Retail news. Semester 1 of 2014 table of contents

McDonald's SA looking to double revenue in four years. 19 Jun 2012

McDonald's SA is on track to double revenue in the next four years and still plans to open about 25 restaurants a year despite tough trading conditions‚ MD Greg Solomon said on Monday, 18 June 2012. "It has been a tough environment since the soccer world cup but we should see some improvement by quarter one next year‚" he said.

Solomon said consumers had been downtrading as they began to feel the pinch of rising costs but the company has also managed to garner the support of new customers from competitors with more expensive offerings.

The company currently has about 163 restaurants‚ he said‚ but hopes to speed up growth in the next year. "We do not trade in many areas‚ there is place to grow in parts of the North West province and KwaZulu-Natal as well as the North Western Cape‚" he said.

McDonald's SA still had a beady eye on expansion into Africa‚ he said. "We have to learn how to eat off our own plate first‚" he said‚ adding that SA was a priority. "We will not be the first to go into Africa but we will be bold‚ when we eventually do."

Businessman Cyril Ramaphosa's company‚ Shanduka‚ acquired the 20-year master franchise last year to run all McDonald's restaurants in SA‚ it has a combination of franchise and corporate-owned stores.

Yum! the owners of KFC in SA said they would be bringing their Pizza Hut franchise to the country "soon" and Burger King may also grace local shores in the short term‚ the US-chain said last year.

"Threats are always there‚ but it also says someone else sees opportunity here in this market‚" Solomon said.

Yum! is considered the world's largest fast-food restaurant company with about 38‚000 restaurants in more than 110 countries. The company's turnover in SA was about R8bn last year.

Local players Famous Brands earlier this year said it was on the lookout for acquisitions and would look into new market segments including "evening casual dining" within the next few months. Famous Brands plans to open about 250 new stores in the coming year‚ 48 of these stores would be outside SA. It reported group revenue and operating profit growth of 15%‚ to R2.16bn and R413m respectively.

One of the smaller players in the market‚ Taste Holdings said it would open about 50 Fish & Chip Co restaurants in the next six months as competition in the fast food market and particularly the lower end of the market intensifies.

Payments 'will switch from cards to mobile phones'. 26 Jul 2012

The use of debit and credit cards would reduce over time as more consumers used cellphones to make payments using new technology that eliminated the need to swipe a card, Deloitte said on Wednesday, 25 July 2012.

"It is obviously farfetched to think that the use of debt and credit cards will be completely eliminated, but a time will come when you open a bank account, you will be asked to choose between having a card or a phone (as a means) to pay," said Jonathan Houston, digital marketing lead executive in the Deloitte consulting technology division.

Houston said the rapid convergence of mobile and banking technology which started with such simple functions as money transfer was increasingly making the cellphone a virtual bank in itself.

Bankers say SA's high mobile penetration rate made it the perfect market to launch banking technology and products using cellphone to reach an under-banked and unbanked population estimated at more than 11-million.

One such technology was Near Field Communications (NFC), which provided the ability to carry out banking transactions with a simple swipe of a cellphone, said Houston. The other was the MXit cellphone-based geo payment system called Gust, which was launched in May.

These rival technologies were beginning to compete to make cellphones the next passport to making transactions, said Houston, adding this could result in the retail payment systems becoming redundant, with bank-issued cards being made obsolete.

"Essentially the difference between the two is that with NFC, a mobile phone has to be enabled with an NFC chip and mated with an NFC reader to facilitate payments. The paying party, however, does not require a credit card to make a payment (but) only a bank account that has eWallet functionality," he said.

Michael Jordaan, the CEO of First National Bank, said cashless payments would become the norm over time.

In May, FNB launched a person-to-person payment option called Geo Payments, using its banking app which allows users within close range of each other to make payments to one another without using their bank account details.

"We see our Geo Payment solution being used more frequently as banking app penetration grows," said Jordaan.

He said that there was an increasing convergence of financial services and mobile technology, and the latest mobile handsets would allow banks to launch a raft of mobile payment solutions.

"It is important (however) to differentiate between NFC as an eco system and Geo Payments in its current form as a person-to-person payment solution.

"NFC has a number of shortcomings before mainstream application whereas the Geo Payment solution is here and (is already working) for FNB and non-FNB clients," said Jordaan.

Source: Business Day

New food-labelling law 'will deprive consumers'. 15 Oct 2012

Experts say consumers could lose out on valuable product information because food labelling legislation has made the publication of nutritional information on packaging much more complex and costly.

To print a nutrition table with a breakdown of how much fat, salt or carbohydrates are in the food, manufacturers now have to do intensive and costly testing of the food every three years.

Previously, manufacturers would estimate the nutritional data from the ingredients. They are now forbidden to do this. So, since offering nutritional information is voluntary, many will simply remove it from their labels.

Nicky Edwards, product developer for Ina Paarman Foods, explained the process: "Nutritional information in the absence of a product claim is not required.

"The reality is that many manufacturers will simply no longer include nutritional information on their product labels because of the cost and renewal every 36 months, which is ultimately to the disadvantage of the consumer." Food consultant Norah-Ann Hayes agreed.

"The drawback of requiring testing for many products is that companies are not going to declare the nutrition information, especially smaller manufacturers.”In addition to the lab testing, this needs to be done every three years, so the cost is not a once-off."

But Hayes said the law was necessary. "This is unfortunate but the previous method of calculating nutritional information was not accurate."

Hayes said consumers who wanted to know how healthy the product was and the quantities of sugar, salt and carbohydrates could check the ingredients list.

"If fat or sugar are near the top of the ingredients list it is going to be a high-kilojoule product. If salt is high up it is going to be a high-sodium product." Under the food labelling law, products cannot contain the word "natural".

This means that products that use natural flavours instead of synthetics cannot indicate this to the consumer on the packaging.

Source: The Times