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

A major threat to the meat supply chain's reputation and integrity

Therefore, it appears that the best prospect for "redress" is for the National Consumer Commission (NCC) to conduct an investigation into whether suppliers at any level of the value chain have been deliberately misleading. If this is found to be the case, the matter can be settled in terms of which suppliers might agree to put safeguards in place to ensure proper manufacturing practice and labelling. If the matter cannot be settled, the NCC has the option of prosecuting the matter at the Consumer Tribunal or issuing a compliance notice detailing what steps suppliers should take to ensure proper disclosure and labelling. If suppliers fail to adhere to the compliance notice, then an administrative penalty may be levied.

Ultimately, the scandal poses a major threat to the integrity and reputation of the meat supply chain in South Africa and the incentive to correct the situation lies in re-building consumer trust rather than any draconian punishment to be imposed under the CPA - it is not that kind of an Act. The golden rule of compliance with the CPA is voluntary consumer-orientated conduct by suppliers; open communication and the taking of proactive steps to correct problems in the supply chain will be in keeping with consumer rights and also obviate the need for the NCC to issue compliance notices or prosecute the matter before the Tribunal. If suppliers fail to do this, the NCC will need to invoke its considerable powers to ensure that consumers get what they pay for.

In the meanwhile, consumers should be aware that while the CPA affords them with rights, the paradigm can only shift if consumers also exercise their responsibilities to be more vociferous in demanding that retailers act in a consumer-oriented manner. Consumer activism does not only mean running to the NCC, but involves making shopping decisions based on supporting retailers that are open and honest and which take steps to educate the consumer about the products they are consuming.

Retail revolution - shifting control to consumers

By: Andrew Pyper. 5 Jul 2013

Worldwide, the power has shifted from the control of the retailer into the hands of the customer and this seismic shift in customer behaviour is transforming the retail landscape, driving customer centricity as the competitive differentiator of the early 21st Century. Retailers are starting to understand that you cannot control the customer; the customer controls you. In the past it was more about retailers presenting their offerings on their own terms and people didn't have as many options. Now, if retailers want to remain competitive, they have to become customer-centric and invest in giving their customers the experiences they seek.

The term 'customer-centric' is one of the buzz words in marketing speak that is sometimes used rather loosely. A carefully designed and proactive strategic process that puts experiences that customers want in the channels of their choice - very different from the primarily reactive customer focus that typified ways of doing business in the past.

Continuous innovation

To remain competitive in the modern economy, organisations have to understand that their customers need to be at the centre of everything, and they have to know how to "operationalise" this strategy and how to sustain the engagement into the future.

One needs to stay ahead of the trends and discern which ones are here to stay. Continuous innovation is key in order to keep up with customer demand and to retain customer loyalty - there can be no endpoint, it must be ongoing.

Fuelled by the Internet growth, companies have phenomenal new opportunities and new channels for buying and selling. The Internet has completely taken over the channels by which people can buy things.

A leading global trend in customer-centricity is omni-channel retail. If you are going to be competitive, you have to service the customer via whatever channels they choose to work with - be it through call centres, online or mobile platforms. Companies have to make that leap to invest in all the channels. Store and Internet retail now has to be seamless, with products available on both platforms and delivered from both platforms (usually at a similar cost).

Zero inventory stores

There is a growing movement towards zero inventory stores, where the shop floor becomes a place to touch, feel and experience, but the selected merchandise is delivered from a central warehouse. Retailers do not need to keep a stock of inventory on site and have the flexibility to customise orders before delivery.

This concept is taking off particularly well in 'experience lounges' in electronic retail, for instance, where customers can spend time in the showroom enjoying the high touch experience of the products before they choose to buy. Here the quality of the experience becomes the critical differentiator for securing sales and retaining customer loyalty.

Consumers now also use the Internet to do their research. They know in advance what features to look for and what the prices of products are. The auto industry is a prime example: very few buyers visit a showroom in order to build an understanding of different models offered by a manufacturer. The buyer comes to the showroom to touch and to feel - to validate his or her decision.

Social media impact

The power of social media has also had a profound impact on buying behaviour. Current statistics show that a company today only owns about 22% of the ability to influence the buying decision. People listening to stories from other customers about how they have been treated or what emotions have been experienced influence 78% of the buying decision. This phenomenon has accelerated the importance of a customer centric business model as a competitive differentiator and the onus is on organisations to earn the right to have consumers tell their story.

Many South African companies are showing great leadership in developing customer centric processes. Although there are remarkable innovators amongst global operators, such as Amazon and Starbucks, the advances being made by local retailers such as Woolworths and Pick n Pay, for example is to be commended.

The conclusion is that there are pockets of excellence from which all business leaders in the country can draw inspiration. However, businesses are not adequately designed and leadership is not sufficiently enlightened to make sure that all processes are joined up in such a way that there is a consistent delivery of a defined experience. We are subject to randomness - that's what frustrates people.

What to consider when purchasing a franchise. By: Jeremy Lang. 9 Jul 2013

The local franchise industry is growing at a progressive rate and according to Franchise South Africa, the country currently boasts over 400 franchise systems and approximately 23,000 franchise outlets.

This fast-growing sector presents an attractive investment opportunity for entrepreneurs, as purchasing a franchise can offer various benefits. Franchisees have the advantage of owning an established product or service that is already familiar to the public, as well as a pre-sold consumer base and household brand-name recognition.

Although the industry offers many opportunities, it is important that entrepreneurs do in-depth research before investing in a franchise. The key to finding a franchise that will generate returns requires insight as to what is being purchased. Due diligence should be conducted in the same manner when purchasing a franchise, as when opening any new business.

I have some tips for potential franchisees:

Know the industry: Choose a franchise in an industry that you are familiar with, as this industry knowledge is an important tool for searching and evaluating business opportunities. Not only will this best suit your background, but it will also aid in your success.

It is also important to have previous experience in an outlet of a franchise that you intend to buy. Should you not have previous experience, choosing a franchise with a thorough franchisee training course will act as a good entry platform.

Choose within your budget: Calculate what you are able to afford. This amount should include the finances you are able to raise, save and will be able to borrow. When calculating the budget, keep the following factors in mind: firstly, too much finance can ruin a venture, so be wary of overburdening your business with too much borrowed capital.

Secondly, calculate the entire investment required, including set-up costs and working capital. Do not limit your funding to include only the franchise fee.

Review the franchisor: The first two steps should dramatically narrow down your search and allow you to focus on a particular franchise. The third step includes investigating the franchisor. Look over the documentation the group provides, but also find out as much as you are able to about the reputation and financial help of the franchise.

Being a member of the Franchise Association of South Africa counts in the favour of a franchisee, but it does not guarantee success.

Speak to franchisees and ex-franchisees: This is probably the most important exercise in the process. A franchisor should be able to give you a fully updated list of franchisees and ex-franchisees, as well as their contact details. If you are interested in purchasing an outlet or a franchise group, test all the assertions with the franchisees before making a decision. Comparing their levels of support, the quality of their training, the profitability of the business, and the integrity of the franchisor's business dealings, will give you a better understanding of your potential purchase.

Investigate the location: Suitability of the location of your outlet, or, in the case of non-retail franchises, the area in which you are going to operate in, is key. An in-depth knowledge of the surrounding market is vital to the success of your business. Make use of expert marketers or neighbouring franchisors for advice, but also do your own independent research to help ascertain your market.

Get the value calculation right: Ensure you are not overpaying for the franchise outlet that you have in mind, whether it is a new or existing one. After conducting your research make a concerted effort to consult an accountant to check your financial projections and value calculations. Although they are costly, industry specialists are an asset for any business.

Get legal advice and knowledge: The franchise agreement the franchisor will give you to sign is a crucial document detailing the rights and obligations of you and the franchisor. Ensure a lawyer, preferably one with knowledge about the franchising sector, goes through the document with you, not only to make sure that it is fair to you, but also to explain any clause that you may not understand.

In the end, it depends on you: The strongest franchise brand can still fail, but with the correct leadership and management this can be avoided. Just like any other business, operational and cash-flow management needs to be realistic.

Bear in mind that a hands-on management approach is also required. If you are an experienced independent business owner, and this is your first attempt at franchising, it is also important to remember that you will need to become accustomed to operating according to the rules of the group.

Private labels investing in quality, growth. By: Michael van Wyk. 4 Jul 2012 12:22

Consumers seeking to save some money in tough economic times are fuelling the current growth in private label brands, forcing retailers to rethink how they promote their in-house and own-name brands. The conundrum is: do they increase the number of products they offer or only the perceived quality and value of the existing product line-up?

Retailers are also starting to understand the power of knowing and controlling their own private label products and are becoming more agile in responding to the ever changing needs of the modern day consumer. Customers are giving retailers the permission to grow their private label brands by exercising their right of choice. They are telling the retailers what they want and the retailers are responding and, in the process, building brand loyalty and equity.

However, the real question is: Will retailers grow private label brand value or simply add more private label products to their existing range? In this age of booming private label brands, the trend for retailers to grow their own product ranges is causing national consumer product goods brand managers added anxiety. It also presents some relationship challenges for retailers who want to grow value and trust for private labels with their customers.

National brands losing their grip, South Africa room for growth

There is mounting evidence (Deloitte Review: The Battle for Brands in a World of Private Labels), which suggests national brands are losing their hold on the consumer, as there is a degree of separation between consumers and national brands, as compared to private labels. Consumers are more willing to try new and different private label brands; the perception exists that there is more value in these brands. This perceived value can be in the form of price, trust or even the ability to interact with the owners of these brands. Although private label sales are growing as the economy weakens, the industry needs to understand there are important lessons to be learned from past recessions if the current market share gains are to become long-lasting.

It should also be noted, that in comparison to Europe or other developed markets, private label penetration levels in South Africa are relatively low, especially when looking at the independent trade segment which accounts for more than half of national grocery retailing. Planet Retail, a leading information provider to the retail industry, estimates that private labels now account for 9.3% of domestic consumer spending on groceries, as well as 24.7% of spending in modern grocery retail channels. The 9.3% share, however, pales in comparison to the just over 40% in the UK, which has the highest private label presence in Europe.

Compared with other key emerging markets such as Mexico, China and Russia, Planet Retail estimates that South Africa still has the highest private label share of consumer spending on groceries within this group of countries. Nonetheless, figures from Europe show that the forecast 11.3% share in 2016 for South Africa's private labels is relatively low in absolute terms and leaves a lot of scope for growth and opportunity.

Attaching value

This begs an important question for consumer product companies: "How do you attach value and quality to a private brand to ensure it becomes a destination brand."

Retailers are realising there are several benefits in developing and marketing private label products. Among them are:

1. 
   increased profitability through cost saving and increased margins;
   
2. 
   increased store loyalty and creation of a distinct corporate identity;
   
3. 
   opportunities to seize new market ventures;
   
4. 
   increased bargaining leverage with suppliers; and the
   
5. 
   ability to control the product and communicate directly with consumers - empowering of consumers.
   

The first relates to potential increases in profitability, which stems from the higher average price margins private label brands generate for retailers. The better price margins could be attributed to the fact that private label brands require minimal advertising expenditure; lower research and development costs; and, usually, reduced packaging costs.

Private label brands can assist in developing loyalty to a retailer and in creating a distinct corporate identity for a business. Retailers however must ensure careful managerial practices are implemented for these brands in order to maintain retailer brand equity. Research indicates that consumers who purchase private label brands regularly do not only become loyal to that particular brand but also to the retailer through which it is sold.

Private labels have become omnipresent and have achieved enormous success, thus providing a base for the improvement in branding activities. A Deloitte global private label report indicates consumer perceptions and attitudes toward private label brands are changing significantly. The report offers insight into the notion that spending less for private label brands does not necessarily mean consumers are settling for less. I believe private labels have changed from inferior generics to brands in their own right with value beyond functional attributes.

Consumer knowledge critical

Crucial to creating value and quality in private label products is understanding the wants and needs of the consumer. Consumers are becoming more discerning and want to understand the emotional as well as economic value of their purchases. This can be achieved by effectively telling the story of the private label brand in marketing, effective use of social media, in-store communications and through packaging. Using loyalty programmes is yet another way to track consumer spend and determine what it is they want and need. By creating an emotional link to the journey of the product or brand, retailers are able to appeal to customers on a personal level.

Innovation is another key driver in creating a successful private label and retailers are taking product and brand building innovation to heart. Driving innovation within private label brand-driven retailers can be more nimble than national consumer product brands. Developing a private label brand can therefore be more efficient and be done in much less time. Depending on their business model, private brands do not necessarily have to make the same long-term capital investments in product development, manufacturing and other quantitative research methods to gain the assurance that their value proposition is relevant and the long-term investment warranted.

UK model

Stefano Pessina, executive chairman of Alliance Boots, a leading international, pharmacy-led health and beauty group which operates the UK high street pharmacy, Boots, was quoted last year as saying that they are looking to build Alliance Boots' private labels into a third core area for the business by distributing them through third party retailers.

"The brand will be something that is really important over a long period. It will lead to a new dimension. We said that we wanted to invest in our brand and we also said that we wanted to elevate the status of the brand from being a part of one of our two core businesses, retail and wholesale, to be a third leg, something that has its own life and this is what we will do," he said. Carrefour and Alliance Boots have entered into a 10-year co-operation agreement that will see cosmetics made by Boots sold under the Carrefour brand in some European countries.

Private labels could lead the way

Probably still some way off for the South African private labels, but this strategy may also open many opportunities for growing revenue and market share.

Private label brands will start to lead the way for South African retailers. It's probably safe to conclude the next generation of super successful brands will not come from the name brands, but from more private label brand-focused retailers. It is therefore important retailers consider private labels with a clear strategy and show the value attached to their products.

Consumers seeking to save some money in tough times may be fuelling the current growth in private label brands, however progressive retailers will continue to innovate and leverage the immediate access they have to their customers to the fullest advantage.

Pick n Pay takes its brand to Zimbabwe. 12 Jun 2012

Despite growing concerns over Zimbabwe's continuing 51% indigenisation programme that has ruffled the feathers of foreign investors, South African retail giant Pick n Pay is expanding in Zimbabwe, with plans to open a new supermarket in Harare at the end of the month.

The store in Kamfinsa will be the first Pick n Pay store in Zimbabwe bearing the company's logo and will culminate in a rebranding exercise of all TM supermarkets countrywide - where Pick n Pay holds a 49% stake in the supermarket chain.

Ozias Makamba, finance director at Meikles Africa, the Zimbabwe stock exchange-listed company that previously owned the majority 75% stake in TM supermarkets, said TM Pick n Pay would open at the end of the month and that it started refurbishments at TM Borrowdale that will be followed by TM Mutare, Masvingo and Gweru.

The South African retailer's expansion in Zimbabwe began at the end of last year when the Competition and Tariff Commission gave the green light to Pick n Pay to increase its shareholding in TM supermarkets from 24% to 49%, in a deal that saw $15m injected into the supermarket chain. With 51 stores countrywide, TM supermarket controls almost a quarter of the groceries market.

Its biggest competitor, OK Zimbabwe, has said it was ready to take on the new challenge posed by its South African-backed rival. But economic observers warned that Pick n Pay's expansion into Zimbabwe, brought on by the stabilisation of the country's economy in February 2009, would pose a further challenge to efforts to revive the local manufacturing industry.

Tony Hawkins, an economics professor at the University of Zimbabwe, said Southern Africa had been turned into a huge supermarket of South African products. All the leading chains, Shoprite, Pick n Pay and Spar, are expanding northwards. "This is not great news for the local manufacturing industry at all."

Earlier this year, Finance Minister Tendai Biti echoed the sentiments, saying that South African products accounted for more than 70% of grocery imports.

Source: Business Day

Pick n Pay opens first supermarket in Zimbabwe. 22 Jun 2012.

Retailer Pick n Pay opened its first supermarket in Kamfinsa‚ Zimbabwe‚ on Thursday, 21 June 2012.

The supermarket‚ the first Pick n Pay-branded store to open in Zimbabwe since it took control of 49% of TM Supermarkets‚ is situated in the Kamfinsa shopping centre in eastern Harare and will stock a full range of local and imported products.

"We are proud to be opening our first Pick n Pay at Kamfinsa‚" said Dallas Langman Director Group Enterprises Pick n Pay. As the anchor tenant of the centre - which has been rebuilt and refurbished by Pearl Properties - we've seen the transformation that has already taken place in the suburb of Greendale."

The store comprises a Pick n Pay Supermarket‚ as well as stand-alone Pick n Pay Liquor and Clothing stores. "These will offer world-class merchandise to customers at the best possible prices‚" said Langman.

Mark Vickery TM Chief Executive Officer said: "This development will offer a similar experience to our shoppers to that of any southern African Pick n Pay supermarket‚ it's a real 'taste' of what we have planned for Zimbabwe over the next two years."

The PnP outlet is the anchor tenant‚ coupled with a collection of supporting services‚ in the refurbished shopping centre.

PnP has provided operational support to TM Supermarket‚ through a skills development programme designed to equip the Zimbabwean local team with international best practice in a variety of retail disciplines that will ultimately result in a unique‚ new and fresh shopping experience for the customer.

"The customer has always been at the centre of all we do‚ and we believe that our partnership will result in a productive sharing of ideas that will mean service delivery to the customer‚ comparable to anywhere in the world‚" Vickery added.

A number of Pick n Pay branches will be opened‚ many of them at sites where TM Supermarkets have been operating.

Langman said the supermarket would emphasise the "fresh" concept with a minimum of 40% of floor space being dedicated to fruit and vegetables‚ deli‚ and confectionary. "This is our response to the fact that people want to eat more healthily; and we will be offering an infusion of traditional health food‚ as we have seen high turnover in traditional lines of fresh food."

The TM chain currently has 50 stores in Zimbabwe and the Kamfinsa Pick n Pay store will be the first in its strategy of offering the best brands to customers. Pick n Pay currently operates 17 stores in Namibia‚ 12 in Botswana‚ seven in Swaziland and one in Lesotho‚ together with the its first Zambian store.

"We pledge that the shopping experience in all our Pick n Pay stores will be second to none‚ both in terms of store ambience and most importantly giving customers real and great value for their hard earned money".

As at financial year end (February 2012) Pick n Pay operated 94 stores in Africa.