Retail news. Semester 1 of 2014 table of contents

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.

Bricks, mortar still important in shopping choice. 24 Apr 2013

Late last year, research conducted by Cisco Systems predicted that global e-commerce would increase 13.5% annually over the next three years to reach an estimated $1.4 trillion in 2015 and, with rapid adoption of smartphones and tablets, anytime, anywhere virtual store browsing is playing a significant part in consumers' changing shopping habits. In South Africa, where broadband internet penetration is still low - with approximately 6.8 million people connecting to the Internet via desktops and laptops - almost triple that amount, 16.8 million, are reportedly accessing the web via mobile devices. However, this is not necessarily translating into more e-commerce sales locally, since a large number of consumers now make use of multiple channels to shop.

"Many shoppers in South Africa access retailers' online stores on their desktops, laptops or mobile devices merely to compare and look up prices and specs for specific products and then still go to the brick and mortar shop to make the purchase," explains Simon Campbell-Young, CEO of Phoenix Distribution, a South African-based distributor of software and technology brands.

"There are various reasons for this: many people still distrust the security of making online transactions. However, even those who are not sceptical about paying online are often put off by the time it will take to have the product delivered to them and the cost in delivery fees. The postal service in South Africa is often criticised as being too slow and unreliable. Courier services, while faster, are too pricey to be a viable delivery option."

Omni-channel retailing

This evolving nature of buying, in which consumers are embracing digital technologies and devices in all stages of their shopping experience, has given birth to a new trend called omni-channel retailing.

"This new buzz term describes the approach of connecting the web, mobile and brick-and-mortar to make for a seamless customer experience," continues Campbell-Young. "It is the process of building a bridge between online and offline shopping. Brands have to do this in order to remain competitive. For example, brick and mortar shops can become more digital by using QR codes to provide more information about products. Some retailers already allow customers to browse in-store merchandise and then skip the checkout queues by paying for it online on in-store tablets. From their end, online shops can encourage sales with a 'click and brick' approach, allowing users to make the purchase online and then pick up the order in store."

Store shopping still important

The continuing importance of physical shops, where you have to jostle with crowds and stand in line at the cashier, in an increasingly virtual world was highlighted in a recent survey by UK-based Shoppercentric, called 'Shopping in a Multichannel World'. It found that 87% of respondents are still using a store as part of their purchasing journey and 45% of shoppers said that they will "always love going to the shops, no matter what new technologies are available."

Campbell-Young says that this convergence of online/offline shopping is going to benefit everyone along the retail channel and that it makes the relationship between suppliers and retailers more crucial than ever before.

"Retailers need to keep in mind that this new breed of omni-channel consumer is sophisticated and informed. They are going to have to anticipate the needs of their shoppers and see to it that the product they are searching for online is also in store. These shoppers have no patience with out of stock products or late deliveries. It will definitely be challenging at times, but beneficial to everyone."