
THIS ISSUE: 30 Oct - 06 Nov
YOUR NUMBERS THIS WEEK
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Shoprite Northern exposure
Exciting stuff, this Expansion Into Africa business. It’s taken some time, but finally the big boys are getting the message that there’s a buck to be had beyond our borders. What? Never! Turns out Shoprite are coming up for their – wait for it – 20th anniversary in Zambia! From brave beginnings, The Big Red One is now the largest supermarket chain in the country, with 44 stores, 3,000 locals on its payroll and 75% of its product sourced from local businesses. In fairness, it hasn’t been all plain sailing, with pushback on occasion from labour, government and dishonest shareholders, but Shoprite have stayed the course. One of their big success stories lies with the humble potato, 7million kgs of which Shoprite now procures yearly from local growers, who have set up storage facilities to extend the supply season of that earthy crop.
Comment: One day when the book on retail in Africa is written, Shoprite’s successes and challenges in Zambia will have a chapter all of their own.
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Woolworths Retailers 1, Frothing Lunatics 0
Until recently, Australia had to include on its already encyclopaedic list of disadvantages the fact that its prime minister was a right wing ex-pugilist whose only achievement was a plan to dynamite the Great Barrier Reef. Now that Tony Abbott is gone, Australian punters have dug themselves out of their pit of cynical despair and returned to their national mood of crowing sarcasm accompanied by a willingness to spend freely at oddly-named retailers. But don’t listen to us, listen to David Jones (and Woolies) CEO Ian “The Transporter” Moir. “People feel more confident there is a government that is more in charge,” he says “And it’s reflecting in how we are seeing our business performing. It’s slightly better than it was before.” Woolies bought DJ’s for $2.2billion late last year, and under competent management, the business has seen sales grow steadily ever since.
Comment: It’s amazing what a spot of grown-up leadership can do for a business and indeed an economy. It’s an experiment we might wish to try here in The Beloved Country come 2017.
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Boxer Stores Boxing Clever
Five years ago, to the relief of suppliers and shareholders alike, the Pick n Pay Group made its move towards centralised distribution. Now Boxer, the rising star in the Group, has jumped on board with both feet, opening a 10 000m2 warehouse in Cato Ridge, just up the N3 from head office in Westville. The new facility is their second foray into warehousing – the first was a very successful 4500m2 shed in Prospecton – and was designed and built entirely according to Boxer’s own specs, with room aplenty for shelves over 13m tall and space for 14000 pallets. The DC runs an automated replenishment system with a nominated order day for stores from a set range, picking and packing immediately, ensuring next day delivery, or a delay of one day for stores in the Eastern Cape. And excitingly, an IT system geared up to control the approximately 1,1 million cases of stock; plus 30 shiny red branded DC trucks to service its KZN & EC stores. Comment: Excellent news and a big step for an exciting business.
Comment: Excellent news and a big step for an exciting business.
MANUFACTURERS AND SERVICE PROVIDERS
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Pioneer Foods Most important deal of the day
The acclaim for Pioneer’s proposed acquisition of smart-cereal maker FutureLife has not, naturally, been universal. While the analysts and the punters have loved it, the competition has not, and while the Competition Commission approved the deal, rival Kellogg have taken that decision on appeal, and the merger is now on ice pending a decision by the be-toga’ed sages over at the Competition Tribunal. Kellogg has noted with concern that ProNutro – produced by Pioneer – and Future Life are already close competitors, and that a merger would reduce the competition between the two brands, which together would control 80% of the market for mushy breakfast nosh.
Comment: Seems a little specious to the fine legal minds up here in Tatler Towers, although you can understand Kellogg’s dismay.
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RCL Foods Every drought has a silver lining
KwaZulu-Natal is suffering through its worst drought in 23 years, and this has shown in the output of sugar giants Tongaat Hulett and Illovo. But for RCL subsidiary TSB Sugars, this has been something of a boon: TSB is located in Mpumalanga, which has had plenty of rain, thanks very much, helping the manufacturer of Selati Sugar to produce a record crop of 702,000 tonnes and RCL to grow revenue 20.1% for the 2015 financial year. TSB was able to offload most of its sugar locally rather than taking it to the international markets and flogging it at much lower prices. TSB contributes just under a quarter to the revenue of the strategically-diversified business it would now be wrong to call Rainbow Chicken.
Comment: RCL is one of those businesses that seems seldom to put a foot wrong. And then providence kicks in with tidy little bonuses like this one. Still, swings and roundabouts eh.
TRADE ENVIRONMENT
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The Budget Balancing act
Fans of financial arcana would have followed with interest Finance Minister Nhlanhla Nene’s medium-term budget. For the rest of us, here’s a recap: Public sector wage hikes (R63,9bn over budget for the next three years) and a promised freeze on tertiary education fees (at a cost to the treasury of R2,6bn) have us scraping the bottom of the financial barrel for shekels to throw at our growing array of problems. And when we say barrel, we mean monies put aside for education and training by such departments as the National Skills Fund and the SETA’s. Already the wage hike has put a freeze on hiring by government departments, a case of stealing from Peter and twenty of his unemployed friends to pay Paul, and there is talk of finding new sources of tax revenue – perhaps even through increasing VAT.
Comment: Which would be a truly terrible idea. Is it not perhaps time for business, government and civil society to put their heads together in a National Economic Convention of the sort that once bought us the world’s best Constitution?
IN BRIEF
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Unilever Ones and zeros. Lots of zeros.
Sailing off in to the wide blue digital yonder are Unilever, whose global online sales are growing at 40%, double the global average, and driven thither by strong performances in the tech-savvy markets of the UK, Ireland and France. E-commerce will account for 6% of global sales for Le Grand Bleu this year, though whether this is from shoppers or retailers is unclear to us – anyone?
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Nestlé There are nine million babies in Beijing
There’s one we should have seen coming, and don’t we wish we had: Nestlé’s stock jumped 3% on the news that China was ending its one-child policy, freeing up a new generation of fathers to double in number those late-Sunday night trips to the grocery store in sweaty-palmed search of exactly the right formula, because you’d forgotten to add it to the list on Friday afternoon. The baby formula market in China is worth $19billion, a fair chunk of which goes to the world’s biggest producer of the powdery nutritious stuff.
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