THIS ISSUE: 20 Jul - 26 Jul
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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Shoprite The family business
The Shoprite Group experienced 489 armed robberies and burglaries in the 2018 financial year. A shocking number of course, reflecting as it does the banal criminality of our society, but one that is on its way down as Shoprite beefs up its security efforts. These include a centralised Command Centre and an anti-crime team, with professional investigators and data specialists, enabling the business to monitor stores and vehicles, trigger security devices remotely – including on trucks – follow up on crime incidents and ensure suspects are arrested. The Command Centre sits at the middle of an intelligence network which delivers live information on protests and strikes, but also on actual criminal activities which might endanger assets, staff or customers. As a result of their endeavours, which include partnerships with the South African Police Service (SAPS) and the National Prosecuting Authority (NPA), arrests are up 200%.
Comment: That’s how you do it. That, and creating jobs, something on which our great industry needs to keep its focus.
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SPAR Green are the tills of Natal
One of the many benefits of SPAR’s owner-manager model is how great ideas can be originated and trialled by particularly motivated franchisees then rolled out group-wide if they prove particularly effective. And indeed how the business model can be adapted according to the demographics served by individual stores. This it may all prove to be in the case of the Hillcrest KWIKSPAR in the rolling KZN interior, whose enterprising owners, having turned their physical property into an endearingly quirky retail wonderland and their Tops into a reliable source of everything up to and including cannabis beer, are proving early adopters of online grocery retail too, delivering to punters within a 10 kay radius of the store, and even nationally. This has required beefing up stock integrity, through such measures as additional staff and electronic shelf labelling.
Comment: Hopefully, all worth it. Online grocery shopping is something one generally associates with the larger scale. But who says the smaller guy can’t make it work.
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Woolworths Pull your socks up mate
Woolies thus far ill-fated Aussie venture David Jones has announced that it will be retrenching around 130 staff, 30 of them from head office, in an attempt to further cut costs as its struggles to find its feet post the $2.2bn acquisition of the business by the Dapper One in – can you believe it? – 2014. Since then, you’ll recall, the middle-of-the-road general dealer has been forced to write down $712.5m in value as a result – they say – of difficult economic conditions and unusually active competitors, particularly in the area of promotions. Pundits – of which even the blasted Antipodes have an unwelcome supply – say that conditions are unlikely to improve for anyone in the next 12 months.
Comment: David Jones is facing the same conditions as other Australian retailers, and easier conditions than Woolies itself does at home. Perhaps it is time for another, further-ranging write-off?
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International Retailers Blitzkrieg
Over in Blighty, Waitrose are on the ropes, with the announcement that they’ll be closing seven shops this year, affecting up to 677 jobs, and that one of the closures, to deepen the humiliation, will be in the form of the sale of one of their stores for use as a Lidl. Tesco have announced that they are upping the prices on over 1,000 items, including some staples and private label products, with average increases of 11%, despite recently saying they would be cutting prices to keep up with the discounters. Aldi, in the meanwhile, have been swished over the knuckles with a ceremonial ponytail by the Advertising Standards Authority for claiming that punters switching to Aldi from Tesco could save up to 45% on their bill. If their purchase consisted only of Merchant Gourmet Puy Lentils, in fact, the saving could be by as much as 152%, the increase on a pack of those at Tesco. Presumably, though, Aldi doesn’t sell them. In the US, retail sales have risen 0.4% in June, and Aldi has opened up within a mile of Walmart’s Bentonville HQ, which is something of a stake in the ground.
Comment: All sorts of shenanigans and goings on this week. The common thread, however, is that the German discounters have everyone running scared. Or at least getting belligerently defensive.
MANUFACTURERS AND SERVICE PROVIDERS
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Unilever Domo Arigato, Mr Roboto
Smart work from Unilever, which are building a set of virtual factories, streaming data from their actual factories so they track conditions in those facilities and test operational changes digitally before implementing them on the shop floor. Working with Microsoft, it will bring 70 of its 300-odd plants on-stream in the next year, feeding data like temperature, motor speed and other production variables into the cloud. The eight factories already online have begun to deliver results, increasing the production of things like shampoo and conditioner, and testing quality offline rather than interrupting workflow. Rivals P&G and Colgate are apparently taking similar steps. There are of course challenges: how to wrest data from older machines, for example, and what to do with the massive volumes of data without drowning in the stuff.
Comment: The Internet of Things is here, no mistake. And it’s being used to make more things…
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SA Suppliers Refreshing
A couple of shorter items this week from SA’s suppliers. First off, Clover have received the nod, with conditions, from the Competition Commission for the sale of the business for R4.8bn to a consortium headed up by Tel-Aviv based Central Bottling Company, with Boycott, Divestment and Sanctions (BDS) and trade union Food and Allied Workers Union (FAWU) both in opposition. The comish has specified conditions relating to employment and local procurement. Secondly, embattled sugar giant Tongaat Hulett have asked ten of their creditors for temporary relief on as much as R11bn in debt while they get their house in order. “We have been implementing cost cuts, from reducing head count to the sheets of paper being used in the printers,” says new CEO Gavin Hudson, who has learned to his cost the meaning of the term “poisoned chalice.” And finally – a biggie – PepsiCo have announced their intention to purchase Pioneer Foods, which they believe has a robust, locally-relevant product portfolio that complements PepsiCo’s current line-up. Pepsi boss Ramon Laguarta: “Pioneer Foods represents a differentiated opportunity for PepsiCo and allows us to immediately scale our business in Africa. Pioneer Foods forms an important part of our strategy to not only expand in South Africa, but further into sub-Saharan Africa as well.
Comment: Huge news from Pioneer. Wow. And good to know that foreign businesses of this scale still want in.
TRADE ENVIRONMENT
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The Economy Putting the wind up
A big week in the old fiscus – do we get any other kind, these days? – with the Reserve Bank announcing a cut in the repo rate, to the relief of all South Africans who track these things, and Eskom on the receiving end of a special appropriations bill which will see it getting R60bn in bailout cash over the next two years. Re. the interest rate, this in response to inflation which stubbornly persists at around 4.5%, instead of the 2% that an economy like ours currently merits. The Reserve Bank was also not as generous as some might have wished, cutting the rate 25 basis points from 6.75% to 6.50%, which is widely seen as a signal to the Government that it needs to start moving on these structural reforms about which we’ve heard so much. Re. Eskom, this was incidentally also the week Kenya announced that it was on track to meet its target of 100% renewable energy by 2020 with the opening of the continent’s largest wind farm that now supplies 13% of that rapidly-accelerating economy’s requirements.
Comment: Kenya. Put that in your paraffin stove and smoke it.
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