
THIS ISSUE: 03 Jun - 11 Jun
Welcome indeed to week two of level three, or is it the other way around? To the eternal present, anyway. Although the week has brought its glimmers of hope, one of which came in from a note of approbations from one of the ratings agencies, rather than the usual slap on the wrist. Some solid work from Oceana and IMPERIAL. And in a week that sees a world increasingly galvanized against institutional racism, Walmart announces a meaningful new initiative. Enjoy the read.
RETAILERS AND WHOLESALERS
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COVID Catch-up Unfriendly
Amid the positive tsunami of feel-good stories about businesses doing the right thing during the current pandemic, there will inevitably be some flotsam. So it proved for Checkers this week, which was accused by one disgruntled Facebook user of “stealing from the public” through involuntary donations to the Solidarity Fund, for which it has already collected R1m. Checkers have investigated and found that some such donations were received without customers’ knowledge, but that this had been an oversight and has been corrected. In better news, township delivery start-up Yebo Fresh is partnering with charities by offering its growing grocery ordering model to help deliver food parcels – to the tune of 1,000 a day, or 110,000 meals – to poorer South Africans isolated in their homes by the virus. Most customers place their orders by means of the website, a WhatsApp order bot or via WhatsApp call; the business has also provided paper order forms which are then digitised by local agents.
Comment: Another classic example of that can-do South African attitude. Also, an unfortunate illustration of the Grundyism that characterises so much of Facebook.
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Clicks Expanding into DIY?
An interesting court battle concluded this week; interesting, that is, if you’re an independent pharmacy, not so interesting if you’re Clicks, who lost. At issue was Clicks’ ownership of Unicorn Pharmaceuticals, which imports and repackages drugs as Clicks generics. The Independent Community Pharmacy Association (ICPA) argued against Clicks’ ownership of the business before the Cape High Court on the grounds that pharmacies are forbidden from owning drug manufacturing concerns, thus disabling them from selling only their own product rather than that of suppliers. Clicks made the case that the arrangement has helped reduce supply chain costs, an argument it is now hoping will receive a more sympathetic hearing on appeal.
Comment: The survival of South Africa’s independent pharmacies has been in question ever since we started publishing this missive 15-odd years ago. This ruling represents a rare victory for the sector in a long war they appear to be losing.
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Dis-Chem It’s like Uber but for taxis
Crowdsourced logistics are officially a thing now, as Dis-Chem partners with Uber-for-Supply-Chain outfit Picup to boost its last-mile delivery across the increasing number of channels in the business. Picup is able to integrate with the Dis-Chem delivery system to provide real time feeds and order placements into the Picup app; these orders are then filled from the nearest Dis-Chem DC or presumably supplier. Picup are now working closely with Dis-Chem to establish how their technology can improve last mile delivery across more channels within the Group and using data to optimise and deliver more efficiently. And in these contagious times, deliveries are contactless, and staff are equipped with masks, sanitiser and guidelines for best behavioural practices.
Comment: Just-in-time order fulfilment was once just an excited sparkle in your business lecturer’s eye. Crowdsourcing has transformed it into a game-changing new reality.
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International Retailers Oh, I say!
This seems the week that corporate America discovered its conscience. Case in point, Walmart, which has pledged $100m over five years in the “fight for greater racial equity inside and outside Walmart,” according to CEO Doug McMillon, through a soon-to-be-established centre on racial equity. Recruitment and staff development will be a primary focus of the initiative. Over in the UK, totally unrelated, COVID-19 has forced even Harrods, the lofty soul of that nation of shopkeepers, to open, gasp, a branch in a nearby mall to accommodate the stock (and bargain hungry punters) for its legendary summer sale, in an environment which can better accommodate social distancing and touchless shopping. It’s not Harrods’ first foray beyond Knightsbridge, however: the business already has small outlets in department stores around the world and some airports and will soon be launching a beauty store spin-off.
Comment: Meaningful stuff from Walmart at a time that cries out for such projects.
MANUFACTURERS AND SERVICE PROVIDERS
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Oceana Net profit
Interims from Oceana for the six months through March, and as tidy a set of numbers as you could hope for in times like these. Revenue was up +2% to R3.63bn, driven thither by its African operation, which grew revenue by +3%. Group wide, operating profit was up +9% to R605m, with African operations positively screeching home with an +18% increase to R514m, offset somewhat by a -23% decline to R91.4m in the operating profit of US-based fishmeal and oil specialist Daybrook Fisheries. Nevertheless, says CEO Imraan Soomra, “Our strategy of both customer and geographic diversification is paying dividends.” And indeed, the business Oceana sells fresh fish in Africa and Europe, pet food in the US, fishmeal in Europe, Africa and Asia, and canned fish in South Africa. Their strong exposure to consumers rather than to the hospitality and tourism industries has served them well in the lockdown, too.
Comment: Don’t take Mr Soonmra too literally on the issue of dividends though, he was merely employing it as a figure of speech. Oceana is prudently holding on to actual dividends until the storm has passed.
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IMPERIAL Logistics Big wheels keep on turning
In an announcement which will put the heart into its clients’ businesses and into the FMCG sector in general, IMPERIAL Logistics expects that its volumes will recover as South Africa’s lockdown regime eases. At the end of March, the business was running at 50% capacity; at time of writing this had edged up to 70%, and the business has retained most of its contracts with existing clients. It does warn, however, that profits are likely to decline by over -20% for the year through June. As tends to happen, says IMPERIAL, some smaller transport businesses will have been hit hard by the pandemic; this will rebound to the benefit of the larger players like IMPERIAL. Eating into the profits of the business are its efforts to simplify operations. These efforts have already yielded the sale of its European shipping business, and its South American shipping concern will follow within the twelvemonth. All of this as IMPERIAL seeks to become the full-service logistics gateway to Africa.
Comment: A worthy goal, informing a well-executed strategy.
TRADE ENVIRONMENT
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The Economy A stimulating read
In words we have longed to publish for how many months now, ratings agency Fitch congratulated the South African government. What? Ah yes, quite. We got lost in the euphoria of it all. Congratulated the South African government for its strong fiscal policy response to the COVID outbreak, which matched those of Brazil and Poland. “South Africa's fiscal support accounts for 7.3% of GDP, although 54% of the stimulus will be in the form of credit guarantees to support SMEs,” noted Fitch director Marina Stefani. This should stand us in better stead for the recovery than other developing economies, which were more circumspect. In the meantime, the dear old South African Reserve Bank is doing its bit to inject some much-needed calm into the financial markets with the purchase of another R10.2bn worth of government bonds in May, after April’s spree of R11.4bn. According to some experts, this means of monetising government debt is the “cheapest, quickest and easiest” method of financing the stimulus at the required scale.
Comment: Things are tough. But it seems that in some matters, there is a steady hand, or series of hands, at the wheel.

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