THIS ISSUE: 06 Apr - 16 Apr
Shoprite pipped Pick n Pay to the post – by a day – on an innovative new pandemic-proof payment method, so claiming rights go to the Big Red One. But congrats to both of those businesses, showing that innovation and shopper-centricity are the qualities that distinguish the businesses that adapt best to the reality of the global pandemic and will long outlast it. Cost-cutting above all and business as usual are not. And take a gander at these two goodies from our friends at IRi – the globally popular webinar entitled ‘Lessons from Italy’ as well as their latest COVID-19 study update. Enjoy the read.
RETAILERS AND WHOLESALERS
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Coronavirus Locked and loaded
At this time of heightened awareness of illness and immunity, Clicks has seen a fourfold increase in demand for flu vaccinations at its clinics around the country, leading the business to stock up on vaccines, train an additional 200 pharmacists to administer them, and provide dedicated nursing staff at the busier stores. Rival Dis-Chem, in the meantime, has partially withheld rental to some of the country’s major property owners including Resilient, Hyprop, and Liberty Two Degrees, on the grounds that despite continuing to trade as an essential service its turnover has been impacted by the lockdown. Pick n Pay, which has closed one store in the Western Cape after a staffer tested positive for COVID-19, has joined Shoprite – a day later, but hey – in offering payment via QR to shoppers, see Shoprite story below. Massmart appear to be enjoying some competitive advantage relative to other purveyors of white goods, selling some essential appliances like kettles, gas stoves and two-ring cookers while holding back on less essential items, categories also sold by the likes of Checkers, but leaving non-essential businesses like Hirsch scratching their heads as to the fairness of it all. Woolies, in the meantime, have sadly let it be known that they expect profit for the 52 weeks through June to decline by as much as -20%, driven thither by a loss of sales from the corona crisis.
Comment: A new competitive landscape, certainly, with uncharted moral and commercial pitfalls. But also areas of legitimate and ethical opportunity.
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Shoprite Code Red
Even as it has been forced to close two stores in the Western Cape after an employee at each tested positive for COVID-19, Shoprite is innovating safe and contactless ways of collecting cash and providing goods and services while keeping shoppers and store staff safe, as the first retailer to offer payment via dynamic QR on a mobile app. Once they’ve filled their trolley, punters simply scan the QR code at the till point with their phones, which will display the exact amount payable, then pay using Masterpass, SnapScan, Zapper, FNB Pay or Nedbank Pay. The service is currently available in 29 Checkers stores and will be rolled out across South Africa within the next two months, with the rest of the continent to follow asap. Shoprite has also partnered with long-standing pal Computicket to allow concerned customers to send vouchers to needy friends or relatives via phone, redeemable almost immediately for the purchase of groceries. And finally, Checkers has announced a partnership with Mr D Food to deliver medicine to the homes of MediRite pharmacy customers during the lockdown.
Comment: All innovations designed during a pandemic, which will give the business an edge as the country reopens.
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SPAR Fanplastic
The Jolly Green One demonstrates that it is possible during a pandemic to both walk and chew gum at the same time, provided there has been no panic buying of gum. Or better, that it is possible to take meaningful measures against one crisis while continuing to address another. In this instance, this second crisis is the ongoing destruction of the environment caused by our current way of life and consumption. In one small step for poultry but a giant leap for packaging, SPAR have introduced an all-plastic packaging for chicken pieces that extends shelf life and reduces food waste while cutting by up to 25% the amount of plastic used. The packaging uses amorphous polyethylene terephthalate (PET) underneath the product and recyclable PET on top, shrunk wrapped. This combined with a policy of re-introducing every last scrap back into production sees an overall reduction in carbon footprint of 60%.
Comment: Comforting confirmation that amid our current crisis, some of SA’s great businesses are forging ahead with innovations that will benefit us all in the long run.
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International Retailers Hire purpose
In case you were worried, Tesco have announced that they’ll be able to pay their shareholders an annual dividend as well as a £5bn special pay out after panic buying and general stocking-up led to a 30% surge in sales. Tesco have also added 45,000 workers to the payroll to meet demand and cover for the 50,000 who have been off sick or self-isolating in recent weeks. Partially as a result of this, they anticipate a steep increase in operating costs. Across the pond, Walmart is in the midst of an even bigger hiring jag, adding 150,000 staff to the books as demand for food and groceries continues to grow. Walmart are also paying out an impressive $550m in bonuses to its frontline hourly staff, who will each receive a somewhat less impressive $150-300 for their pains.
Comment: It may be that COVID-19 might shift the balance between shareholders and labour in the long term. Certainly, there is a rising awareness among the foot soldiers of the value chain about just how important they are collectively in the bigger scheme.
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Tiger Brands In the forests of the night
The Striped One has let it be known that it will not be raising prices on any of its products – not a single one – during the course of the present shutdown. And this in the face of a R60m increase in costs from staff transport and incentives already incurred during the initial 21-day period. Since its operations are classified as essential services, it has continued production throughout the period, with 100% staff attendance and little sign of production failing to meet demand except in the categories of pasta and rice. In the case of the latter, Tiger has been hit hard by the recent decline of the rand, by countries like Vietnam putting a stopper on exports and by more stringent safety measures for imports put in place by the Department of Health. Pasta, in the meantime, has seen a 60% spike in demand – impossible for any business to adjust to quickly.
Comment: Another interesting look at the many challenges faced by the food supply chain in these times.
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IMPERIAL Logistics Big wheels keep on turning…
IMPERIAL Logistics generates 55% of its revenue in the consumer goods, health-care and other essential products and services sectors, employing 13,000 South Africans and operating in 32 markets globally. It carries a heavy burden in these times in ensuring that we are all fed and clean and getting our meds when we need them – the business supplies 5,000 retail pharmacies, among countless other outlets. How is it keeping things going? With an adamantine attention on its workforce. "Our biggest focus at this time across the business is to protect our people from getting the virus,” says CEO Mohammed Akoojee, “And also ensuring that our operations are running as smoothly as possible". They have increased shifts to ensure that people don’t get burnt out, and have utilised their own hygiene and cleaning services subsidiary to give staff access to PPE, sanitisers and other health measures required to keep infections to a minimum.
Comment: South African businesses, particularly in this great industry we call home, seem to be going to the wall to keep their staff both safe and functioning.
TRADE ENVIRONMENT
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Economy Heavy artillery
A couple of lifelines for the dear old fiscus this week, and goodness knows it needs them. The first comes in the shape of a sturdy 1% cut in the repo rate by the worthies of the SARB, bringing it down to a fighting fit 4.25%, which may provide some relief to the indebted and encouragement for those individuals and businesses who may have something chucked away under the mattress to invest. The second comes in the form of a lifeline from the World Bank, which has indicated that it may call for a halt on debt repayments for the continent of Africa in the midst of the pandemic. The Bank has predicted that Africa’s GDP will decline by somewhere between -2% and -5% as things worsen. In the meantime, the AU has appointed Trevor Manuel, who presided over what now seems like a golden age for the South African economy, as one of four special envoys tasked with mobilising support for the COVID-19 fight from the G20, the EU and international financial institutions like the World Bank. Some big guns are coming into play. Hopefully they will prove sufficient.
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“This is a wake-up call. We must live within our planetary boundaries to avoid future pandemics.”
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