
THIS ISSUE: 11 Mar - 17 Mar
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Metcash Well met indeed
The future for Metcash, relieved (competition authorities permitting) of the burden of its franchise division, is in hybrid retail/cash ‘n carry stores, according to CEO Peter Dodson, who typifies them as stores with more refrigeration, a bakery, a butchery and a deli – whereas traditional Metro stores carried dry goods only and had limited refrigeration. The real difference comes, to paraphrase the president, in the clientele, which spans hawkers, spaza owners, and independent retailers as well as ordinary retail consumers. And the business model – driven in Metro by a solidly implemented SAP backstore system – allows for up to four different price points per SKU, depending on the punter.
Comment: A single price per customer has long been a gripe of independent retailers, who rightly resent paying the same unit price for a shrink of product that their own customers do for a single.
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Pick n Pay Strewth.
The Big Blue is deep in the trenches of the Aus legal system as we speak, brought thence as you know by the Australian Competition and Consumer Commission (ACCC) who have lodged, if that’s the word, an application to stop the sale of Franklins to Metcash (a R36billion business, it may interest you to know, still run by South Africans 10-odd years after its sale by Metcash SA). It is the concern of the ACCC that the acquisition will substantially lessen competition in New South Wales and the Australian Capital Territory for the wholesale supply of groceries to independent retailers. PnP, in the meantime, contends rather plaintively that as a vertically-integrated retailer Franklins has been outcompeted – so presumably, its purchase by Metcash would have little effect on the competitive landscape.
Comment: If there’s one thing an Australian hates, it’s a South African making a buck on the dry red soil of that benighted land, one way or the other.
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Unilever Subcontinent, superopportunity
Unilever CEO Paul Polman has issued a directive to management in India to stretch targets and double its business to offset sluggish growth in mature markets like the US and Europe. This despite increased competitive pressure on Hindustan Unilever (HUL). Hindustan remains the frontline of innovation for Le Grand Blue – for e.g. HUL is planning to set up a 5,000 square feet customer innovation centre in Mumbai. The innovation centre, to be situated close to the company's corporate headquarters, will be equipped with latest technology like retina scanning and RFID to enable the company to study the behaviour of customers on a shop floor, and next door an experimental beauty studio on a similar scale. Polman is looking for growth in the next 15 years that will match HUL’s growth in the last 100.
Comment: A stretch, indeed. But those eager young Hindustani managers are reputed to be an elastic bunch.
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Distell Mud in your eye
Wine and spirits chaps Distell have secured the services of a new distributor in the UK, to get their brands into an extensive network of restaurant and pub chains, independent licensed premises and “style bars”, which even if we knew what they were would surely not let us through their stylish doors. The distributor in question is Matthew Clark, which we are given to understand is a company not a person, and it will focus on getting Nederburg, Fleur du Cap, Durbanville Hills, Pongracz and Drostdy-Hof products off the trucks in front of thirsty punters where they belong. Nederburg has developed its The Manor brand specifically for on-trade consumption, and this will be an area of particular focus. On-trade has been good for Distell, growing 23% in value sales in FY2010.
Comment: More on-trade sales will of course contribute to the growth of South African brands in the barbaric British market, which is a good thing.
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Clover Good morning!
Nice work from the freshly-listed Clover, with revenue up 10.8% to R3.02billion rands (South African). Operating profit up 43% to R176million and headline earnings from (newly) continuing operations up 693% to R94million. Various initiatives to save costs and increase efficiencies have paid off, and some of the benefits achieved in this regard have been passed onto punters in the form of more appropriate pricing for various lines. The beverage business has also been a pleasing contributor, winning market share from competitors and growing in volume to the melodious tune of 12.4%.
Comment: They’ve come a long way from the clink of sturdy bottles on the doorstep at 6 am, remember those?
TRADE ENVIRONMENT
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Mobile technology Is that a Blackberry in your pocket?
Here’s one: nearly 100% of all South African households are in possession of one or more cellphone. Here’s another. Cellphones outnumber that other work of Lucifer, television, by an order of 2:1 in the Beloved Country. And another: Mxit has 29million users, all of whom will soon be able to by various things from music to Vida coffee via Moola, their mobile payment system. And we are assured anecdotally that north of the borders you may take your bag of mealies to market where you will sell it by airtime to a vendor who will roast the ears of corn and sell them individually, for slightly more airtime than she paid you. All of this and more from the Southern Africa Mobile Banking Conference held earlier this month, and where one of the key messages to retailers was, get on mobile, because your punters will drag you there otherwise.
Comment: Via lost revenue, natuurlik.
IN BRIEF
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Massmart Mark our words
Knowing a good thing when they see one, Walmart will be asking Mr Mark Lamberti to stay on as independent non-executive chairman of Massmart should The Big Deal be approved by the Competition Tribunal. Mr Lamberti’s first duty would be to assist in the selection of a few good men – and, presumably, women – to make up a board for the new entity.
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Unilever There’s a good guru
In other Unilever news, Le Grand Bleu has snaffled the services of one brandedly-named Marc Mathieu from Coke as Marketing Guru. As senior vice president of marketing, Marc will be responsible for delivering a step change in Unilever’s marketing capabilities and developing the brand to enable them to double the size of the business while reducing its environmental impact. And this he will achieve while tweeting from his Blackberry and taking a contemplative stroll across the turbulent waters of the Sea of Galilee.
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Tesco Tesc, tesc
Tesco’s recent campaign to cut prices on 1,000 everyday lines in order to compete more stiffly with Asda was preceded, according to our fellow hacks over at The Grocer, by a much-less-trumpeted campaign to raise prices on the very products it was about to cut prices on. For e.g. the price of its Finest traditional pork sausages was slashed – slashed! from £2.79 to £2.58 on the 7th of Feb. On the 10th of Jan, however, the same product was going for £2.59. Naughty.

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