Trade Intelligence Logo

For the super-organised among us (or more accurately, among you), Pick n Pay is introducing a new grocery delivery service that enables punters to set up an automatic, weekly or monthly, delivery of items that are purchased regularly. The way it works is you fill an online trolley with what you need on a regular basis, then press go and carry on with what you were doing. ‘Grocery Genius’, as the service is called, will see that you get what you need, bang on schedule, and Pick n Pay will remind you that the order is on its way, three days in advance. And if you forget to remove the items you don’t need for that order, just hand them back to the driver or return them to your favourite PnP store.

Comment: Smart. Quiet innovation is in Pick n Pay’s DNA, and it seems to be enjoying a new day under Mr Brasher’s team.

To Botswana, then, that quiet neighbour that keeps its head down and its lawn neat, whose kids go to nice schools and which seems to do very well for itself, although no one is quite sure what it actually does. Anyways, Shoprite in Botswana has just done something innovative and rather wonderful there, inviting eight suppliers to sell their produce directly to the public at various locations around the country in ‘Market Days’, which Shoprite has been running here at home since 2017. For the farmers, it provides an opportunity to showcase their work to other potential customers (although one assumes that Shoprite keeps them pretty busy anyway). For Shoprite, it gives their customers some visibility into their supply chain and the freshness of the produce they sell every day. On offer at the inaugural event was a fresh and mouth-watering combo of maize, chives, spinach, peppers, egg plants, butternut and tomatoes.

Comment: Excellent work from the Big Red One.

Shopping malls in South Africa – and elsewhere – have had a rough couple of years, what with store closures, the decline or demise of chains like Edcon and Stuttafords respectively, and large tenants starting to push back on high rentals. Plus, of course, declining footfall as punters shop online or shove what remains of their hard-earned under the proverbial mattress in this difficult ambit. And don’t get them started on rates, utility bills and load shedding… please. But – you’ll be pleased to know – they have a plan, bringing in smaller tenants who typically pay more per square metre than the big boys, being open to negotiation on rental, and looking beyond traditional businesses to tenants like doctors, clinics, crèches and schools, and beefing up their entertainment and food offerings.

Comment: Malls, in short, will need to become more like the thriving town centres they replaced if they are to survive. Rich irony indeed.

In the mysterious east, Tesco is fixing to wrap up the sale of its operations in Thailand and Malaysia to one of three competing Sino-Thai conglomerates, who are each offering somewhere in the region of $10bn for the business. In the UK, in the meantime, Tesco is seeking to wrestle control of the market (and the narrative) back from the German discounters, matching Aldi’s prices on hundreds of branded and private-label goods, amid much fanfare. Aldi, in the meantime, have hinted darkly at a response, see this story’s headline. Across the pond, in the meantime, Walmart is roaring into healthcare with its ‘Walmart Health’ clinics, where cash-strapped shoppers can go for routine check-ups or attention for chronic conditions such as diabetes or heart disease. Says CEO Doug McMillon, not, let’s face it, sounding a lot like Mother Teresa here, “Health care looks like a big opportunity […] takes advantage of big boxes and big parking lots close to people.”

Comment: Pragmatism aside, anything that relieves poor Americans of their healthcare burden is probably a good thing in that economically divided country.

RCL FOODS, the business previously (and more fabulously) known as Rainbow Chicken, has had a rough few years, what with cheap imports and bird flu, but its diversification strategy seems to be paying off if last week’s interims are a reliable indication, and we have no reason to suppose they are not. For the six months through December, revenue was up +7.1% to R14.2bn on strong volumes, particularly in the chicken and sugar divisions. Sugar was the real standout, growing revenue +12.2% to R3.7bn, EBITDA by a whacking +142.4% to R294m, and margin from 3.6% to 7.8%. What gives? This growth was off a low base, admittedly, but also came in the context of declining consumption back home as a result of the sugar tax, estimated to have hit the market to the tune of 300,000 tons per annum. What has helped is the reduction of production costs, increasing efficiencies, and the export market, which has benefited from increased volumes and prices.

Comment: Nice to see some good news from the business.

Tough times for Anglovaal Industries Limited (AVI), which released a flat set of interims last week, with revenue up just +1% to R7.1bn, headline earnings per share down -3.8%, and operating profit up +0.1% to R1.46bn, well below inflation and not enough to offset higher finance costs and lower income from JVs. (Insert load shedding and tough trading environment here). Also of consequence for AVI was heavy discounting by competitors, particularly around Black Friday, which is fast becoming a reason, one way or another, that most businesses give for disappointing results and should just, by consensus, be scrapped for the boondoggle that it is. AVI is expecting that it might return to stronger profitability in the second half on lower finance costs and exchange rate hedging.

Comment: Tough times for everyone though, Black Friday aside.

Moody’s, the last of the ratings agencies to hold our debt rating at investment grade, has cut its growth forecast for the dear old SA economy to 0.4%, leading to fears that it may downgrade our rating as soon as its next review on 27 March, despite Tito’s stalwart performance at last week’s budget speech, in which he announced public sector wage cuts of R160bn. Solid, but not enough to offset the ballooning deficit, which will rise to 6.8% this fiscal, and the debt trajectory, which will hit 71.6% of GDP by 2023. Covid-19, in the meantime, has hit these shores, even as it creates turmoil on the international markets, where the rand took a beating, sinking to four-year lows this week. No wonder that Business Confidence, as measured by the Bureau of Economic Research, has fallen to a 21-year low, from to 18 from 26 in the three months through December. And this was before the news that South Africa’s economy officially went into recession in the fourth quarter of 2019, shrinking by -1.4%.

Comment: We’re in the teeth of a perfect storm right now. Shorten sail, keep pumping, and let’s ride this one out. One day we’ll find calmer waters.