THIS ISSUE: 25 Jan - 01 Feb
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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Woolworths David Jones’ locker
The outback, we are told, is littered with the skeletons of foreign businesses who thought it might be a good idea to make a couple of clams (Aus.) off the local punter. Is Woolies about to join them? Too early to tell, perhaps, although last week’s news tells of how Mr Moir paid as much as 33% too much for the drably named local retailer David Jones, whose losses continue unchecked in the face of tough trading conditions down under. Woolies announced a R7bn impairment due to, they said, “the cyclical downturn and structural changes” in Australia's retail sector. While Mr Susman has expressed his full confidence in the leadership of Ian Moir, he has also declined to say how long he thinks the turnaround of the Aussie outfit will take. In the meantime, Nic Criticos – the store design maven responsible for the glory that is Woolies locally, is reportedly headed to the blasted Antipodes for a two-year stint, presumably to spend some of the A$207m CAPEX earmarked for David Jones for the 2018 FY.
Comment: Safe to say that there’s some sort of turnaround strategy in the offing. Let’s hope for Woolies’ sake it works out.
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Retail Trends Back to the Future II
A couple of weeks ago, you may recall, we devoted some valuable column inches to the Trade Intelligence views on what is shaping grocery retail in South Africa in the short to medium term.. Time for Part II, which encompasses those trends that are influenced by retailers’ own operational and bottom-line imperatives. Here we go:Category profitability is the heart of decision-making: Well of course it is. Shopper demand vs efficient range management, and a focus on lucrative categories like fresh.Back to retailing basics: Customer service, well-stocked shelves, good prices, Bob’s your auntie.The supply chain: The next competitive frontier and the one after that. Supply chain inefficiencies are a gold mine… get digging people.The connected value chain: Better bandwidth, better businesses.Making data useable: A discipline only now coming of age, with literally decades of data to dig into.Where to for growth?: Spoiler alert: New markets, new formats, new categories and new territories.Targeted retailer-supplier collaboration: Especially of the cross-functional kind.For more detail on these trends, click hereComment: We’ll leave the last word to our old pal and notable philosopher Photy Tzellios, who runs the formidable Shoprite supply chain: “What’s behind the visible is where the power truly lies,” he says.
MANUFACTURERS AND SERVICE PROVIDERS
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Agriculture Playing Chicken
Just one more reason to be circumspect of the chicken imports that are putting local poultry producers out of business: they could make you sick. This according to a recent edition of Special Assignment, which revealed inter alia that bacteria counts in Brazilian chicken were thousands of times higher than those in local birds, which are rigorously inspected at every step from the egg to the entrée. This according to antidumping advocacy group FairPlay, which also asserts that none of the price savings on imports are passed onto the poor, and that the countries of origin of many of the imports are impossible to establish. Importers are having none of it, however, arguing that the Department of Agriculture’s petty insistence on checking all consignments of raw meat coming in through Durban for bacteriological contamination is killing their business.
Comment: Food safety and traceability are key consumer rights issues in a globalised economy. Good work Fairplay for highlighting those areas that should be getting attention.
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Clover Sing for joy oh Afrika
Mama Afrika is a busy woman. Providing a home to billions and inspiration to an entire planet, performing the general smiting/providing duties of a goddess or, if you prefer, the mythical personification of the feminine ideal. Symbolic of both bounty and famine and the matrilineal origin of our entire species, and for the past 14 years, also the spokesentity for the Clover Mama Afrika Project, which finds women from all corners of South Africa who are already helping their communities and supports them to “be the best they can be.” It’s been a big year for her: one of the finalists, Mama Rosie Mashale, took a top ten slot in CNN’s Heroes awards for her work as founder of Baphumelele, an education centre and a home for abandoned or orphaned children and children living with HIV. And Clover itself is a finalist in the ‘Play your Part’ category of the ‘South African Premier Business Awards’.
Comment: Excellent work there Mam’ Rosie, and Clover, and indeed Mama Afrika herself.
TRADE ENVIRONMENT
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The Economy Storybook ending
What a week eh? Cyril wowing the well-heeled in Davos, the repo rate staying put for now, the rand absolutely skyrocketing to 11-something to the Trump dollar, the petrol price tanking (oh stop it!) by 41c. On the downside, of course, there was both the World Bank and the IMF lowering our growth forecasts to below 1%. And dire warnings from no less a personage than economist-for-hire Dawie Roets that further downgrades are coming our way later this year, with the ratings agencies awarding us junk status, on the news that over half of all South Africans are three months behind on their debt repayments and owe a collective R1.7trillion. But back to the upside: Cyril! Seriously, though – with a changing of the guard in both Angola and Zimbabwe, and a concomitant clean-up of state-owned enterprises and general corruption seemingly underway, there is a story on the wind of a southern Africa newly resurgent.
Comment: And sometimes a good story is all it takes.
IN BRIEF
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Distell Cheap at the price
Remgro have got the go ahead to restructure its shareholding in Distell, with the dismissal of an appeal against the move by activist shareholder Albie Cilliers was thrown out by the Takeover Special Committee. By means too arcane to document in the In Brief section, this leaves Remgro with 56% of the voting rights for an economic interest of only 31.4%, which sounds like a bargain to us.
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International Retailers The Big Fight
In the UK, Globaldata are predicting that click & collect sales will grow 55.6% through to the year 2022, especially on Moonbase Alpha. Also in the Uke, as we called it back in our Earl’s Court days, Tesco and Sainsbury’s are shedding thousands of jobs as the cost of doing business rises in the face of Brexit, discounter growth and wage increases. In France, Carrefour is partnering up with Chinese tech giant Tencent to ward off the tender ministrations of Amazon, which promises to be the McGregor/Mayweather matchup of retail. And that, brethren, is a rap.
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Sustainable Business Circle the wagons
Nestlé plans to ensure 100% “responsible sourcing” in its supply chain across 12 categories of key raw materials in Switzerland by 2020. This is good news, but Switzerland is a small country, and we hope that Nestlé’s ambitions in this regard are global. Paul Polman of Unilever, in the meantime, has renewed his call for the food and beverage industry to move towards a circular economy and do away with single-use plastics, a year after Le Grand Bleu committed to ensure 100% of its plastic packaging is fully reusable, recyclable or compostable by 2025.
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Pick n Pay Nor any drop to drink
Not to single any business out, but Pick n Pay in Cape Town have embarked on a rigorous programme of water wisdom against Day Zero working with landlords and customers alike, and putting measures in place which include gaining access to groundwater, and desalination. Some stores have boreholes and grey water equipment, as well as water tanks which will be filled from non-water-stressed areas in the event of Day Zero.
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