Retail news. Semester 1 of 2014 table of contents

Pick n Pay online shoppers can use PayU. 25 Jul 2012

Enhancing the convenience for Pick n Pay's new online store is online payment service provider, PayU. The payment method is available in all South African regions and is a convenient, fast and safe way to pay for purchases made on the online store. It allows customers to store multiple credit card details for future purchases and speed through checkout. It is free to use with no sign up, monthly or transaction fees.

"As a payment method, it enables secure transactions online. With the increase in registered users, it is evident that the South African public is recognising that we are making their online shopping experience much faster and convenient," says Mark Chirnside, CEO of PayU. "To use, a consumer merely needs to link his or her various cards and look out for the logo when paying online."

Mike Cotterell, head of online shopping at Pick n Pay said, "The partnership contributes to giving our customers a wider range of payment options for their online shopping. We are constantly seeking ways to make our online shopping experience the best it can be and customers can now use their smart shopper points against their online spend."

Chirnside concludes, "Our aim with the various products, such as the branded wallet, is to enhance and guarantee payment security while providing a more convenient, hassle-free online shopping experience for our users. This consumer confidence will play an integral role in the current rise of the Internet economy, which has proven to be a key component of the South African economy."

Owned by Naspers, the company's products include a digital wallet for consumers and a PCI DSS level 1 certified payment gateway for businesses.

New owners for Toys R Us and Reggie's. 4 Dec 2012

Toy and baby retailer Redgwoods (Pty) Limited, owners of Toys R Us and Reggie's stores, has been sold to Durban-based businessmen Christian Larsen and Mohsin Mia. The company was sold as a going concern by Maurice Sacher and Issy Zimmerman who each owned 50% of the business. The sale, for an undisclosed amount, was concluded after five months of negotiations. The new owners take over a business consisting of 65 stores countrywide as well as Reggie's and Toys R Us online stores.

"We have built a very successful business which is profitable but we feel it is time for us to enter a new phase in our lives and pursue other interests. There are no immediate changes forecast for staff or systems," says Zimmerman.

He said Mia and Larsen are a perfect match for the business with strengths in logistics, sourcing and licensing, having been in the wholesaling of toys and baby products for nearly 13 years. They were the largest local supplier to Redgwoods in 2011. They have however on-sold their wholesale toy and baby business to a German toy manufacturer who is seeking a foothold into Africa.

"They will add tremendous value to the supply chain and further enhance profitability of the Toys R Us and Reggie's brands."

Zimmerman said the transaction has been approved by South Africa's competition regulators and brand owners Toys R Us International.
The new owners envisage an aggressive store roll-out into Africa and a revamp of the store formats including the introduction of smaller versions for convenience.

The effective ownership and control was officially passed onto the new owners on 1 December 2012.

Africa is where it's at for retail. 3 Apr 2012

For global retailers looking to secure long term growth and diversify their source of income, setting up an African strategy is key. The continent's gross domestic product (GDP) is forecast to grow above 5% annually over the next five years - that's 2% more than in developed markets. GDP is one of the primary indicators that is used to gauge the health of a country's or continent's economy.

In 2011, sales growth for the Middle East and Africa reached 4%, making it the fastest growing region for retailing in the world, according to Euromonitor International.

"Africa's young urbanising population and underdeveloped retailing market means there's an unmet demand for consumer goods," Cedric Bra, retailing analyst at Euromonitor International said. This, "Afro-optimism" has seen a deluge of retail players pour cash into expansion plans as far north as Ethiopia.

According to Bra, the fact that the world's largest retailer Wal-Mart decided to take a majority stake in the SA retailer Massmart (MSM) last year is proof that Africa now exists on the global retail map.

This supports the view of Natalie Berg, research director at Planet Retail, who recently said Wal-Mart would not be the last global heavyweight to enter SA.

"If I had to put money on it, I'd say Tesco will be the next ... but not anytime soon. "If the opportunity presented itself, I'm sure they wouldn't turn their noses up," she said at a breakfast organised by the South African Council of Shopping Centres (SACSC).

Now, while rich-pickings are clearly there, risks do exist - Africa is a tough region to trade in for formal retail operations. Lack of infrastructure and limited energy supply affects businesses, as does the volatile currency risk. And significant competition can be felt from informal traders.

"Overwhelming bureaucracy and trade barriers disrupt supply chain and result in very high cost of operations and impact margins," Bra added.

In a report examining the barriers that stifle cross-border trade within Africa, the World Bank revealed that Africa's largest retailer Shoprite Holdings (SHP) spends US$20,000 a week in import permits to truck meat, milk and other goods to its stores in Zambia alone.

"For all countries it operates in, approximately 100 single entry import permits are applied for every week; this can rise up to 300 per week in peak periods.

"As a result of these and other requirements, there can be up to 1,600 documents accompanying each truck Shoprite sends with a load that crosses a border in the region," the World Bank stated.

Shoprite has earned its stripes as "continent kingpin", with the largest footprint, trading in various African countries for well over 20 years. Part of its success no doubt owing to its first mover status.

"Being the first in a country where most customers shop in small scale shops, open markets and informal settings is a real advantage because it can offer them a different shopping experience.

"The fact that they can shop in air-conditioned stores, have access to a larger array of branded products and better quality really makes a difference," Bra said.

Despite high trade barriers and supply challenges, Shoprite (SHP) will be adding twelve stores in countries like Nigeria and the Democratic Republic of Congo by the end of June, its CE Whitey Basson said.

Upmarket retailer Woolworths Holdings (WHL) is shifting its focus from Australia to Africa, swapping its franchise based model for a more involved joint venture strategy.

The group's African operations currently make up 3% of its total turnover, a number they're hoping to push to 10%. "The opportunities in Africa are immense," Bra said.

"Countries such as Nigeria, Ethiopia and the Democratic Republic of Congo offer large potential for big scale retailers in the future.

"They have a total population of 300 million and a combined GDP that is expected to reach about US$380 billion in 2016 - that's almost as big as the United Arab Emirates," he added.