
THIS ISSUE: 19 Nov - 25 Nov
RETAILERS AND WHOLESALERS
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Shoprite Help us out here…
Last week, erring on the side of snide as we occasionally do, we referred to Shoprite Zambia GM Charles Bota as being “almost certainly incorrectly spelled”. We apologise for this: Mr Bota, a Zambian, spells his name as given. We suggested in the same story that Shoprite was being unfairly targeted by Government for pricing irregularities, where different prices were being attached to merchandise of the same weight. A 2kg pack of sausages was given as an example, with one unit being priced almost seven times higher than another identical unit. We still cannot imagine that this is as a result of a Shoprite-wide scam, as the Zimbabwean National Broadcasting Corporation is suggesting. A mistake, or general carelessness perhaps. This week, Shoprite is under fire for high proves in the Eastern Province, whose permanent secretary mounted a fact-finding mission which established that a 25kg bag of mealie-meal was selling at Kwacha 85 in Shoprite compared with around K65 and K63 in other stores respectively. The Secretary mentioned that he was aware that some shop owners were trying to make the Patriotic Front (PF) Government unpopular through the hike in the prices of foodstuffs.
Comment: It still seems to us that Shoprite is being singled out for attention in Zambia, and that this in some way answers political motives. If anyone cares to enlighten us as to what is actually going on, we would love to tell that story.
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Fruit & Veg City Bordering on crazy
Also in Zambia, Fruit & Veg City are toying with the idea of slapping a Makro-style wholesaler on its border with the DRC. Apparently there is massive trade with informal DRC retailers at the border post, and FVC are interested in tapping into this as soon as possible although not as soon as they would like – they are bedding down their franchise operations in Zambia after a change in franchisees. FVC has twelve stores outside South Africa, trading under the Food Lover’s Market brand. They are taking the long view of growth on the continent, setting up their supply chain and cultivating local suppliers as they go. The wholesaler would be a dramatic departure in both strategy and format for them.
Comment: Although canny opportunism and a certain lightness of foot have always distinguished the business.
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Woolworths Since you asked… oh, you didn’t?
We don’t recall you asking for a Woolies trading update, but just in case: for the first twenty weeks of their FY, the Dapper One grew sales by 17.7%, or a more muted but just as tasteful 11.7% if you exclude results from the newly-acquired David Jones of Australia. GM sales were up 8.1% and food up 11.7% while trading space grew 9.2%. Moving to Australia, which we certainly hope you don't, David Jones increased sales 12.2%, and Country Road (including South Africa) 14.2%. And if you had the jolly good sense some time ago to have a little flutter on the stock, your shares would now be worth 35% more than they were this time last year.
Comment: Which is what we call a result.
MANUFACTURERS AND SERVICE PROVIDERS
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Supergroup Hot wheels
There was a time, it seemed, that Supergroup had taken up residence in the pages of the Tatler, so often did we report on them. Recently, not so much. Remiss of us: they’re having quite the time of it, snaffling up German logistics businesses here, acquiring Aussie vehicle-financing outfits there. The former: IN tIME, for R2.01bn, effective this month, the latter: NLC for R2.03bn, effective asap. The thinking is that Supergroup’s Australian division, which comprises just 7.7% of the total businesses, sells double the number of cars than the South African business, and if you can sell a bit of credit with your cars, well, why not, for goodness sake?
Comment: Yet another great South African business spreading its risk and finding new opportunities abroad.
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Tiger Brands It’s time we spoke about Nigeria...
It’s a testament to the strength of the Stripy One’s business here at home that Tiger could take the bath it did in Nigeria and still come out profitable, albeit with a 20% drop on last year’s numbers. Turnover in the business was up 5% to R31.6bn, with profit before tax down 20% to R2.1bn. But this was after the board’s decision to cut off funding to Dangote Flour Mills in Nigeria and write off costs there to the tune of R1.9billion. On the upside, Tiger is pleased with the performance of its groceries, home and personal care businesses, which saw double-digit growth and improved margins for the year. And then back to the downside: like many businesses which rely on agricultural commodities, Tiger is worried about the prospects of a maize shortage as the drought drags on, and on the implications that this might have on the beleaguered SA consumer.
Comment: Gracefully handled, that large jungle cat, although it’s a shame that the affable Captain Matlare had to walk the plank for the wreck of the Dangote business.
TRADE ENVIRONMENT
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Interest rates Reserves of goodwill
As you know by now, the Reserve Bank has upped the prime lending rate by a modest 25 basis points to 6.25%, giving as its reason concerns for inflation and or the health of the dear old rand. This has revised inflation rate estimates down miniscually, from 4.7% for the year to 4.6%, while economic growth is expected to come in at a negligible 1.4%. The inflationary outlook for next year has been similarly revised, although it still looks fairly grim at 6.4%, temporarily (we hope) breaching the upper limit of the Bank’s targeted band. The real worry is food inflation as the effects of the drought kick in – it’s already starting to tick upward after a long slide, and came in at 4.8% for October.
Comment: Still, laudable restraint and humanity from SARB governor Lesetja Kganyago and the team.
IN BRIEF
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Coca-Cola We’ll have whatever they’re having
Hats off to Coca-Cola, who have found a way of reducing the amount of the brown and fizzy they punt to consumers while still making more wedge. While the volume of soda Americans consume is going down, the number of packages they buy is going up, to the tune of 15% in smaller cans and bottles, according to Coke. We’re thinking of implementing something similar over here at the Tatler. Once we’ve figured out how to get you lot to pay us for it in the first place, that is...
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Tesco Redemption song
Saying the terrible thing that must be said this week were Tesco. “I think all corporations have slavery in their supply chains and some of those instances are absolutely horrific,” said responsible sourcing director Giles Bolton. He went on to argue that businesses can be part of the solution. To be honest, this is not a story to which we can do justice in the space available, so we’d recommend that you go and have a look at it over here.

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