Putting in context that apparently generous R6.4bn offer by Walmart to buy out Massmart shareholders at a premium of 53%, it is worth less than half per share of what it was trading at three years ago, and slightly under what it was this time last year. Massmart has struggled to implement its otherwise sound turnaround strategy in the face of COVID, civil unrest and generational flooding in KZN, and punters have responded accordingly. That said, the strategy is still under execution: the business is in the process of closing eight of its underperforming Game stores, with another seven soon to follow. This leaves 99 still trading. This, says Massmart, “represents an intensification of the Group’s initiative to optimise the Game store portfolio as we move beyond our turnaround imperative, to prioritise investment in core and high returning trading assets”. It’s also focusing on growing the online business – it’s currently the second-largest online retailer in SA – ahead of the arrival on these shores of Amazon.

Comment: Probably not the outcome we would have predicted, or Walmart was looking for, but it will be interesting to have a large global retailer in our sector.

Since its launch in late 2019, the Checkers Sixty60 one-hour delivery service has grown exponentially and is now available in 300 locations across the country, offering 23,000 products at in-store prices, and with sales up +150% for the FY just concluded. One of the downsides of this growth is the proliferation of delivery staff in stores, which act as mini-DCs for the service. Hence the appearance – if that’s the word – of Checkers’ first ‘dark store’ on Cape Town’s otherwise mostly sunny Bree Street. It’s essentially a mini-DC, used exclusively for the fulfilment of online orders. During the FY, Shoprite also acquired RTT’s delivery business, cheekily renaming it Pingo Delivery, and giving the business critical last-mile capacity. And speaking of store openings, Shoprite is targeting a record 275 store openings in 2023 across the Group. Of these, the Supermarkets RSA segment plans to open 220 stores, of which 95 stores will serve the mid to lower LSMs. They’ll also break ground on an 85,000m² Johannesburg campus, expected to open towards the end of FY2024.

Comment: We are in the midst of a great leap forward in retail evolution, with some formats being reenvisioned, and others emergent but far from their final forms.

Not much in the way of further news from our great retailers this week, so instead of our usual ‘In Brief’ section we’re going to take a dip into the results of a visit to the US by commercial property services outfit Broll, who have some thoughts on the trends shaping the newly resurgent shopping mall landscape. And speaking of which – the first one is open-air malls, common over there, but rarer here. It’s possible, though, that our mall designers might take a leaf, as it were, and bring some softer, more experiential outdoor elements indoors. Pet friendly malls are big over there, where people refer to their animals as fur-babies and take them almost everywhere. So as our retailers get deeper into the pet category, we might see pet friendlier features in the retail environment. Next up, pop-up stores, a great way to fill those awkwardly vacated spaces, and cater to a seasonal or occasional market. And finally, sustainability, from alternative generation (a necessity on these shores) to recycling services and eco-friendly restrooms.

Comment: News of the demise of this social and commercial institution has been greatly exaggerated.

In Kenya, grocery retailer Naivas has seen its share price increase ten times in value since the sale of 40% of the business to the IBL Consortium, which was supported in this transaction by French and German development institutions. The business made a modest net profit of Sh2bn off sales of Sh65.1bn this FY just gone. In the US, salvage stores – which feature groceries and produce approaching their sell-by dates, and discontinued lines – are enjoying a newfound popularity as inflation bites deep. The stores offer even fewer frills than the German discounters, and rejoice in such names as Hungry Harvest, Misfits Market, and Too Good To Go. Finally, in Israel, the country’s largest supermarket chain Shufersal has been piloting shop-and-go technology provided by start-up Trigo, and is, erm, good to go in one Tel Aviv location that sports the usual blend of proprietary algorithms and ceiling-mounted cameras to enable shoppers to just walk in, pick something off the shelves, and saunter out like they own the place.

Comment: Truly we live in a time of wonders. Especially when it comes to the reduction of food waste by the simple expedient of selling it to people who will appreciate it.

Heineken’s acquisition of Distell appears to be approaching resolution, as the Dutch giant agrees to additional investments of R10bn and other public interest conditions to sweeten the R38.3bn deal, which splits Distell into two businesses, wine and spirits brands under a new company, to be combined with Heineken’s Southern African business and the Dutch interest under Namibia Breweries (owners of Windhoek and Tafel). Last week, the Competition Commission recommended that the Competition Tribunal give it the nod but insisted that Heineken invest R10bn over five years to maintain and grow its operations in South Africa; divest itself of its Strongbow business to maintain competitive conditions in the cider space; implement a R3bn Employee Share Ownership Scheme; establish a R400m Supplier Development Fund; and invest R175m in a tavern transformation programme.

Comment: The Competition Commission has made something of a crusade in securing economic transformation goals through this sort of transaction. And for more on this most dynamic of sectors, read our article here and have a look at what our SA Liquor Report has to offer here.

In the pleasant and tropical nation of Malawi, Coca-Cola Beverages Africa (CCBA) has commenced operations following the acquisition of SOBO, Castel’s soft drinks business, through CCBA’s local subsidiary Coca-Cola Beverages Limited (CCBL). “We see a compelling long-term growth opportunity in Malawi that will benefit our business as well as consumers in this market,” explains CCBA CEO Jacques Vermeulen. Back home, Rainbow Chickens – trading under its own proud banner once more as a division of RCL FOODS – is kicking up a righteous fuss about the decision of Minister for Trade Industry and Competition (Dtic) Ibrahim Patel to delay the imposition of higher anti-dumping against Brazil, Ireland, Denmark, Poland, and Spain for 12 months. The decision, argues Rainbow, will not help South African consumers one bit, and will unfairly prejudice businesses like themselves which are creating jobs here in the Beloved Country. “As investors in the poultry industry, we remain supportive of the Poultry Master Plan which was co-created by the government and industry to harness and support the local industry’s potential,’ says RCL parent Remgro. Finally, Kimberly Clark expects that prices for nappies, toilet paper, and other essentials, already increasing to the tune of +6% to +8% across its categories, are likely to go up even more, reaching as much as +10% on the back of supply chain issues and the increasing cost of pulp.

Comment: The anti-dumping tariffs – a whacking 265% in the case of Brazil – are a real protection for our embattled but defiant local producers.

A quick whisk around some of the numbers that drive our fiscus and describe our national well-being. First up, real growth in our economy averaged +1.1% in the last decade while the population grew +1.5% for the same period. You do the maths on that one. Next, household spending, which accounts for two-thirds of GDP, grew +0.6% in the second quarter, and is likely to come under further pressure with high fuel prices and if interest rates – a blunt instrument for the control of inflation – go up, too. Private sector investment (as described by gross fixed capital formation) rose just +0.5% in the second quarter, with companies leery of investing too heavily in local projects. Finally, after a decline of -0.7% in the second quarter, GDP growth for the year is likely to come in at an uninspiring +1.8%. Inflation is up to a 13-year high of +7.8%, and official unemployment, while down very slightly, comes in at 33.9%.

Comment: What gives? We are a country blessed with material resources, human ingenuity, and the will to succeed. The challenges we face are by no means unique, globally. These numbers reflect none of that.