
THIS ISSUE: 09 Mar - 16 Mar
RETAILERS AND WHOLESALERS
-
Game Levelling the playing field
Well the punters certainly enjoyed Massmart’s impressive 15.8% increase in HEPS last week, rewarding the Men in Black with a 16% jump in the share price. This after lean years totalling almost a decade, during much of which the retailer has battled to bed down the Wakro deal and figure out the way forward in Africa. Things are looking rosier, now, to be sure, although nothing is set in stone. A recent development causing the analysts to admit muted notes of approval is the appointment of the vastly-experienced Albert Voogd, fresh from Ahold in the Netherlands, as CEO of Game. Game, which is also setting its hopes upon its new SAP POS and ERP system, which will provide a better view of profitability by product line, is key to the Massmart turnaround: it’s a popular brand north of our borders, and contains Massmart’s hopes of an expansion into traditional food retail.
Comment: Our industry is becoming positively ripe with hired guns from Europe. It’s working for Clicks, Pick n Pay and Woolies, why not Massmart too?
-
-
Shoprite It’s considered vulgar to discuss money in our family.
An unseemly spat between Shoprite and a supplier of sugar holds up an unflattering mirror on how it is between retailers and suppliers generally. Hold on to your synapses, this one’s a little tricky. Pearl Island, a company that provides packaging and warehousing services to Shoprite, ordered 50,000 tons of white sugar from a business called Starways in 2014. Starways duly delivered about half of that, in consignments, then the import-duty went down from R2,395 a ton to around R320. Pearl Island demanded a corresponding price cut, at which Starways demurred, muttering something about rand hedges and the exorbitant cost of keeping the stuff on Starways’ premises while they sorted things out. Pearl Island duly went ahead and imported cheaper sugar from Brazil, while Shoprite – who Starways assumed was funding the deal – distanced itself from the whole sordid affair. Starways’ application in the Cape High Court has been dismissed with costs; now they’re taking it on appeal.
Comment: Sometimes the length of an arm isn’t quite enough to keep one’s name out of the headlines.
-
-
Pick n Pay If you want loyalty, get a loyalty programme
Since Tesco alum Richard Brasher joined the business, Pick n Pay’s stock has risen steadily by some 54%. However, while it’s tempting to attribute Pick n Pay’s turnaround to Brasher’s steadfast presence, other factors are also at play. Centralised distribution, for one, which kicked off during Nick Badminton’s tenure, a general cost cutting initiative, and the launch of the Smart Shopper loyalty programme, which predates Brasher’s arrival by two years. Tesco’s attempts at cost-cutting yielded patchy result; the South African consumer is more sensitive to value than to other factors like convenience. Brasher himself believes success in retail is a relatively simple matter: "Good quality, great value, attractive stores, effective operations and exceptional customer service. Follow these principles and you will never go far wrong."
Comment: The match of Richard Brasher and Pick and Pay is one made in a sensible heaven where bells and whistles are only faintly to be heard and where harps and halos are distributed generously to deserving shareholders.
MANUFACTURERS AND SERVICE PROVIDERS
-
Coca-Cola/Pepsi You’re grounded!
Coca-Cola and Pepsi, two businesses not traditionally in the same corner, are together facing some spirited resistance from the good people of the state of Kerala, India. They are joining their neighbours in Tamil Nadu in alleging that the multinational beverage manufacturers are depleting groundwater in the drought stricken region. Retailers in Kerala are threatening to follow the example of their colleagues in Tamil Nadu and boycott the two in favour of locally-produced beverages. The government of Kerala has already placed restrictions on Pepsico’s use of groundwater at a plant in Palakkad; it is threatening further restrictions or even stoppage. Lobbying group, the Indian Beverage Association, believe that the boycott flies in the face of Prime Minister Narendra Modi’s call to businesses who wish to sell product in India to manufacture locally.
Comment: India is rapidly becoming ground zero for wide scale community environmental activism.
TRADE ENVIRONMENT
-
Foreign Traders Is there room at the inn(dustry)?
In Durban, concern is mounting around a delay in the implementation of the recommendations of the Special Reference Groups (SRG) on Migration and Community Integration. The Group was convened to investigate the causes and consequences of 2015’s xenophobic violence in the city, in which several lives were lost – among them South Africans – and 10,000 people were displaced. Traders, as you know, are particularly affected by xenophobic violence, as their success in building networks, extending their trading hours and pooling buying power to offer better value is perceived by local traders as a direct threat to their own livelihoods, inter alia. KZN Premier Willies Mchunu assures us that several programmes are underway in response to the report, but that these things take time.
Comment: A commodity in short supply when it comes to xenophobic sentiments in a time of economic want and social tension.
IN BRIEF
-
Pioneer Eastern Promise
Pioneer Foods released a cryptic cautionary last week, hinting broadly that a deal of some sort was in the offing, but not saying where or for what, or how much. The more irresponsible among the analysts are speculating nonetheless, suggesting that an offshore acquisition, perhaps something in Poland or elsewhere in Eastern Europe, a market not dissimilar from our own, might be on the card. Wait a couple of weeks say Pioneer, and all will be revealed.
-
-
Errata Apologies
Errors in last week’s Tatler, for which we are sincerely sorry. Minister Gigaba is of course at Home Affairs, not Public Enterprises as reported in our SPAR story. And the R35m fine imposed by the Competition Commission was imposed upon Sime Darby Hudson Knight, not Unilever. We thank the reader who pointed these out to us.

Subscribe to the Trade Tatler to get an up-to-date overview of what is happening in the SA and international FMCG industry
Tatler Archive
- 2023
- 2022
- 2021
- 2020
- 2019
- 2018
- 2017
- 2016
- 2015
- 2014
- 2013
- 2012
- 2011
- 2010
- 2009