JD Group Buy Out

Steinbuild to buy hardware group

JD group subsidiary Steinbuild on Tuesday, 4 December 2012, made an offer to acquire Hardware Warehouse for R1.14 per share, sending Hardware Warehouse's share price up 5.15% to R1.02.

The deal values Hardware Warehouse at R88.8m.

JD Group - which is majority owned by Steinhoff Holdings and which acquired Steinbuild last year - said in August it would expand its furniture retail footprint, mainly in rural areas, by adding 50 new stores in the next financial year.

JD Group's share fell 0.12% to R47.99 and Steinhoff fell 0.81% to R26.83. Hardware Warehouse provides affordable building materials to low-to-medium income level customers mainly from the rural areas of the Eastern Cape, although it has grown its exposure to urban customers.

The company said on Tuesday the transaction would result in a number of financial and operational benefits to the stakeholders of both businesses.

Its shareholders would receive "a price that reflects the inherent value of the Hardware Warehouse business", while the business would benefit from being part of a larger retail group with a national footprint that included property management, procurement, treasury management and financial services. Hardware Warehouse would also benefit from a reduced risk profile due to a greater footprint across Southern Africa.

The scheme is subject to the fulfillment of various conditions. Following implementation, an application would be made to the JSE to terminate the listing of the Hardware Warehouse shares, the company said.

In September, Hardware Warehouse reported that headline earnings per share from continuing operations were 8.78c for the year ended June 30, from 5.11c previously.

Source: Business Day

Christmas Trading Tips

This season, when you can expect to see heavier traffic volume in your stores, try a laser focused approach on the sales floor. 

Often, during these busier times, you expect that customers will outnumber your sales team by quite a lot. While it's a wonderful problem to have, there are certain things you must do to make sure that you are able to take full advantage of it; make order out of the chaos and reap the rewards in terms of sales -conversion, average sale per customer, average units per customer, etc.

Without direction, the sales team can get caught up in the whirlwind of activity with the resulting sales achievement being significantly less than what it could be.  This might be a natural occurrence and may not necessarily be because your sales team are doing something wrong.

What they need is continuous guidance, direction and coaching on the sales floor. With proper sales floor leadership and direction in place, your customers will enjoy shopping in an environment where everything is well managed. They'll be able to get in and out fast, so they can move on to other things they need to accomplish.

They’ll enjoy being served (and sold to) by competent, happy, knowledgeable sales individuals and getting their questions answered quickly. And for those customers who don't want to take care of their shopping quickly - the ones who enjoy lingering and spending time, choosing just the right items - your sales team will be there for them too – providing exactly what they need.

The Store Manager, Sales Manager or other Management Person in Charge, must be free to perform the function of supervising on the sales floor during busy times. This role cannot be delegated to just anyone..choose the person carefully. The sole purpose of this function is to firstly increase sales now however if you have an unhappy customer this will effect your future business, so make sure the sales team and customer support functions are properly employed and free to do their jobs. Whoever you have decided to put in charge of the sales floor, must be aware of everything that is going on in the store at all times and must act to remove potential obstacles to performance. Clearly, customer's will benefit from this organized approach during a hectic time and this will have a direct impact on your current and future sales.

Here are some guidelines for the person in charge of your Sales Floor:

• Keep moving around the store (managing by walking around and keeping the finger on the pulse at all times).
• Have a system for being kept informed of sales by balancing back the sales team at certain convenient intervals regarding individual sales, conversion rate or any other important aspect of your operation.
• Always be facing the front of the store so you stay up to the minute on the traffic entering and exiting (one eye on the floor and one eye on the door)
• Set up a signal system that your team will recognize - perhaps a slight nod - to acknowledge and assist a customer as well as having a different signal for potential shoplifters as this is normally where retailers suffer their biggest losses, so in other words be aware of who is doing what at all times.
• Be on the lookout for items that are selling out so you have a designated individual to replenish to ensure your shop floor remains attractive. (Items in storerooms won't naturally sell themselves). And then follow up to ensure it’s done quickly.
• One of a customers biggest irritations during the festive season is having to sit in a slow moving queue or bottlenecks at the cash desk or checkout. Whoever is in charge needs to take action. Actions like: a) calling in additional employees to assist with packing functions  b) calling another cashier to the desk   c) instructing a runner to go for supplies  d) spending a moment chatting with customers who are waiting - taking their mind off  the fact they are waiting.
• Check all areas of the store, regularly, to ensure cleanliness and safety.
• Watch for individuals who are finished doing what they were doing and have not yet engaged in something else that is productive. Give them a new task or point them toward a potential customer.
• Let the team know that they can, and should, look to you for guidance on any problems that come up. Let them know you are there to ensure the smooth operation of the sales floor providing the very best service to customers and that nothing is more important to you. The customer always comes first and everybody needs to understand that they need to have the customer as the number one priority, anything else can wait.
• Tell the sales team to notify you should they be going on a lunch or tea or any other break so you can check firstly if it corresponds with your sales roster and secondly to ensure employees don't stay  away for too long. Staff respect what you inspect and this action will improve overall productivity in whatever area you are inspecting or checking. Review the schedule regularly. Change it if necessary. Lunch and other break times must be adhered to unless you make a change.
• Stay on the sales floor. If you absolutely must leave the sales floor for a short time, appoint someone to take over. This process can also be used to review your future succession planning and to evaluate individuals for future development.
• Above all, keep the team motivated - a Happy staff member = a Happy customer (be a Cheerleader and share information!)

Converting shoppers into buying customers is much easier when somebody is in charge of the Sales Floor – removing obstacles and directing virtually everything. There will be fewer customers who leave without buying because you've made sure that they were greeted and welcomed into the store, that you have ensured all products/models/styles/sizes that you have available are actually on the sales floor, that the environment is clean and safe, that the sales team are pleasant, calm and available to attend and sell to each and every customer and that the checkout is under control.

Basically, you will then have provided a great shopping experience in an otherwise hectic and chaotic time, and you will be rewarded with higher sales through increased conversion, average sale per customer, average units per customer, etc.

Having a person in charge of the Sales Floor is a ‘must have’, particularly at busy times. If you want to capitalize on increased traffic in your stores, try it. 

Should things not go as smooth, please don't hesitate to contact us should you require any assistance with any of your training needs to improve your business. We provide various workshops and training, and would be more than happy to provide you with a non obligatory quote.

Master Retailing Accreditation / Memberships and Affiliation

Alphabetical order 

•  CGCSA (Consumer Goods Council of South Africa)
• GESFWA (Global Education Support Forum for Working Adults)
• IADL (International Association for Distance Learning)
•  IAF (International Apparel Federation)
• IAO (International Accreditation Organization)
• ICM (Institute of Credit Management)
•  IEAC (International Education Accreditation Commission)
•  IRE (International Retail Education)
•  NUTN (National University Technology Network)
• RCSA (Retail Council of South Africa)
• W&RSETA (Wholesale & Retail Sector Education and Training Authority) a division of the Department of Education.

 The Master Retailing Team would like to wish you all a bumper festive trading, a Merry Christmas and a Happy New Year.

Be Aware and be Careful

COSATU action to stop open road tolling in Gauteng

3 November 2012

The next phase of COSATU’s campaign of mass action against the e-tolling of our highways, will be a protest slow drive on the highways of Ekurhuleni on Thursday 6 December 2012.

Motorists are urged to assemble from 06h00 at the Old Trade Centre (Now Mboro Church), cnr Black Reef and Masakane Streets, near the Scaw Metal factory, Alrode. From 09h00 the convoy will join the N3 at the Heidelberg Road on-ramp, then drive North along the N3, N12, R24, and R21 to the Nelmapius off-ramp in Centurion and then back South on the R21, N12 West towards Johannesburg and back on to the N3 South before dispersing.

Please note this is an extract from an e-mail received from a Ward Councillor from the City of Johannesburg: -

All road users in Gauteng. There will be major road blockades in Gauteng's highways set up by COSATU. This is relating to the E-Tolling system the government wants to implement. Drivers of vehicles in Gauteng are urged to make use of alternative routes due to the E-Toll strike as strikers would be blocking off the routes. The following routes will be affected from Thursday morning 6 December: N3 highway (Durban/Johannesburg),N17 highway(Johannesburg/Springs),N12 highway(Witbank/Johannesburg&Johannesburg/Kimberly).N1 from southern bypass to Pretoria,M1 Jhb/Sandton,M2 Germiston/Joburg,N14 Krugersdorp/Centurion. It’s unknown how long the action will last, motorist are advised to seek alternative means moving around. DO NOT attempt to drive through the blockades as strikers could turn violent. Please notify fellow road users.

There is unfortunately no way that we can confirm that the planned action is going to take place, we at Master Retailing would just like to ensure everybody is aware of this and that they please be careful and take care on the roads.

Congratulations to The Foschini Group (TFG)

 Digital and The Foschini Group (TFG) thrilled by prestigious Inkosi Award win

The Inkosi Award, the most coveted of the DMA Assegai Awards, was awarded to The Foschini Group (TFG) for their Christmas Mystery Mobile campaign, which was developed by Techsys Digital (Cape Town).

The prestigious title is awarded to the campaign which the panel of judges believes has most notably excelled in strategy, creativity and return on investment. The Assegai Awards were held on Thursday, 15 November 2012 and recognise excellence in direct and interactive marketing, which are not only creative but integrated too - making use of multiple channels to drive response across media channels.

With 356 campaigns entered into the award, 2012 saw a massive 37% increase in entries from 2011. This year's entries were marked by measurable strategies withreal bottom line benefits and the dissolution of the above and below the line split. 

Andrew Walmsley, Managing Director of Techsys Digital said "We have partnered with TFG to launch a number of successful digital campaigns over the last four years. This campaign enjoyed over 130 000 consumer interactions which was a fantastic result for everyone."

Techsys is a digital marketing agency based in Cape Town. They are passionate about integrating new insights, strategies and technologies to achieve world class results for their portfolio of clients.

Source: Bizcommunity

Edcon Reports a loss

The well known Edcon reports a 2nd heavy loss in excess of R1 billion from continuing operations in the 26 weeks ended September 2012. This loss is albeit an improvement from the R1.5 billion loss a year ago.

Total revenue in the period increased to just over R12 billion‚ from R11,772 billion a year earlier. At the same time‚ the loss from continuing operations in the 13 weeks ended September amounted to R721 million‚ compared with a R1,277 billion loss in the same period a year ago.

Retail sales increased by R131 million‚ or the equivalent of 2,4%‚ from R5,4 billion in the second quarter 2012 to R5,5 billion in the second quarter 2013‚ with same store sales increasing by 0,8%.

For year to date 2013 retail sales increased by 2,1%‚ from R11,216 billion in year to date 2012 to R11,453 billion‚ with like-for-like sales increasing by 1,0%. Credit sales for the last 12 months to the end of the second quarter 2013 increased from 49,9% in the prior comparable period to 51,4% of total retail sales.

Lets hope Edcon gets it together, especially with some big international names arriving on our shores creating increased competition for the same share of wallet.

IAF International Student Awards 2012 announced

The International Apparel Federation (IAF), in cooperation with the Fashion Education Network (part of the FashionUnited group), has announced the IAF International Student Awards 2012. UK fashion design student Rebecca White (20) has been awarded the IAF International Student Awards 2012 in the category Fashion Design.

The Fashion Branding award is awarded to UK marketing student Sophie Cannings (21).
Both students were carefully selected among 4 nominated candidates in their chosen category. In total, students from 64 different fashion institutes around the world competed in these awards, which resulted in 84 complete assignments from students from 22 countries.

The judging panel was composed of the following industry insiders:

• Felicia Perez, Head Design, Supertrash
• Julia Hengstermann, HR, Diesel
• Angelique Westerhof, Director, Dutch Fashion Foundation
• Matthijs Crietee, Deputy Secretary General, IAF

Rebecca White will receive a paid internship placement in the design department of SuperTrash in Amsterdam. Sophie Cannings will receive a paid internship placement at Diesel in Dusseldorf. Both students will have their work published by FashionUnited in 12 countries accompanied by an interview.

Both IAF and FashionUnited aim to build bridges between education and the industry. IAF offers educational institutes and their students unique access to a global network of apparel companies. The IAF International Student Awards are an effective way to visibly attract top talent and connect them to top global apparel companies.

IAF is pleased with the relaunch of the IAF International Student Awards. In line with the vision of the IAF, plans are already being made to include a Product Development category in the 2013 edition.

Woolworths Sales Up

Woolworths Holdings (WHL) on 15 November 2012 said group sales for the first 20 weeks of the 2013 financial year increased by 15,9% over the comparable period in 2012. Sales in comparable stores grew by 9,9%.

The Woolworths Financial Services (WFS) debtors’ book reflected year-on-year (y/y) growth of 10,9% at the end of October 2012‚ with the impairment rate for the four months to October at 1,8%. The group’s interim results for the 26 week period to December 23 are scheduled to be announced on or about 14 February 2012.

Financial highlights:

• Clothing sales in South Africa grew by 13,7% with a price movement of 5,8%. Sales in comparable stores grew by 8,2%‚ the retailer said.
• Food sales grew by 11,2% with a price movement of 7,3%‚ and sales in comparable stores grew by 7,8%.
• “General merchandise grew by 11,5% and by 9,5% in comparable stores‚” the company said.
• Woolworths’s retail space‚ including stores in the rest of Africa‚ grew by 5,2%‚ net of closures and excluding franchise conversions.

Source:
Business Report, dated 15 November 2012

Mr Price profits up by 34%

Mr Price, profits up by 34% in first-half profit 2013.


 Mr Price is among the top performers this year as investors bet on continued consumer spending thanks to above-inflation wage increases, cheap borrowing and government grants. 79,1% of total sales is cash-based.

Sales increased 14% to R6 billion rand, helped partly by price increases and new stores, which added nearly 4% to its trading space. Same-store sales increased by 8,5%. The Home chains increased sales and other income by 16,3% to R1,8 billion, with comparable sales up by 10,9% and retail selling price inflation of 4,6%.

Operating profit rose by 36,5% to R178,1 million and the operating margin increased from 8,8% to 10,3% of retail sales.

Mr Price Home increased sales by 16,6% (comparable 11,5%) to R1,2 billion.

Sheet Street opened a net 11 new stores and increased sales by 15,4% (comparable 9,7%) to R540,9 million.

Source: Business Day

Truworths Sales up by 15.9%

                                                                                      Truworths Sales on the up

Truworths reported on Thursday that retail sales for the first 18 weeks of the 2013 financial period increased by 15.9% to R3.3bn‚ with credit sales growth of 15.1%.

Comparable (same store) retail sales increased by 10.7% and product inflation averaged 3%. Credit sales comprised 72% of retail sales during the period‚ compared to 73% in 2012.

The trade receivables book grew by 16.5% over the corresponding prior period-end to R4bn. "The receivables book continued to perform in accordance with management's expectations‚" the group said.

Truworths and other retailers have been under pressure with the arrival of foreign retailers to SA's shores.

Zara‚ owned by the world's biggest fashion retailer Inditex‚ opened its doors in SA late last year‚ while UK fashion brands Topshop and Topman are due to set up shop in SA this month.
While credit sales were significantly higher than the Foschini Group's‚ which was about 61%‚ this was not a big concern as Truworths had been good at managing their books.
Source: Bizcommunity.

JD Group Shoots the Lights Out

  

JD Group “shot the lights out” in the ten months to June 2012 and looks forward to a “great” 2013, Chairman and Founder David Sussman told analysts at the presentation in Johannesburg on 27 August 2012. Sussman seemed unbothered by the factors that have qualified other recent results presentations such as rising unemployment, consumers borrowed to the limit and many unable to pay. His presentation was titled “It’s all coming together”. CEO Grattan Kirk said JD Group had been through a storm for the past three years. He pointed out that in 2006 before the National Credit Act (NCA) came into force, headline earnings were 823c a share, well ahead of the 409.9c just reported in the ten months. With all divisions now in good order, it was not unrealistic to expect further growth. Other positives are that the group is in a good position to extend more finance prudently and that the R250 million spent on SAP and R750 million on distribution centres should yield a return. “The heavy spending is now behind the group”.

• Comparable numbers have been provided and these reflect good growth. Revenue up 11,2% to R25,285 billion, operating profit 8,9% to R1,86 billion and headline earnings per share (heps) up 22% 

Source:

Moneyweb, dated 27 August 2012

The 3 big furniture retailers are under the spotlight where Lewis has shown a 7% growth year on year, JD Group 11,2% and we look forward to the Ellerines Group results.

Massmart on the move

Massmart profit up 38%

Massmart is showing other retailers how it should be done despite tougher trading conditions for all retailers earlier in this year.

 

Massmart reported a 38% increase in its headline earnings for its financial year ending 24 June 2012, it said on 22 August 2012. “Massmart's first year as a Walmart subsidiary has delivered strong sales growth,” the company said in a statement. Sales grew by 15,6%. “Trading space increased by 7,3% to a total of 1,350,300 square metres and the group now has 348 stores (with 25 stores opened, 15 acquired and five closed).” Massmart CEO Grant Pattison said: “The results reflect the group's continued investment for growth across all divisions, but specifically for food retail. “This has driven sales and market share growth, while suppressing margin growth in the short term.” He said Massmart's high comparative sales growth suggested consumers were “in pretty good shape”.  The retailer had seen an increase in competition for market share in most product categories. “Most major retailers are being highly innovative in their search for growth, whilst independent retailers remain nimble, exploiting gaps in the market,” he said.

 Source:

Business Report, dated 22 August 2012

Lewis Results

Lewis 4-month sales up 5%

Furniture retailer Lewis Group said on 17 August 2012 that sales for the four months ended July 2012 increased by 5%‚ from the same period a year ago. "Trading in April 2012 was challenging mainly as a result of the Easter holiday period. However‚ sales improved steadily from May onwards‚ with sales for June and July 2012,showing an increase of 6% for the two months‚” said CE Johan Enslin at the company’s annual general meeting held in Cape Town on 17 August 2012. Collections during April 2012 were also affected by the holidays but had improved since May 2012. This had resulted in debtor costs for the quarter to June 2012 of R134.8 million‚ which was consistent with the figure for the corresponding period last year (2011)‚ he said.

Source:

Moneyweb, dated 17 August 2012

Currently it is anticipated that similar to Lewis, House and Home a division of the Shoprite Checkers Group as well as the JD Group will show positive YOY growth, however on the other hand, EHL which is part of ABIL may be trading behind its competitors and results could be flat to even down on the previous years trading. We wait in anticipation to see the other furniture retailers results.

Volatile Rand impacting on Retailers

Tech importers deal with the volatile Rand

The liquidity of the Rand means a “roller-coaster ride” for companies which depend on importing products for retail in South Africa, “but big tech retailers are quick to point out that such a big component of their businesses is definitely factored into the equation”. A movement in the greater global economy, powered by more stable markets such as the USA, the eurozone and Asia, are reflected in the fluctuations in the local unit, which can prove chaotic to some local companies. Tech retailers and distributors such as Incredible Connection, Hi-Fi Corporation and Esquire, who import tech and electronic goods from overseas, weighed in on the impact the volatile Rand has on their businesses. JD Group CEO, Grattan Kirk, opines that exchange rate movements are all part of its business, and as such, the group takes out forward cover for all items imported when orders are place. JD Group houses two of South Africa’s largest tech and electronics retail brands, Incredible Connection and Hi-fi Corporation. “In the case of tech products, as has been seen over the last three or four years, the dollar input prices have been coming down as well,” Kirk said. Reflecting on the impact of the rand, Kirk notes that manufacturer efficiencies, lower dollar component prices, coupled with a stronger rand, has led to a consistent lowering of retail prices for items such as TVs (LED,LCD) computers, computer printers and monitors, HiFi and audio equipment, already.

The cost of volatility

 §     The most obvious impact the Rand has on tech retailers shows up in the form of pricing. “Naturally the volatility of the Rand affects pricing, as it is more difficult to plan and to buy stock,” said local tech and hardware distributor, Esquire. 

§     “If the Rand dips, it is possible to increase the prices on products; but if you have made a big order of a certain product line at a certain Rand price, it is hard to recoup some costs if the value of the Rand suddenly drops, and this drop had not been factored in.”

§     “If there is substantial volatility in the Rand, which we were unable to predict, or factor in, then we do our best to hold our prices steady to the benefit of our clients,” Esquire said.

§     Incredible Connection and Hi-Fi Corporation, being much larger brick-and-mortar retail outlets, also build much longer-term security measures into their stock-piles to buffer any unexpected twists in the local currency’s performance.

§     “As a rule of thumb, we keep about two months stock in store or in our warehouses and the suppliers probably have between 30 and 60 days stock in their logistics infrastructure. That effectively means we have between three and four months stock in the “system” to cover short term exchange rate movements,” Kirk said.

§     “Thus, it’s possible to cope with weekly short-term movement in the exchange rate without having to change selling prices daily or weekly.”

§     But even when retailers and distributors take currency fluctuations into account, they are not immune from the effect of long-term trends or unexpected dips in the Rand’s value.

§     “Longer-term movements in the exchange rate do, however, end up being priced into the selling price. This is either effected by an increase or decrease in selling prices,” the JD Group head added.

Size matters

 Rand fluctuation has a contrasting impact on businesses, depending on the size of operation, while long-term movements in currency will hit both large and small tech importers, the sudden dips and peaks are more likely to impact smaller outlets, “for better, or worse”. 

§     “We have to manage our business with the exchange rate being an integral part thereof,” JD’s Kirk said. “We have been doing it for many years and have policies and procedures to accommodate the exchange rate risk, etc. Practically, you can manage exchange rate movements either up or down when they move slowly.”

§     “The real issue is when the rates move aggressively one way or the other and remain there for 2/3 months and then back again. That plays havoc with procurement and buying and stock holding, particularly for a large group like ours.” 

§     “Smaller players get an advantage if they are not holding a lot of stock when the rand exchange rate strengthens, as they can quickly buy cheaper.”

§     However, as Kirk pointed out, this could also work against smaller companies if the rand weakens: “Then they are forced to buy stock at a higher price, where we are carrying stock at the older, better exchange, hence, we have a pricing advantage.”

§     Esquire also highlighted the impact of such sudden Rand movements. “In the ICT distribution market, a 1% shift in price in any direction can have a real impact on profits,” Esquire said. “Careful forward planning is necessary and one has to try and peg the Rand at a certain trading rate over a period of time, such as taking a three month view.”

§     “It makes it more difficult. But one should not expect business planning to ever be easy. There are always unexpected occurrences which sometimes necessitate a modicum of improvisation.”

Source:

http://businesstech.co.za, dated 30 July 2012

Retailers use social media to identify trends

With the explosion in communications technology through mobile devices, tablets and applications, ever more consumers are willing to share information with each other online, and also with their favourite retailers and brands, a survey by IBM showed recently. This means companies need to influence customers to also influence other potential clients, which to a large degree can only happen by harnessing digital media. 

"The speed of technology innovation, consumer adoption and access to information has created an environment where everything is known and the consumer is truly the one in power, coalescing around shopping communities of ‘we’," said Jill Puleri, global retail leader of IBM Global Business Services. Increasingly, savvy retailers are responding to this and using technology to make sure that interaction with customers is spot-on, based on individual preferences, location and lifestyle. 

• Woolworths and Pick n Pay actively engage with customers on Facebook and Twitter. 
• FNB’s social media strategy aims to build sustainable relationships with customers.
• "It’s quite innovative that banks and insurers follow their clients on social media. They are doing so to try and understand the trends, to see what customers are thinking and spending on, with the view to come back into their organisations and asking what products and services they need to adjust," Colin Daley, associate director for advisory services at Ernst & Young said. 
• Gerard Dumont, IBM SA retail sector lead, believes there is a big opportunity for retailers to engage within these technologies.  
• "Mature markets have fairly developed internet economies and online shopping capabilities, whereas in growth markets these areas are less established. 
• "The uptake of social media through devices by younger generations and the growing middle class in growth markets means that social media is leapfrogging this lag they have in the internet gap," Dumont said.

Source:

Business Day, dated 13 July 2012

Retail "needs BEE Charter"

The Government must introduce a broad-based Black economic empowerment (BEE) charter for retailers to ensure they were fully compliant with BEE codes of practice, empowerment experts said on 11 July 2012. Despite BEE programmes by retail giants such as Spar, Pick n Pay, Massmart, Woolworths, Cashbuild, Clicks and JD Group, there has been general criticism that the retail sector is not fully compliant with BEE standards. Ajay Lalu, the MD of Black Lite Consulting, said that the government had little or no leverage on broad-based BEE in the retail sector. He criticised the sector’s enterprise development programmes and employee share schemes, saying some of them were used to sugar-coat empowerment programmes as they did not fundamentally transform the supply chain.
§     Lalu said retail empowerment programmes, including enterprise development, were inadequate unless retailers were prepared to establish a transformed and sustainable supply chain with real benefits flowing to Black people. 
§     Lalu stressed that more attention should be given to the manufacturing and retail sectors.
§     Andile Thloaele, the CE of consultancy Inforcomm, said the reason retailers lagged behind with BEE programmes was because they were not incentivised. He also added that BEE guidelines were too diluted to get the sector to fully comply. 
§     Lalu said deals such as the Massmart and Walmart merger would not have been opposed by the government if Massmart had good empowerment programmes or better employee relations. “In my view the merger would have received support from (the) government had Massmart been more proactive on its empowerment programme,” Lalu said. 
§     The retail sector, unlike other industries, does not have a transformation charter with set targets to be achieved by particular dates. 
§     Instead of full partnerships with Black-owned businesses, retailers have put in place a number of enterprise development programmes and broad-based employee share ownership programmes.
§     Massmart spokesman Brian Leroni said the company had placed 18 million shares in the Thuthukani Employee Trust, and staff was awarded units in the trust at a price of R49.98.
§     The retailer said the Walmart transaction resulted in the payment of R439 million to staff shareholders when Walmart acquired 51% of Massmart’s share capital at a price of R148 a share.
§     The retailer had also established a youth development trust to assist unemployed youth to set up Hot Dog Cafés at Builders Warehouse stores.
§     Clicks allocated shares to 7,965 permanent staff members, with Black employees receiving 71% of the shares.
§     Through its enterprise programme, Woolworths said, it had appointed Stuart’s Joinery, a Black family-owned company, as its preferred shop-fitting supplier for the company’s African stores and it supported BEE suppliers.
§     Pick n Pay’s chairman Gareth Ackerman said its employee share trust held 3,4 million shares in the company.
§     “Procurement from Black-certified businesses remains a priority and targets have been set for all buyers in all categories to ensure that they have an element of black procurement within their respective portfolios.” The company had also established an enterprise development foundation and a franchise academy.

Source:

Business Report, dated 12 July 2012

Retail Skills Shortage

The African continent is made up of 54 Countries, and despite the fact that 9 out of the top 10 of the worlds poorest countries are all in Africa, we are facing a dilemma regarding human capital, especially with regards to skills shortage and in particular within the retail sector.

Although Africa is the poorest continent in the world, it is also one of the few emerging markets still left. Due to this situation it is receiving more and more international attention from foreign investors. This coupled with the fact that many international retailers are also starting to reach saturation point in their native countries, they  are looking to Africa and in particular South Africa for growth opportunities.

• Currently Samsung is on track to meet $10bn target. According to CEO Park Kwang Kee. Samsung is targeting a 100% growth in West, East and Southern Africa. 
• China is now Africa's largest trading partner. Bilateral trade grew more than 43% to nearly $115bn in 2010. 
• Social media apps are being developed purely for the African consumer, and has already surpassed 60 million users.
• Africa is currently the fastest growing mobile phone market in the world, dominated by MTN.

Did you know, foreign investors already own in the region of:

 54%                       Woolworths

 60%                       Mr.Price

 70%                       Truworths

 90%                       Massmart

South Africa is already facing a serious shortage in retail skills, and situations where retailers like Shoprite, Mr Price and Truworths, who are planning new stores from Angola to Nigeria, to benefit from rising African wealth is just adding fuel to the fire.

According to a 2010 report by McKinsey, Africa’s swelling middle class may boost household spending by 63% to $1,4-trillion by 2020.

Truworths already have 21 stores throughout Africa, Shoprite, Africa’s largest super-market chain has 123 stores in 15 countries and are looking to spend R1,5bn over the next 3 years on expansion.

To give an example of just one of the many retailers, Shoprite opens more than 50 new shops annually, which creates  jobs and a demand for skills in the sector.

According to CEO Joel Dikgole of the Wholesale and Retail Sector of Education and Training Authority (W&RSETA) states that “More than 42000 store managers will be needed in the next five years to meet demand in the rapidly expanding industry.” - This is in South Africa alone.

For every store manager there are a host of other skilled retail positions required. The question is where are all these skilled individuals going to come from? The wholesale and retail sector already contributes in the region of 15% of our GDP and employees in excess of 25% of our economically active population.

If this situation is not addressed in the present, then we are undoubtedly going to have problems into the future.

The Master Retailing Team

To reflect and ... Act.

The difference between poor countries and the rich ones is not the age of the country. This can be shown by countries like India & Egypt, that are more than 2000 years old and are poor. On the other hand, Candada, Australia & New Zealand, that 150 years ago were inexpressive, today are developed countries and are rich.

The difference between poor & rich countries does not reside in the available natural resources. Japan has limited territory, 80% mountainous, inadequate for agriculture & cattle raising, but it is the ninth strongest economy in the world. Then there is the small country of Switzerland, which does not plant coco but has the best chocolate in  the world. In its little territory they raise animals and plant the soil during 4 months per year. Not enough, they produce dairy products of the best quality. It is a small country that transmits an image of security, order and labour, which has not only made it the world's strong safe, but is also ranked as the number 1 economy in the world.

Race or skin color are not important: Immigrants labeled lazy in their countries of origin are the productive power in rich European countries.

You may then ask, what sets the rich countries aside from the poor?

The difference is in the education of its people, framed along the years by the attitude and culture.

On analyzing the top 10 behaviors of the people in rich & developed countries, we find that the great majority follow the following principles in their lives:

1. Passion for ongoing learning & education;
2. Ethics, as a basic principal;
3. Integrity;
4. Responsibility;
5. Respect to the laws & rules;
6. Respect to the rights of other citizens;
7. Work loving;
8. Strive for saving & investment;
9. Will of super action; and
10. Punctuality.

In poor countries, only the minority follow these basic principles in their daily life.

We are not poor because we lack natural resources or because nature was cruel to us. We are poor because we lack education. We lack the will to comply with and teach these functional principles of rich & developed societies.

Let's concentrate on implementing these basic 10 principles and change the future of our great country.

The Master Retailing Team - Proudly South African.

Retail Vacancies

Please send your CV to CV@mretailing.co.za should you be interested in any of the below mentioned vacancies. Further details regarding the position will be discussed with applicable candidates including salary, location etc.

Master Retailing has various clients who are Blue Chip retailers all looking to employ the right caliber of individuals into the following available positions:

• 3 x Senior Credit Analyst
• 1 x Receptionist
• 1 x Planner
• 1 x Area Manager
• 2 x Admin Controller
• 7 x Admin Manager
• 2 x Admin Supervisor
• 6 x Branch Manager
• 7 x Sales Manager
• 15 x Trainee Manager

If you haven't heard form us within 14 days, please consider your application as unfortunately being unsuccessful. We will however retain your CV for any future positions you may be deemed suitable for. 

Kind Regards

The Master Retailing Team

Wholesale versus Retail

Far higher real wholesale sales growth than real retail sales in February may herald a switch from consumer-dependent SA economic growth to a more business-dependent growth.

Real wholesale trade sales at constant (2000) prices for February 2012 grew by 13.9% year on year (y/y) compared with an upwardly revised 10.8% (9.2%) y/y increase in January, after a 6.2% rise in 2011, Statistics SA data showed on Thursday, 19 April 2012.

This compared with a 7.2% y/y rise in real retail sales in February after a 6.1% gain in 2011. The I-Net Bridge consensus forecast for real retail sales February was 5.0% with forecasts among the ten economists ranging from 2.3% to 7.5%.

Seasonally adjusted real wholesale trade sales increased by 2.7% in February compared with January. This followed month on month (m/m) changes of 2.8% in January and 0.6% in December 2011. By contrast, seasonally adjusted retail trade sales fell 2.2% in February compared with January. This followed m/m changes of a 1.0% decline in January and after a 1.1% rise in December 2011.

Wholesale trade sales are not directly correlated with real retail sales, as for example, a major component of wholesale sales are fuel sales, which are captured in motor trade sales not retail sales, but over the time the two series tend to move in the same direction.

Measured in nominal terms (current prices), wholesale trade sales increased by 18.5% in the three months ended February compared with the three months ended February 2011.

The three major contributors to this increase were: dealers in solid, liquid and gaseous fuels and related products (36.0% and contributing 7.8 percentage points); dealers in machinery, equipment and supplies (17.3% and contributing 2.6 percentage points); and dealers in other household goods except precious stones (18.5% and contributing 1.8 percentage points).

Nominal retail sales grew by 12.2% y/y in February led by a 16.0% y/y surge in general dealers (supermarkets).

In 2011 real gross domestic product growth of 4.0% as measured from the expenditure side was supported by real household consumption expenditure growth of 5.0%, government consumption expenditure of 4.5%, and gross fixed capital formation of 4.4%.

This year household and government consumption is expected to slow, but the hope is that fixed investment will rise.

The 50% y/y surge in Value-Added Tax (VAT) refunds to R11.8 billion in February could point to a surge in capital expenditure as VAT vendors can claim a refund for their capital equipment purchases.

VAT charged for capital equipment is a separate entry in the VAT return, but at this stage the South African Revenue Service (SARS) does not disclose how much capital equipment VAT was claimed. What they do provide is a domestic VAT, an import VAT and then refunds.

Confirmation as to whether the February VAT refund surge is due to capital equipment purchases must therefore be looked for in other places. One such source is the national government monthly expenditure account and that shows that there was a 44.6% y/y jump in February in payments for capital assets.

On April 1 Finance Minister Pravin Gordhan said that although government spending was R4 billion below budget, this was due to under-spending on goods and services, rather than capital assets.

The government announced in November 2010 its New Growth Path (NGP) which has as its central focus a massive investment in infrastructure as a critical driver of jobs across the economy. The framework identified investments in five key areas namely: energy, transport, communication, water and housing. Sustaining high levels of public investment in these areas will create jobs in construction, operation and maintenance of infrastructure. The NGP expected the infrastructure programme to trigger a local supplier industry boom. That was essentially what happened in 2003 to 2007 when fixed investment grew at double-digit rates pushing GDP growth above 5%.

In the fourth quarter 2011, the private sector fixed investment seasonally adjusted annualised quarterly growth rate rose to 6.2% from 5.4% in the third quarter, that of public corporations to 9.6% from 9.0% and general government to 7.8% from 3.4%.

Source: Helmo Preuss of Bizcommunity

Toll Road Debacle

As Master Retailing are members of the Consumer Goods Council of South Africa (CGCSA), we often receive updates that may interest the Master Retailing followers. Herewith below the latest on the toll road fiasco:

Dear member,

On the 13^th of April 2012 the Department of Transport published the Gauteng e – toll tariffs in the Government Gazette (#35263), attached herewith. They have now introduced a new tarriff which is almost 6 times higher than the tagged user. To date, the upper limits were indicated at R0.58c per kilometre for non-tagged light vehicles and discounted rate of R0.30c for tagged users.

SANRAL have now introduced a new “alternate user” category of R1.74c per km.  This is a shocking new rate for those who do not register their vehicles on the SANRAL database.

This new category rate of R1.74c / km for the road user who chooses not to register their vehicle with SANRAL is seen as a tactic to force people to register. This is a new issue that may have to be urgently brought before the National Consumer Commissioner and will probably have implications for the engagement process that took place with the Commission last week between the DA and SANRAL. 

It is also important to note that the Gazette has made no mention of the tariff exemptions for minibus taxis and commuter busses.  In the absence of any details at this late stage, it must be assumed that they are in fact not exempt. The absence of clarity on the criteria for exemptions has further implications for both vulnerable groups (e.g. pensioners, mobility impaired).  In addition, the tourism industry which has numerous permitted vehicles and drivers similar to minibus taxi operators, have good reason to expect that they should also qualify for exemptions.   

This once again highlights SANRAL’s lack of transparency  which may further drive a wedge between the citizens of Gauteng and the authorities on the matter of e-tolls. We are continuing to urge members not to register as this matter is to still to go before the court on the 25 April.

CGCSA has engaged with SAVRALA who are one of the applicants challenging this matter, they are optimistic in the prospects of success in obtaining an interdict against e tolling coming into effect on the 30^th April 2012

We encourage all members not to be influenced by this latest move by SANRAL and to await the court outcome on the 26^th.

CGCSA will keep you posted should there be any developments.

Full details of application can be reviewed  on the website: www.outa.co.za

Happy motoring!

The Master Retailing Team

 

Fear of Change

I would like to share with you some extracts of something I read recently in a book by an author named Joyce Meyer in a New York Times best seller called “Never Give Up!” which has many inspiring stories about relentless determination to overcome life’s challenges and I would highly recommend this to anybody seeking daily motivation and guidance.

Former US president Woodrow Wilson said: “If you want to make enemies, try to change something.” For some reason, many people don’t like change, and I believe it is often because they fear it. Many times, when we grow weary or simply become bored with a situation, we get restless and begin to pray: Oh, God! Something has to change!” Then, when God tries to bring change into our lives, we say, “Lord, what are You doing? I don’t think I can take this change!” We often find ourselves caught in the tension between wanting change and fearing change.

Thank God, He never changes. Because He is always the same, we can trust Him through any changing circumstances or situations. Hebrews 13:8 says: Jesus Christ (the Messiah) is always the same, yesterday, today, and forever.” And God Himself speaks in Malachi 3:6 saying: “For I am the Lord, I do not change.”

This should give us great courage and comfort when we face changes in our lives. We do not need to fear change; we can handle it, because God remains the same. What if Abraham Lincoln had been afraid of change? He would not have signed the Emancipation Proclamation and the horror of slavery would have continued in America. What if Orville and Wilbur Wright had been afraid of change? We would all be stuck with travelling on the ground or sailing over the water instead of flying through the skies. What if Thomas Edison, had feared change? We would still be reading by candlelight after sundown. What if Henry Ford had feared change? We would still be walking or making use of horse and carriage transportation. I am sure you can think of many other wonderful changes that have occurred in your life that has brought joy to you and your loved ones.

I share these vignettes with you to inspire you to think about the many good changes that have made peoples’ lives better and easier through the years, for example just think of the changes in the medical profession, can you imagine going back to the old ages of dentistry? Ouch!!!

Remember, the fear of change could keep something wonderful from taking place for you. I urge you not to let that happen, but to boldly embrace the changes that come your way. Without change there is no growth, just think of a baby growing up, they are changing daily in order to grow. Lastly remember that anything that is not growing is dying.

The one thing you can be certain of is change, so embrace it and don’t fear it.

The Master Retailing Team