by the planet, has something to do with rapid urbanisation, which is not a good thing, but it is a thing, so Pick n Pay have to do their bit in the drive to “effective migration absorption strategies”. Put stores where people are, is, we think, what he is trying to say. In Namibia, Pick n Pay is owned by the Ohlthaver & List (O&L) Group, and this also gels nicely with the Namibian government “growth at home” strategy.
Comment: One day everyone will be doing so much good we’ll be able to dispense with profits altogether.
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Shoprite Oh when the saints go margin in.
Guess which South African food retailer is the most profitable. Spoiler alert! It’s Shoprite, trading in 2014 at a margin of 5.6%, leading SPAR at 3.4% and absolutely clubbing Pick n Pay, whose margin has declined to 1.6% from 3% in 2005, the last time it drew with rival Shoprite. Why is this? Simple really: Pick n Pay has allowed its overheads to overflow, while Shoprite has squashed theirs into the very manageable trommel they now occupy, while at the same time edging gross margin northwards from 20.1% to 20.8%. And what of Woolworths, you cry? Well to be fair, with their mix of merchandise, the Dapper One look more and more like a retailer of durable goods, with an elevated margin of 9.9% to match, and no fair comparison with the stalwarts in the trenches of grocery retail.
Comment: Nice one there, Whitey and kie, who have always shown themselves equal to the grinding task of the incremental victory.
MANUFACTURERS AND SERVICE PROVIDERS
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Tiger Brands Rainbows and unicorns
What is a “Kasi Star Brand?”, you may ask. Allow Sarina de Beer, MD of Ask Africa, a research business which invented the category, to illuminate you: “The winning champion brands just get what the township consumer wants and needs, these brands understand the township environment in all its diversity,” she says. Ask Africa, a research business, has determined the 24 top such brands in their inaugural Kasi Star brands survey, and the winner turns out to be that much-awarded staple of the South African pantry, KOO, described by its Senior Brand manager as “the original rainbow brand for the rainbow nation”. Ask Africa believe that affordability and sustainability are the two key drivers of the purchase decision in the township market, which accounts for 41% of consumer spending.
Comment: The continued evolution of the townships, designed as Apartheid’s grim dormitories, is one of the true miracles of the new South Africa.
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Citrus Orange ya glad I… oh, shut up!
In 2014, you will recall, 35,000 tons of South African citrus were impounded by the European authorities on the suspicion that they were infected with the dreaded Black Spot disease, a mildly unsightly but otherwise harmless contagion that the Europeans don’t want getting in amongst their ancient groves and shady orchards. So to avoid this in future, the South African citrus industry has executed what is very trendily called a pivot these days in foreign policy circles, shifting their attention towards the more amenable markets of the Middle East and southeast Asia. And this year, we have a lot of the tangy stuff to flog, with a crop of 1.2 million cartons, up from last year’s 680,000 cartons. 15% of the crop, which in total is worth about R8billion annually, usually goes to fortress Europe.
Comment: A canny pre-emptive move by the shrewd farmers of the Boland.
TRADE ENVIRONMENT
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AGOA Why did the chicken cross the Atlantic?
What’s at stake in the standoff between Rob Davies and his US counterparts in Portugal, as they thrash out the terms for the renewal of the African Growth and Opportunities Act (AGOA)? Under AGOA, 90% of all South African exports have entered the US duty free for the past 15 years. And bailing from AGOA – or being barred by the US – would lose us up to $2.5 billion in benefits and put at risk thousands of jobs in various sectors, from the automotive industry to agriculture. But allowing US chicken imports to escape duties imposed by our anti-dumping legislation could prove to be a final nail in the hencoop of our massive but perennially-ailing poultry industry, itself a provider of many jobs. And now an influential body of African business and political leaders has thrown its hat into the ring, sort of. The Pan-African Business Forum (PABF) is urging our Rob not to blink, as to do so would be to allow Washington to throw its weight around and generally threaten the sovereignty of a continent. We’re right behind you, is the message.
Comment: Thrilling, this high-stakes, high-level diplomacy. Although it is fondly to be hoped that some middle ground is there for the finding.
IN BRIEF
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Woolworths Let me IT blokes loose, Bruce
And in other Woolies’ news, the Dapper One has sacked five IT execs at newly-acquired David Jones, in preparation for that flailing Aussie retailer’s creaking infrastructure being replaced by something sleeker and more functional from the Beloved Country.
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Tiger Brands Eyres and graces
Taking his very deserving seat on the Tiger Brands board as Customer Director is Marc Eyres, ex-of our partner the Smollan Group, and an alumnus of Trade Intelligence’s own board. Previously, Eyres enjoyed an illustrious career at Le Grand Bleu, where he finished up as Customer Director of Hindustan Unilever, during the heady days when modern retail was first opening its doors on the Subcontinent. It goes without saying that we wish him both joy and success in his new position.
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SPAR Oh gosh, is that the time already?
The jolly green one has been running the TOPS at SPAR Wine Week for a decade already (Never! Ed.) and kicks off in Joburg in May before going on the road to Durbs, Nelspruit and PE. This year, it will be upping its spend on various media to the tune of 300-700% and generally taking this well-established event to the next level.