Trade Intelligence Logo

Why on earth would Dis-Chem open new stores in nodes in which it already has footprint, if you’ll pardon the jargon? Well for starters, they don’t have much choice: as they grow, they’ll inevitably start to overlap their own properties. In the year to Feb ’19, they opened 20 new stores, for a total of 149, of which 123 are the large format stores for which they’ve become famous, 21 are the new small format numbers, which as rival Clicks could tell you end up complementing the larger emporia rather than competing with them. All of this is so much on Dis-Chem’s mind that it shared three case studies at the analysts’ presentation showing how it made the respective calls. In Sandton, for example, it opened one store in Sandton City in addition to the existing one at Benmore Gardens, then a third at a new medical centre in Morningside, because duh. It lost R40m in revenue from the Benmore store, but picked up an additional R200m in sales, while making things tricky for competitors. No brainer.

Comment: A formidable business, with lots of gas in the tank.

A few items of interest from Pick n Pay this week: firstly, the Big Blue have joined MetPac-SA, a producer responsibility organisation representing the (shuffles papers) ah yes, metal packaging recycling industry in South Africa. The organisation aims to increase the collection and recovery rates of aluminium cold drink cans, canned food packaging made from aluminium and stainless steel, as well as aluminium foil products, aerosol canisters, metal caps and closures, and just generally establish something as close to a circular economy as we can get. Secondly, Pick n Pay’s Fresh Living magazine is now available in braille, to be trialled in selected stores over the next two months. Fresh Living now has a truly impressive circulation of 500,000. Finally, the Pick n Pay Enterprise and Supplier Development programme has spawned another business, Happy Earth People, who produce super-healthy pasta from legumes and sell it as the real thing to unsuspecting Pick n Pay shoppers.

Comment: And that’s a wrap. Which are also pretty healthy, if you make them from legumes.

Sainsbury’s has seen a 65% year-on-year increase in plant-based, meat-replacement products, and has recently launched a pop-up meat-free butcher, offering vegetarian and vegan punters a range of cuts, joints and sausages, made from plant-based alternatives like mushroom, jackfruit and pea protein. Currently, one in eight British consumers is a vegetarian; Sainsbury’s expect this to rise to one in four by 2025. Across the pond, Carrefour is taking steps to exit its Chinese business, where sales fell -5.9% to €4.1bn in 2018, with an agreement to sell 80% of its Chinese operations to Chinese group Suning.com for €620m, scuppering the hopes of Carrefour-partner and Chinese Amazon Tencent to take the stake. In Germany, meanwhile, retailer Metro has seen off an unsolicited offer by existing shareholder EP Global Commerce, on the grounds that it wasn’t enough. Metro operates in 26 countries with 771 stores, but has scaled back in recent years to focus on its cash n carry business.

Comment: Good news from Sainsbury’s – always great when a whole new category emerges, especially when it’s one that challenges the hegemony of destructive agricultural practices.

Coke’s Mintirho Foundation has just hit a major milestone, with R240m in funding allocated to various projects aimed at developing farmers from previously disadvantaged backgrounds since 2018, and the creation of 1,540 new jobs. “The bulk of these,” explains Foundation head Noxolo Kahlana “are related to sugarcane growing, with the rest covering various fruits and vegetables, as well as fertiliser and logistics.” The Foundation has also formed a partnership with the South African Farmers’ Development Association (SAFDA) to help develop a fertiliser for emerging sugar-cane farmers in Mpumalanga and KwaZulu-Natal, and to provide logistical support to help them get their product to mills timeously. Two successful projects are Hya Matla and Nirmala. Hya Matla, which harvests water hyacinth and turns it into an organic fertilizer, and Nirmala which produces a range of cold-pressed, 100% fruit and vegetable juices.

Comment: Nice work there big guy. Although maybe ease up on the old sugar a touch.

Old Unilever CEO Paul Polman was up for taking on the challenges of global warming and even, maybe, capitalism itself. New Unilever CEO Alan Jope has it in for ‘woke washing’, the unsavoury practice of brands that cash in on the culture wars without actually taking to the barricades. “Brands without a purpose will have no long-term future with Unilever,” he thundered, at the recent Cannes Lions ad fest. “Purpose is one of the most exciting opportunities I've seen for this industry in my 35 years of marketing,” he cried. “[Woke washing] is polluting on purpose. It's putting in peril the very thing which offers us the opportunity to help tackle many of the world's issues. What's more, it threatens to further destroy trust in our industry, when it's already in short supply.” 91% of millennials would switch brands for one which gets behind a cause and 64% of consumers globally choose brands because of their stand on social issues. “Who is with me?” concluded Jope.

Comment: Fair enough, comrade. But if we’re going after ‘woke washing’ among the advertisers, we should also go after ‘greenwashing’ in the supply chain.

The aptly-named Moody’s have warned gloomily that any increase in South Africa’s already shamefully vast wealth gap is likely to further curtail economic growth. Rising inequality, they say, tends to point to high levels of corruption and weaker government institutions, both of which are a drag on investment. It depresses growth through poor health and education outcomes, and creates economic, financial and political crises that reduce investment and can lead to protectionist policies, which further weaken long-term growth. Waxing cryptic now, like proper economists, Moody’s do point out that high-income inequality may result from rapid growth, and that low-income inequality is no guarantee of success either – just ask the Greeks. In other economic news, the hoary sages at StatsSA have let it be known that CPI inflation was 4.5% in May, a slight increase from 4.4% in April, close to the midpoint of the government’s targeted band, and arguing for an interest rate cut sometime soon.

Comment: Income inequality is the new apartheid (and in many ways, the old apartheid too). Not just a threat to the economy, but a blight and a shame besides.