
THIS ISSUE: 18 Sep - 23 Sep
A Happy Heritage Day to you, valued readers. Go out there, don you kilt, your bheshu, your sari, iqoqo or broek. Cook up some chakalaka, biryani, tjops, boerie or stiff pap. And raise a glass – of Black Label or of Liquifruit – to the rich diversity that is our gift to share with each other and the world. And have a look here, if you will, at some of the implications of the occasion for this great industry we call home. Enjoy the read.
RETAILERS AND WHOLESALERS
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Woolworths Food for thought
Woolies released its annuals last Thursday, and they were about what you’d expect: turnover down by the thinnest silver of -0.1% to R78.3bn, with gross profit down -7.8% to R25.3bn, and HEPS – a better measure of profitability – down -45.7%. Fashion, Beauty and Home was down by exactly as much as Food was up: 10.7% – as neat a summation of what ails the business as we could have managed ourselves. Online sales of food was another bright spot, growing gangbusters at +57.2%. In Aus, sales at David Jones were down -6.4%, and after six months in which workwear for the better-heeled has seen a disastrous decline, down -14.3% at Country Road. New CEO Roy Bagattini has committed to no further bailouts for Aus, to the relief of shareholders. “The Group’s intention is to ensure that we not only endure the impacts of the pandemic but that we can learn from it and emerge both strategically and tactically stronger as a result,” says Signor B. For a closer look at it all, have a look at our summary here.
Comment: Woolworths Food is a truly remarkable brand, the anchor of the company’s future, and the truest expression of its Good Business vision. The rest? We’re not sure.
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Strong medicine Going boldly
While not without its hiccups, the rise of Dis-Chem has been both efficient and relentless since its listing, and COVID-19, far from being an obstacle, has presented the business with an opportunity for further growth. It’s added seven new stores in the chilly months of July and August and has another ten planned by the end of the year. And once the borders re-open, the business will be adding a second store to its Botswana operation, in Francistown. “In a market where consumer spending in under severe pressure,” says CEO Ivan Saltzman, “expansion brings greater access to everyday low pricing in dispensary, healthcare, nutrition and beauty items to a larger number of consumers.” Another plus for punters and for the greater public healthcare system, he says, is the rollout of Dis-Chem’s in-store primary care clinics.
Comment: It will take a while. But with Dis-Chem now a sought-after anchor tenant in many malls, Clicks must surely be feeling the chill wind of competition under the old white coat.
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Shoprite Delivering the goods
“COVID-19 has seen a once-in-a-generation shift to online shopping in South Africa, and it's a step change we believe is here to stay,” says Neil Schreuder, Shoprite’s chief of strategy and innovation. This as Checkers’ Sixty60 delivery service completes national rollout after three successful months of operation and the creation of 800 new jobs since lockdown started. There was a brief spell during the busiest times when it was forced to renege on its promise of same-hour delivery, but everything’s back on track now. In other news, not unrelated, of the Big Red One, the Checkers Xtra Savings rewards programme, which kicked off several lifetimes ago in November 2019, has signed up 4.7 million of South Africa’s discount-hungry punters. “These are attractive add-ons they have added which reinforce their brand in the market,” says Sasfin Securities deputy chair and investment guru David Shapiro, of both initiatives.
Comment: Nice work Shoprite, a combination of marketing innovation and sticking to the knitting, which sounds like a solid premise for our next Pinterest page.
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International Retailers The Dunkirk Spirit
News from the Middle Kingdom, where retail is roaring back into recovery with August sales up +0.5% YoY to 3.36 trillion brave new yuan, or $495bn shabby and corrupt US dollars. This as the job market stabilises and travel restrictions ease after the first quarter’s record decline of -6.8%, and the moderate recovery of +3.2% growth in the second. Over in the UK, in the early days of COVID, Tesco employed over 35,000 new staff, mainly pickers and drivers, to meet anticipated demand in online shopping, and is boosting this side of the business with the addition of new automated urban fulfilment centres (UFCs) in some of the larger stores. A little slower off the mark, Aldi are trialling a click and collect system in their Midlands store, which is all a bit analogue to be frank, with punters having to choose a timeslot and drive their Austin Anglia round back to pick up their brown paper parcel of groceries all tied up with string.
Comment: Tesco’s response has been nothing short of remarkable, establishing the business for growth in the new normal, whatever that turns out to be.
MANUFACTURERS AND SERVICE PROVIDERS
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Coca-Cola The Bizniz
As the COVID restrictions ease, aspects of communal life that were temporarily shut down are starting back up; one critical but overlooked sector is corporate social development. Coca-Cola Beverages South Africa (CCBSA) has announced that as restrictions ease it will be firing up its Youth Empowerment Programme (YEP), which aims to equip township youth with the skills and knowledge they need to manage “Bizniz in a Box” spaza shops, 100 of which are under construction in KZN, Mpumalanga, Limpopo, Gauteng and the Eastern Cape. There is perhaps no more urgent task than the economic rescue of South Africa’s youth: two-thirds of 15- to 34-year-old South Africans are unemployed. “As CCBSA, we believe it is through collaboration between business, civil society and government that we can establish platforms to empower this segment of our society, to create opportunities through which they can create their own livelihoods,” says public affairs, communication and sustainability director Nozicelo Ngcobo.
Comment: Excellent and critical work.
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Nestlé Culture club
Talking up some of their great South African brands as we gear up for Heritage Day this week are Nestlé, which is running initiatives celebrating our colourful consumer culture. Under the Nestlé Dessert and Cooking Cream range, they’re launching #DelightfullyMzansi – a creative platform that celebrates and showcases South African talent in the form of Icons of Heritage who have unapologetically celebrated their heritage through their creativity, from food, music and design. Their Ricoffy brand has been running a competition for the design of a “Proudly Me” Ricoffy 750g Tin; the three winning designs will be available in stores this month. Finally, Kit Kat are running a Chit Chat campaign on Instagram, in which local celebs will lead the discussion on passion points like music, fashion, language and food.
Comment: Nice one Nestlé, cheering everyone up in the weirdest Heritage Month anyone can remember.
TRADE ENVIRONMENT
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Retail Trade Sales Trading blows
We knew it had been bad, but this? Retail trade sales for the bleak month of July fell by -9% YoY, after contracting -7.2% in June. Breaking it down, general retailers saw a decline of -39.1%. Food, beverages, and tobacco contracted -18.4%, driven substantially, no doubt, by the overall decline in disposable income, but also, no doubt, by the Prohibition. Clothing was down -13.8%, but sales of household furniture rebounded, up +14.6%, as South Africans hunkered down and those with extra cash bought new sofas and TVs. Elsewhere in the fiscus, the jobs report indicates that the unemployment rate rose by one percentage point to 30.1% in Q1 of 2020 – the period before lockdown began in earnest.
Comment: It’s not too soon to hope that when it comes to retail sales, we have hit rock bottom and can begin the long, slow recovery, keeping further casualties to a minimum.

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“Our rich and varied cultural heritage has a profound power to help build our nation.”
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