THIS ISSUE: 04 Nov - 10 Nov
As the great and the good meet in Sharm el-Sheikh to deliberate on the future of our Earth’s atmosphere and thus its habitable future, Australian retailers warn of climate-induced shortages of a number of basic commodities. A lot is at stake in the days – and years – ahead. It’s time for us to exercise all the ingenuity we have to solve our mounting planetary problems. And, of course, best of luck to our MD, Natasha Smith, and the Trade Intelligence business who will be in attendance at the Standard Bank Top Women Awards gala event tonight in Johannesburg. Enjoy the read.
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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Pick n Pay A bit rich
Extending the brand this week is Pick n Pay, with the launch of its online Pick n Pay Home store, a side-hustle offering the value-conscious punter over 5,000 products from homeware to appliances, with the added bonus that Smart Shopper members get 10% of their purchase back to spend in Pick n Pay stores – ensuring that the online offering drives footfall to other categories rather than cannibalising in-store sales. One of the categories is baby, the subject of something of an arms race right now, as we’ve observed before. In other news from The Big Blue, 39 of its stores are now accepting payment in Bitcoin, with every till point shortly to follow, provided you have the right software on your phone, Louis Vuitton loafers and a Versace tracksuit. Payments, once notoriously slow, take a mere 30 seconds using the Bitcoin Lightning system. Pick n Pay has been personally invested in the currency since 2017, when it trialled crypto payments at its head office canteen.
Comment: It may be a little tech-bro, but crypto is definitely a thing now, and should be treated accordingly.
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Clicks Are you experienced?
Big up to Clicks, winner this year of the Customer Experience category in the pharmacies industry in the 2022/23 Ask Afrika Orange Index Awards. The index is the most referenced customer experience benchmark in South Africa, and the definitive measurement for identifying the companies that offer the best customer experience. “Customers are looking for products that meet their needs, with the correct value proposition, that are reliable and that are honest in their dealings with the consumer,” says Ask Afrika MD Sarina de Beer. “Winning brands build seamless customer channels and have a good understanding of the needs of their customers.” With 670 dispensaries operating, Clicks is now South Africa’s biggest pharmacy brand, providing professional advice, low dispensing fees, and a wide range of generics and OTC medicines. In other pharmacy news, Shoprite has just opened third standalone Medirite Plus pharmacy in the Western Cape, at Somerset Square in Somerset West.
Comment: Even so, it seems unlikely at this point that anyone – even Shoprite – will ever knock Clicks off the pedestal it has worked so hard to win.
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In Brief Sharing the sorrow
First up, farewell to the Johannesburg Securities Exchange for Massmart, on November 22, following the R6.4bn offer from parent Walmart to take the business private. Massmart has been publicly traded for over 20 years, the last 11 of those with Walmart as its major shareholder. In that time, sadly, the share price has almost halved. Analysts are of broad agreement that Massmart will do better away from public scrutiny and the demands of its shorter-term shareholders. Next up: Dis-Chem. Sales dropped during the shopper ‘boycott’ from 17-24 October after the publication of CEO Ivan Salzman’s hastily written memo about not employing any more white people in order to ensure that the business was not fined 10% of its turnover, in which case pretty much lights out. “We have seen our growth trend reverse from 17 October to 24 October when looking at daily sales numbers following the leaking of the memo,” says CFO Rui Morais, gnashing his teeth almost audibly. “That trend has now reversed back to normal following the pay cycle on 25 October.”
Comment: Sad re. Massmart, no? A great business which has for a number of years fallen on the wrong side of fickle circumstance.
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International Retailers Lean times
In Australia, supermarkets have warned punters that they might shortly have to impose purchase limits on certain items due to shortages of grocery staples after a growing season impacted by extreme weather, and supply chain issues. Some of the items are corn, cauliflower, broccoli, beans, peas, carrots, and potatoes – the last of which affects the availability of such products as frozen chips. Months of flooding on the eastern seaboard, and a major monsoon in Thailand were among the weather events in question. In the US, where consumers seem to believe they are the only country affected by high inflation amid the recovery of a pandemic, disrupted supply chains, natural disasters and a major international crisis, research outfit Vericast has established that 57% of them plan to cut back on spending for Thanksgiving dinner, and 74% reported that they would buy Thanksgiving ingredients from a new brand if offered a deal. “Survey results continue to point to another rocky holiday season,” says Vericasts’s director of category strategy for national sales, the cheerfully named Chip West.
Comment: Signs and portents, everywhere you look. We will need a paradigm shift in how things are bought and sold if we are to successfully navigate the age of greater scarcity and disruption we are entering.
MANUFACTURERS AND SERVICE PROVIDERS
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Daymon Breaking bulk
Thrifty South Africans have a tradition of bulk buying, but this great tradition may be under threat as economic circumstances put many of us under even greater pressure than that to which we’re accustomed. This according to our friends at Daymon, who note that while the South African shopper looks for the value that bulk buying provides, the offset between the drivers for this behaviour and the challenges it faces are becoming difficult to balance. Some of the drivers are availability concerns, price stability concerns, value and convenience; the challenges include higher prices per unit in an inflationary environment, smaller households and lower disposable income, and loadshedding concerns – especially for fresh produce. The crunch on disposable income is a concern shared across income groups.
Comment: As always, pertinent and timely research from Daymon. More on the subject may be read in the report over here.
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Tongaat For the birds
Bad news from the rolling hills of the greenest province, where Tongaat Hulett has entered business rescue under the stern gaze of a trio of managers from Metis Strategic Advisors, as the business staggers under the burden of a debt ten times larger than its market value. After a massive accounting scandal and having incurred an already significant chunk of credit, Tongaat was hit with the cascading effects of a downturn in the property market in KwaZulu-Natal, civil unrest which led to destruction of cane fields, and catastrophic flooding over Easter. You may recall that at one point Tongaat made a fair whack of cash turning its struggling cane lands into bucolic golf estates (and also lower-cost communities, industrial sites and shopping malls.) It’s not all just white-collar crime and happenstance though; the business also suffered, by its own admission, from “sugar loss at the refinery and poor milling performance, which revealed inadequate historic plant maintenance.”
Comment: A shame in the true sense of the word, and one which will lead to hardship in many of the families that depend on this provincial giant for their livelihoods.
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In Brief Choc and cheese
Chocolate giant Mondelez, owner of Cadbury and Oreo, has announced the next phase of its Cocoa Life programme, with an additional investment of $600m through 2030, for a total of $1bn since its inception in 2012. The programme’s aim is to secure supply of more sustainable cocoa and tackle the root causes of systemic issues in cocoa, including farm productivity, farmer livelihoods, community development, and helping combat child labour and deforestation. The new investment will help increase the production of sustainable cocoa at scale, in partnership with 300,000 farmers by 2030. In completely unrelated news, cheese brand First Choice, manufactured by Woodlands Dairy, has launched its own marbled cheddar, a variation of white and yellow cheddar, which is growing in popularity worldwide. “Our marbled cheddar looks enticing, creates curiosity, and adds glamour to any cheese platter,” says Marketing Executive for Woodlands Dairy, Marisa Maccaferri.
Comment: Excellent work, both of those businesses. When we first sampled cheddar that was yellow, but also somehow white, we couldn’t believe our tastebuds.
TRADE ENVIRONMENT
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Stokvels Big dreamers never sleep
Stokvels, as we reported some weeks ago, are a national treasure: a great repository of buying power, of real wealth, and of cultural capital. Now, says Santy Mokgoatsane, co-founder of non-profit company Stokvel Movement of SA, they could become a true force in retail. Stokvels, he says, should invest some of their cash in cooperatives, local shops or malls where their members may buy goods but also from which they could derive dividends. Stokvel Movement runs monthly roadshows in Gauteng and Limpopo where they encourage stokvels to start businesses and educate them about how to run their cooperatives. He also advocates the establishment of a stokvel bank, with offerings tailored to the needs of this uniquely South African business unit.
Comment: Some ambitious ideas here. But certainly, food for thought, with the cooperative model in particular being an attractive way to establish formal retail in underserved areas while keeping their often modest wealth in situ. And as stokvels themselves demonstrate, South Africa has a boundless aptitude for practical ingenuity.
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19 September: Corporate Retail Comparative Performance H2
“Vulnerable countries are rightly concerned about loss and damage caused by other countries’ emissions. That’s certainly the reality for our African friends and partners […] The African continent is on the frontline of a climate emergency it did not create.”