Retail news. August 2013 Zimbabwe internet mobile phone traffic tops sunday mail. Saturday, 21 July 2012 Business Editor

Debonairs a success

Debonairs Pizza has been a particularly successful export for Famous Brands in Africa - it has outlets in the Kenya‚ Democratic Republic of Congo (DRC)‚ Sudan and Nigeria.

The opportunities in the rest Africa for Famous Brands are "quite big‚" according to Duane Cable‚ portfolio manager at Coronation Fund Managers.

"We think the business is well positioned given its experience in SA. The market here is still underpenetrated relative to developed market trends‚ and the rest of Africa is in an even earlier stage‚ so we think potential is definitely there. We rate the business highly. It's quite capital light. They have a great management team with strong brands‚" he said.

While rich pickings are clearly available‚ this must be tempered with the reality of doing business in Africa‚ as risks such as the lack of formalised retail infrastructure‚ power shortages and poor logistics exist.

Infrastructure a challenge

Bechoo says the greatest challenge for Famous Brands will be to establish a supply chain to service its outlets as infrastructure in Africa is poor.

"The other challenge that it could encounter is the difficulty in establishing credible and sustainable suppliers of inputs. African expansion by companies which supply the group in SA is still slow and tentative due to the political and economic risks still evident in African countries‚" he says.

"On the whole‚ Famous Brands' African expansion strategy should therefore be tentative to prevent a misallocation of capital‚ together with a mistiming of entry." Bechoo says.

Africa's fast-growing prospects have caught the eye of local players Spur Corporation and Taste Holdings‚ as well as global chains.

US competition

The US's Subway sandwich franchise‚ which is owned by Doctor's Associates has around 30 restaurants on the continent and aims to open twenty 20 in Kenya over the next six next years‚ and others in SA and Zambia. While Domino's Pizza‚ which is the largest pizza chain worldwide‚ opened two restaurants in Nigeria last year‚ and is exploring expansion opportunities in Kenya and SA.

Another international food company establishing a steady platform in Africa is YUM Restaurants International‚ through its KFC‚ which it intends to grow "exponentially" in the future.

The group now has over more than 1‚000 KFC restaurants on the continent‚ although SA‚ where it opens between 40-50 stores a year‚ still makes up the majority of the group's African portfolio. Yum also operates the Pizza Hut and Taco Bell brands.

Brand recognition

According to KFC Africa MD Doug Smart‚ a challenge in the rest of Africa is that consumers don't really know the brand as well.

"KFC has been in SA since 1971 and so almost all of our consumers grew up with it and they know it‚ it's a household name‚ in many parts of Africa that is not the case they may not have ever heard of it ever. Another challenge is that because we don't have scale‚ our offerings are more expensive than they are in SA‚ which by definition means we appeal to a smaller audience and so we are very interested in quality growth in Africa‚" he says.

The group is entering countries including Zimbabwe and Uganda‚ and is looking to expand into other new African markets as well. According to Bruce Layzell‚ the group's GM of new African markets‚ Nigeria would be "a gem in Africa" for the group‚ given its size‚ economic growth driven by oil wealth‚ and its growing middle class.

In November last year KFC in November last year opened the first ever drive-through restaurant in Ghana.

Source: Business Day

Challenge: engaging consumers across all channels. By: Steve Jones. 2 Apr 2013

The key challenge for businesses in 2013 will be how to develop and execute strategies that allow for meaningful and seamless cross-channel consumer engagement. In an 'always open, buy almost anything at any time, delivered (or collected) anywhere' market, local businesses are going to have to work hard to understand and deliver on the needs of their customers. This requires a movement away from the tendency in today's highly competitive market for businesses to look for growth by adding new products to their mix, adding more stores to their network or by spending more money on advertising campaigns.

The trouble is that these efforts are relatively 'easy' to execute and are often done in isolation, resulting in short-term growth spikes that do little to create value. It is much harder to re-evaluate the total brand offering and make meaningful changes that lead to sustainable and profitable growth.

Developing relationships

Retail in South Africa is experiencing a radical shift: the industry is evaluating and coming to terms with new channels because of the ever-changing expectations of more digitally empowered and global thinking consumers. The opportunity to develop more meaningful and loyal relationships with consumers can only be achieved with strategies that focus on designing better experiences and services accordingly, instead of the usual product, store or campaign-based activities.

When we learn the real meaning and value of life-long customer relationships, whether in store or online, we soon come to realise that the job of the organisation (and everyone in it) is not only to sell product, but also to appreciate how the customer journey and the store environment influence the transaction and the experience.

With as many as 8 million brands in the market, the transaction is now much more than the exchange of money for product. The factors of time, cost and anxiety need to be written into the equation to determine proper assessment of the experience. In restaurant terms, the food, the service and the ambience are the difference between a good, bad or amazing experience.

People strategies needed

When we understand this, the store is no longer just a place to purchase product, but rather becomes the product, and should be seen as an experience delivery centre. The measures of success will no longer be the traditional monthly foot traffic and sales, but be replaced by what percentage of customers made a purchase on any particular day.

A good marketing strategy, however, is not enough - and more often than not the missing piece is people, not technology. People strategies are needed to pull off a good experience: intelligent, trained, empowered people are the glue that holds the entire experience together. There is a real danger in this digital age to want to 'mechanise' the system. I have not yet met a device that can outplay a spirited, helpful and attentive store assistant or manager.



Edcon still struggling to grow market share. By: Zeenat Moorad. 28 Nov 2012

Edcon‚ the unlisted owner of clothing chains Edgars and Jet‚ on Tuesday said retail sales increased marginally by 2.4% to R5.5bn in the second quarter of financial year 2013‚ as it continued to trudge along and step up efficiencies in order to arrest market share declines to rivals.

The company‚ which also owns CNA‚ Red Square and Boardmans‚ made a loss of R592m in the three months to 29 September‚ from a loss of R1.18bn a year earlier.

Jürgen Schreiber‚ CEO of Edcon‚ said the quarter under review was a challenging one.

"But we are on the right track‚ which is the important thing. There's still a way for us to go; it's not a fixing from one corner to another‚" he said.

Revenue was at R5.8bn from R5.7bn in the same quarter last year. Trading profit slipped to R139m from R194m.

Simon Anderssen‚ equity analyst at Kagiso Asset Management‚ said Edcon's 2.4% year-on-year retail sales increase in the second quarter‚ showed that the group continued to lose market share to its listed competitors.

"Same-store sales growth of 0.8% highlights that the group is not yet seeing meaningful benefits from its strategic interventions‚" he said.

Local players such as Truworths‚ Woolworths and The Foschini Group have streamlined their fashion supply chain in the face of heightened competition as global players such as Zara and others expand in SA.

Edcon's Edgars division grew total retail sales by 4.9%‚ but on a like-for-like basis there was a 2.4% reduction in retail sales.

"We took a pretty tough stance on the winter markdowns. We really wanted to go for a good hard clearance strategy‚" Schreiber said.

The company is pushing hard to fix its Edgars business by revamping stores‚ and beefing up its merchandising as it turns its attention to "quick response" modern fashion. It is also adding more international brands to attract footfall.

The company entered into a partnership with local group The House of Busby and Britain's Arcadia Group to bring Topshop‚ known for its cheap‚ chic apparel to SA.

Edcon's discount division‚ which includes Jet and Legit‚ grew same store retail sales by 4.9%.

Abri du Plessis‚ CEO and chief analyst at Gryphon Asset Management‚ described Edcon's results as "disappointing".

"They're struggling to get it right. They have a huge debt load but that should not be affecting the way they're trading‚" he said.

Edcon‚ which was once known as the retail jewel of SA‚ has significantly underperformed its peers since its highly leveraged private equity buyout in 2007 by Bain Capital.

Five years on‚ the company is still saddled with debt: as at September 29‚ its debt was at R23.4bn‚ compared with R24.5bn on March 31.

It is expected that the R10bn injected since Absa took over Edcon's store card book in June will allow it to reduce debt.



Consumer spending online rises 30% to R2,6bn [bizcommunity 9 Jan 2012].

By: Annaleigh Vallie. 9 Jan 2012 11

South Africans spent about R2,6bn online last year, 30% more than in 2010, research from World Wide Worx shows. "The final numbers are not yet in and this figure could grow to almost 40%," World Wide Worx MD Arthur Goldstuck said late last week. "There were a few key ingredients that the growth can be attributed to."

"Firstly, there has been significant growth in internet users that have been online for more than five years." These people are just waiting to be persuaded to spend their money online, he said.

"Secondly, websites are far more user-friendly now with more payment options. More and more evidence shows people are using retail websites to make purchasing decisions and to do research, which has meant the websites have become an integral tool."

According to a World Wide Worx research report, entitled Online Retail in SA 2011, the total retail market in SA was worth R561bn in 2010 with online retail accounting for R2bn or 0.36%.

This is up almost threefold from 0.13% of total retail sales in 2004, but remains a small part of the overall pie. As online retail sales grow, however, there is clearly much potential to realise in this market, Mr Goldstuck said.

This has been the case for latecomer to the market for luxury goods Forevermark - a diamond brand of jewellery produced by De Beers. The brand introduced in 2008 has found its online presence has helped people to learn more about the brand and driven sales in the East, Forevermark CEO Stephen Lussier said.

Local high-end retailer Woolworths said the number of customers and sales have grown each year. "Improved connectivity and online user experience has been the key to driving e-commerce activity. Many Woolworths customers are transacting on our site from work, possibly for convenience. The range of products available online will continue to grow, as will the delivery coverage area," the company said.

In the US, world's largest ecommerce market, online retail was about US$165bn in 2010.

Even as traditional retail sales fell in 2009 in response to the worldwide recession, global online retail sales grew 14.5% in 2009 to $348,6bn. The biggest contributor was electronics, making up about 22.6% of the market, the research report says.

According to the report, in terms of proportion of all global retail, online retail sales accounted for only 2.5% of the total. For the top 100 retailers worldwide, online retail accounted for 6.6% of sales. By 2014, global online retail is expected to reach $778,6bn, increasing at 22.2% a year.



Clothing retailers agree to fund factory improvements in Bangladesh. H&M, Zara chain owner Inditex among major retailers to sign safety deal

The Associated Press. Posted: May 13, 2013 5:35 PM ET

 

Swedish-owned H&M is the world's second-biggest clothes retailer and is known for its low-priced fashions. It was one of several large clothing retailers that agreed to fund safety improvements at Bangladeshi garment factories.

Some of the biggest Western clothing retailers embraced a plan that would require them to help pay for factory improvements in Bangladesh as the nearly three-week search for victims of the worst garment-industry disaster in history ended Monday with the death toll at 1,127.

Bangladesh's government also agreed to allow garment workers to form unions without permission from factory owners. That decision came a day after it announced a plan to raise the minimum wage in the industry.

The collapse of the eight-storey Rana Plaza factory building April 24 focused worldwide attention on hazardous conditions in Bangladesh's garment industry, where workers sew low-cost clothing that ends up on store shelves around the globe, including the U.S. and Western Europe.

It came months after a fire at another garment factory in Bangladesh in November killed 112 workers.

Swedish retailing giant H&M, the largest purchaser of garments from Bangladesh; Britain's Primark Stores and Tesco; C&A of the Netherlands; and Spain-based multinational Inditex, owner of the Zara chain, said they would sign a contract that requires them to conduct independent safety inspections, make reports on factory conditions public and cover the costs of fire and building safety repairs and improvements.

It also requires them to stop doing business with any factory that refuses to make necessary safety improvements.

Two other companies agreed to sign last year: PVH, which makes clothes under the Calvin Klein, Tommy Hilfiger and Izod labels, and German retailer Tchibo. Others have refused to sign, complaining that the plan would be legally binding and costly.

A 'pragmatic step' for retailers: H&M

"This agreement is exactly what is needed to finally bring an end to the epidemic of fire and building disasters that have taken so many lives in the garment industry in Bangladesh," said Scott Nova, executive director of the Worker Rights Consortium, a worker rights group that had been one of the organizations pushing for the agreement.

H&M said the agreement is a "pragmatic step," and urged more brands to reach a pact that covers the entire industry of 5,000 garment factories in Bangladesh.

"Our strong presence in Bangladesh gives us the opportunity to contribute to the improvement of the lives of hundreds of thousands of people and contribute to the community's development," H&M spokeswoman Helena Hermersson said. "We can slowly but surely contribute to lasting changes."

Primark is one of the few retailers that have acknowledged that their clothes were being made in the Rana Plaza building at the time of the collapse. The building housed five clothing factories.

Minimum wages among lowest in world

Mohammed Amir Hossain Mazumder, deputy director of fire service and civil defence, said the search for bodies at Rana Plaza was called off Monday evening. The last body was found on Sunday night.

The Rana Plaza owner and eight other people, including garment factory owners, have been detained in the investigation. Authorities say the building owner added floors to the structure illegally and allowed the factories to install heavy equipment that the building was not designed to support.

Working conditions in the $20-billion US industry are grim, a result of government corruption, desperation for jobs, and industry indifference. Minimum wages for garment workers are among the lowest in the world at 3,000 takas ($38 US) a month.

Bangladesh's cabinet approved an amendment to the 2006 Labour Act on Monday lifting restrictions on forming unions in most industries, government spokesman Mosharraf Hossain Bhuiyan said. The old law required workers to obtain permission before they could unionize.

"No such permission from owners is now needed," Bhuiyan told reporters after the Cabinet meeting presided over by Prime Minister Sheikh Hasina. "The government is doing it for the welfare of the workers."

Union organizers harassed

Union leaders responded cautiously.

"The issue is not really about making a new law or amending the old one," said Kalpana Akter of the Bangladesh Centre for Workers Solidarity, a group campaigning for garment workers' rights. "In the past, whenever workers tried to form associations, they were subjected to beatings and harassment. The owners did not hesitate to fire such workers."

Bangladesh's government has in recent years cracked down on unions attempting to organize garment workers. In 2010 Hasina's government launched an Industrial Police force to crush street protests by thousands of workers demanding better pay and working conditions.

On Monday, nearly 100 garment factories shut down in the Ashulia industrial area near Dhaka after protests erupted over the death of a worker, Parul Akter, 22, whose body was found Friday inside a garment factory. A local police official, Badrul Alam, said she committed suicide.

Thousands of workers took to the streets and vandalized vehicles and shops before police used sticks to disperse the protesters. Several people were injured, said a police official who spoke on condition of anonymity because he was not authorized to speak publicly.

Wage board to oversee pay raises

Bangladesh has 3.6 million garment workers. It is the third-biggest exporter of clothes in the world, after China and Italy.

On Sunday, the Bangladesh government set up a new minimum wage board that will issue recommendations for pay raises within three months. The Cabinet will then decide whether to accept those proposals.

The wage board will include representatives of factory owners, workers and the government.

Government officials also have promised improvements in safety.

Since 2005, at least 1,800 garment workers have been killed in factory fires and building collapses in Bangladesh, according to the advocacy group International Labor Rights Forum.

In the blaze last November in Dhaka, the factory lacked emergency exits, and its owner said only three floors of the eight-story building were legally built.



Burger King to open in South Africa. 8 Nov 2012

The world's second largest fast food hamburger chain, Burger King, has announced a joint venture (JV) agreement with Grand Parade Investments (GPI) to launch the franchise in South Africa. The opening of the first restaurant in the innovative new global design is planned for Cape Town in 2013.

The JV is subject to regulatory approval in South Africa and is expected to close before the end of the year. According to GPI, its exclusive rights and national rollout will enable the business to become a major presence and employer in South Africa. The aggressive growth plans are expected to contribute significantly to the South African economy and create a number of jobs for South Africans over the next five years and beyond.

Founded in 1954, the system operates in over 12 600 locations serving over 11 million guests daily in 83 countries and territories worldwide. Approximately 95% of its restaurants are owned and operated by independent franchisees, many of them family-owned operations that have been in business for decades. In 2012, the group successfully introduced similar joint ventures in Russia and China and in 2011, in Brazil - all focused on increasing market share in the fastest-growing economies worldwide.

"We are thrilled to announce the continued expansion of the brand with this JV," says José Cil, president, EMEA, BKW. "We have closely studied the region with GPI and believe that now is the time to develop the brand in South Africa. Today's announcement is an example of our company's strategy to accelerate international expansion by creating master franchise agreements with strong local partners in high-growth emerging markets."

"Hassen Adams and the management team at GPI have an excellent operational and sales record demonstrating strong growth and solid sales performance in its leisure portfolio over the last couple of years. We look forward to significantly expanding the scope of its portfolio with its first QSR (quick service restaurant) investment," he concludes.

"The company is perfectly positioned and poised to enter the QSR market with a significant number of restaurants planned over the next few years," said Hassen Adams, chairman of GPI. "Our experience and our successful track record in our outlet driven business will add substantial value to the newly acquired master franchise rights."

Mayor of Cape Town, Patricia de Lille added, "The City of Cape Town works hard to create a prosperous city that enjoys economic growth and development and job creation. Foreign direct investment that boosts our city and our country is warmly welcomed. We are honoured to welcome the global giant to Cape Town and South Africa. The City of Cape Town congratulates GPI on its JV and its efforts in bringing this high quality global brand to South Africa."

GPI was selected for a combination of key factors including its financial resources, industry-leading operational knowhow in the hospitality sector and expertise in running outlet driven businesses. Since its foundation in 1997, GPI has reported strong growth and solid revenue performance across its portfolio of investments.



Burger King opens first SA store. By: Paul Vecchiatto. 10 May 2013

US fast food franchise Burger King opened its first SA store at midday on Thursday, 9 May 2013, in the centre of Cape Town to the blare of DJs‚ music and no speeches. Burger King will be competing head on with its international rival McDonalds‚ which has been in SA since 1995‚ and a plethora of locally owned fast food chains such Nandos and Steers.

JSE-listed Grand Parade Investments (GPL) owns 8% of the Burger King franchise with the US company holding the remainder.

Grand Parade Investments chairman Hassan Adams said the Burger King stores will be company owned as it develops its distribution network and trains staff to operate in the US company culture.

"Burger King burgers are made exactly the same way around the world and we have to ensure that the quality is absolutely consistent in every new store‚" he said.

Burger King SA chief executive Jaye Sinclair said the company had opened a centre that will train groups of 100 people at a time on how to operate a store.

"What we are doing is creating a career path for people. We want to train them from how to cook a burger to eventually managing a store‚" he said.

Sinclair said anyone of any age could apply to work at Burger King.

"As long as they are 18 or older. The eldest person is 55-years‚" he said.

The store is located in Herengracht Square‚ one block away from the Cape Town International Convention Centre where the World Economic Forum on Africa is underway with various government and business heavyweights giving speeches about Africa's economy and how to uplift the continent.

But the crowd of an estimated 2‚000 people at Burger King appeared to be either totally unaware of the economic conference or expressed disregard for it.

"I don't care what they are saying there (World Economic Forum) ... at least here I stand a chance to get a burger and maybe I can get a job application‚" one member of the crowd said.