
THIS ISSUE: 17 Nov - 23 Nov
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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SPAR Hit send
In the heady days of 2010 when the nation was abuzz with World Cup fever, we reported how SPAR had launched its money transfer service, joining the likes of Shoprite at the time. SPAR has quietly been gaining users ever since and the distinguishing feature of SPAR’s Instant Money service has become its reach: it claims to offer punters “South Africa’s Biggest Supermarket Money Transfer Network”, with transfers possible from over 4,000 till points nationwide, a fact it is making known on screens in taxis, in train stations and at bus and taxi ranks to an audience of 16.5million commuters in its collaboration with Transit Ads™. SPAR reckon that 200 million money transfer transactions take place annually, and are all out to get a bigger share of these.
Comment: Refreshing transparency there SPAR, allowing us a window into this thriving industry and why retailers are so keen to keep it going.
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Game Online Gaming
Game launched its ecommerce offering last week, don’t you know, and without too much fuss or fanfare. Game Online, as they’re rather catchily calling it, seems like a solid online retail offering, emphasising width rather than depth across the categories one would typically go to Game for; appliances are perhaps their strongest suit, as one would expect. Although they’ve gone with groceries straight out the gate, too – biscuits, chips and snacks offers an appetising assortment of 930-something lines for example – and this move will surely boost the profile and the sales of their still-nascent food offering. Good clean interface, extremely navigable and easy to pay, which tempted us sorely to put a nice 5-burner gas hub and electric oven on the poor old Tatler credit card.
Comment: The best feature of the site is of course that glorious Game pink, as fresh and cheeky as it was the day it was revealed at the Ordinance Road store back in 70-something.
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Woolworths Food for thought. Food for thought, get it?
Woolies posted a trading update last week which did little to dispel the concern around its last set of financials. Fashion, Beauty and Home sales in SA grew just +0.7% for the first 20 weeks of the current FY, against internal inflation of +0.9%, while down under, David Jones’ sales slid -5.3%. This latter they attributed to a couple of store refurbs and the implementation of a new inventory management system. On the upside – and it’s a big upside – food sales in the Beloved Country grew +9.3%, against internal inflation of +4.5%, with positive volume growth. This, say our gimlet-eyed colleagues among the analysts, demonstrates the essential resilience of the core Woolies demographic, i.e. the better-heeled punter, who appreciates Woolies’ insistence on quality, as delivered by a superb cold chain, even as the wolves howl at the gates of the gated community.
Comment: Is it perhaps time for Woolies to focus more sharply on the expansion of that part of the business for which it is truly and justifiably famous? We ask rhetorically.
MANUFACTURERS AND SERVICE PROVIDERS
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Coca-Cola Something bubbles something something lost its fizz.
According to Wells Fargo (an institution of some recent notoriety, which incentivised staff to open unasked-for accounts for millions of existing clients) Coca-Cola may be looking at going into booze. Fargo analyst Bonnie “and Clyde” Herzog believes that Coke may hint as much in an analysts’ presentation this week. Specifically, she expects Coke – as per recently-detailed strategy – to grow and incubate high-growth brands in the U.S. through its Venturing & Emerging Brands unit (VEB) and to build and nurture small brands internationally. She also expects that it will “expand into other premium segments such as adult craft beverages.” There’s also some excitementamong shareholders about Coke expanding its share in Monster, purveyor of irresponsible drinks to impressionable youngsters. What there isn’t excitement about is the potential takeover of Coca-Cola Beverages Africa (CCBA) by Coca-Cola HBC in the UK, where shareholders have grown skittish after the collapse of CCBA’s profit margin in recent months.
Comment: Busy times for a global giant with lots going on.
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Oceana Fishing for compliments
Oceana’s results were out last week, and let’s just say they were not incompatible with the general tenor of this difficult year. Revenue for the year through September was down -17% to R6.8bn on a -16% decline in the number of cartons of canned fish sold, after a -30% drop in the number of pilchards the business is permitted to catch. And apparently the stronger rand was something of a drag after Oceana bet the wrong way on forex contracts taken to pay for frozen fish imports. All of this saw after-tax profit decline 50% to R479m. Over in the Land of the Free meanwhile, US subsidiary Daybrook saw a 36% decline in operating profit to $29m – which translated into a 42% rand loss to R390m. The business decided on these grounds to withhold its final dividend of the year, to the surprise and disappointment of the shareholders.
Comment: Oceana is now looking at opportunities to diversify into aquaculture, which is less susceptible to declining catches and the vagaries and politics of permitting.
TRADE ENVIRONMENT
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Retail Trade Sales Let’s get fiscal (really? - Ed)
Who-ho-ho-ho-hoahh! Easy there, tiger! In what passes for excellent news in these troubled times, retail sales rose a barnstorming +5.4% for the month of September, against economists’ expectations of +4.5%, for a straight sixth month of year-on-year increases and a not too shabby quarterly average of +1.4% in the black. This, say the wild-eyed beard-tuggers who make a living descrying the entrails of the fiscus, shows evidence of something called pent-up demand among South African consumers, who heartened by an easing of inflation and heedless of any downgrades which may be coming our way have taken once more to the aisles. Leading the charge were the textiles, clothing, footwear and (oooh!) leather goods people at +8.6% compared with +1.8% in August, followed by our own glorious sector, the general dealers, a doughty body of men and women in Victorian period getup, up +3.4% in September compared to +2% in August.
Comment: Of course the analysts and economists warn against a bleak Christmas at the registers, but they’ve been wrong as recently as 2 minutes ago, so who knows?
IN BRIEF
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International Retailers Lidl shop of horrors
Tesco have been given the go-ahead by the UK authorities to acquire wholesaler Booker for €4.2bn, to the chagrin of the latter’s competitors in the cash & carry business. Booker is the biggest player in its market; so is Tesco, so there is some cause for concern. Also in the UK Aldi and competitor Lidl are busily recalling a whole bunch of products which don’t meet labelling or safety standards, thought you might like to know. And Lidl is dipping its toe into the oily waters of Black Friday for the first time, offering such items as Tomahawk Steak, and a George Foreman grill to cook it on.
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Online Click, click, tuk-tuk!
Two businesses are revealing the true potential of online retail (and associated disciplines) in South Africa, once thought to be the purview of the better-heeled. Quickspaza will deliver hampers ordered online to homes in Khayelitsha in a branded tuk-tuk, while StokFella is an app – and a licensed financial services provider – which makes the complex network of payments involved in the administration of stokvels easier and more transparent to members.
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