Stocktake: Retailers brace themselves for festive season

There has been an oversupply of retail news this month as retailers prepare for a festive season filled with uncertainty and predictions of a second Covid wave. Some of the highlights include Pick n Pay buying the Bottles app that saved their bacon under lockdown; Massmart importing an ecommerce head to unbox its online delivery game which has been less than stellar – while Game launches its new concept stores to favourable reviews; and Woolworths investing in its food division to try win back consumers crossing the aisle to cheaper grocery options as food prices rise.

Woolworths invests R750 million in food business

Woolworths last week announced its commitment to invest R1 billion in its prices over the next two to three years, with a R750 million investment planned in the Foods business. Commenting on the announcement, Woolworths SA CEO, Zyda Rylands, said, “Over the last few years, we have been on a journey to invest in the prices of key product lines and categories to ensure we continue to provide our customers with the value they have come to expect from us. The COVID-19 pandemic has emphasised this need and therefore accelerated our price journey, because of the significant impact it has had on our economy and on the lives of our customers and their families. Because we know our customers are under pressure, we are investing even more in our prices to ensure we remain relevant and accessible, while not compromising on our quality. Through the crisis, we have focused on identifying further efficiencies in our business as well as in our value chain, to find opportunities to be more effective and cut costs.” The first phase of this journey begins with a R250m price investment planned in the Foods business and R250m in the Fashion business for this financial year. The investment is being focused on the most popular Woolworths products: in Foods, this includes the entire fresh chicken range such as all whole and portion chicken packs, excluding Easy to Cook, crumbed and marinated chicken. More promotions have also been applied on everyday basics across Groceries, Household and Personal Care. In Fashion, the investment will be in selected key wardrobe essentials.

Massmart uploads its ecommerce Game

Massmart announced a new head of ecommerce last week – importing (Theodore) Sylvester John, the Walmart North America vice president for Last Mile Delivery, to lead the Massmart ecommerce team. John, who will report into chief operations officer, Richard Inskip, has extensive senior level retail experience in the US and Africa, having worked in a wide range of business development activities including merchandising and operations. It is John’s experience in ecommerce, specifically omni-channel retail and last mile delivery however, that will be leveraged at his role at Massmart. Commenting on the appointment, Massmart CEO Mitch Slape said, “The role of ecommerce is an important growth area for Massmart. COVID-19 has further emphasised the critical importance of ecommerce to access changing customer expectations; and while we have seen significant increases in click and collect and online sales, we know there is more we can do. The result is that we have placed high priority on investing in, and improving, our ecommerce competence.

“To achieve this, we are extremely lucky to be able to draw on Walmart’s extensive knowledge and experience. They have been unwavering and very enthusiastic about sharing their expertise with us and Sylvester’s assignment is further evidence of their support.” John was key to launching and positioning online grocery pickup in the US and establishing Walmart’s Last Mile Delivery organisation, delivering from more than 3000 stores in +500 US domestic markets that account for more than 65% of US households. This included leading Walmart’s Express Delivery, SNAP, Smart Substitutions and Instacart Marketplace initiatives. His remit in his new role will be to leverage his experience to assist his Massmart peers in establishing a market leading ecommerce and omnichannel capability within the Massmart group.

Bottles becomes part of Pick n Pay basket

Pick n Pay last week published its interim results for the six months ended 30 August 2020, announcing that it has also purchased the Bottles same day delivery app for an undisclosed sum. Bottles enabled the retail group to rapidly transform its online delivery options under hard lockdown, ahead, at the time, of other retailers. Now it faces up against the aggressive rollout of Shoprite’s Sixty60 offering; Woolies R1bn investment in food and grocery; and the focus of Massmart on ecommerce, including Game’s makeover which includes grocery essentials. The group said lockdown trading restrictions affected up to 20% of the group’s revenue at different stages, and sales were further impacted by reduced trading hours, limits on the number of customers in stores, and temporary store closures. These restrictions resulted in an estimated R2.8 billion in lost sales over the period. Pick n Pay said it successfully pursued two primary goals over the period: feeding the nation in a safe and reliable way as an essential provider of food and groceries; and delivering on its long-term plan to build a leaner, more agile and more modern business, attuned to the needs of their customers. Against this background, group turnover increased 2.6% year-on-year, with like-for-like growth of 1.0%. Turnover from South African operations increased 3.4%, with like-for-like growth of 1.7%.

Growth was achieved in core retail sales. Food, groceries and general (excluding liquor, clothing and tobacco) grew 8.7% year-on-year (6.4% like-for-like), with 9.9% growth in South Africa (7.6% like-for-like).  Core food and grocery sales in South Africa grew 4.2% in volume. Group earnings were impacted by additional measures taken to protect staff and customers during the lockdown, resulting in R150 million in additional operating costs. A further R100 million was fully expensed in the six months relating to the group’s voluntary severance programme (VSP), initiated at the beginning of the financial year.  These costs will be recouped through lower employee costs in the second half, and will result in leaner operating costs in the longer term. Despite lockdown disruptions, 42 new stores opened and store footprint reaches 1,945 stores, with decisive action taken to improve estate profitability; Smart Shopper loyalty participation is up to 70% of sales, with seven million active customers; over 550 new or redesigned own brand products in Pick n Pay, with Pick n Pay and Boxer own brand penetration now close to 25% of participating categories; and R80 million was raised through Feed the Nation for South Africa’s most vulnerable citizens. Commenting on the result, CEO Richard Brasher said: “I am very proud of how the Pick n Pay and Boxer teams have performed over the most difficult trading period any of us can remember. Customers had a very difficult six months, with unemployment reaching record levels and many families suffering sharp falls in income. We responded by getting even tighter on our costs, investing R500m in the price on everyday essentials, deepening our promotions and providing even better offers to Smart Shoppers. We also responded well to the surge in demand for online shopping. Pick n Pay Online is the largest online grocery offer in sub-Saharan Africa. We were also the first retailer to launch an on-demand app via partnership with Bottles, converting it from an online liquor platform into a grocery app in just four days. Pick n Pay Online now covers more than 150 stores nationwide. Our franchisee partners joined us in introducing new Click-and-Collect services for their customers. Overall, we recorded sales growth of more than 100% in online, and a 200% growth in overall unique active customers. With an exceptional effort from our online team and logistics partners, we achieved an on-time delivery rate of 98%.”

 V&A Waterfront adds Covid drive through testing

The V&A Waterfront now offers visitors of all ages a drive-through COVID-19 testing facility without them having to leave their cars. The Waterfront, in partnership with Dis-Chem, launched the new public facility on Saturday, 24 October. The testing centre will operate between 9am and 4pm from Monday to Friday, and between 9am and 2pm on Saturday. Extended hours and Sunday’s are planned for December. It is located at Battery Park in the V&A’s Canal District, with entrances via Alfred Street or Dock Road. It will be open to any adult or child of any nationality, with the requirement that one must produce an identity document or passport. All patrons should wear a mask at the site. Dis-Chem trained nursing practitioners will undertake the Nasopharyngeal swab tests. The lab results will be linked into the National Institute for Communicable Diseases (NICD) database. Each swab test costs R850 and payment should be made by credit/debit card. At this stage, the test is not covered by medical aid providers as their rules all differ currently. Anyone visiting the V&A specifically to do the test will not be required to pay for parking. To prevent backlogs, visitors are requested to pre-register online via Dis-Chem. Results will be out the day after the test has been conducted. These will be communicated by email and SMS. The customer should print the physical certificate at home/at their hotel for travelling purposes. All results are automatically communicated to the NICD. Dis-Chem currently runs seven drive-through testing stations nationally. Explaining the V&A Waterfront’s involvement, CEO David Green said, “Our drive-through COVID-19 testing facility represents another weapon in our arsenal against COVID-19. In the fight against the pandemic we need to make it easier for people to be tested. It’s vital for us, and for our city’s economy, that our retail, hospitality and leisure services can resume safely. Since the beginning of the lockdown we’ve scaled up our use of technology and other examples of this include our click and collect drive-through shopping solutions, and our contactless parking payment.”

 This week in numbers:

R53 million

Since the start of the national lockdown, the Shoprite Group has donated more than R53 million in surplus food – over R300 000 per day for the past 185 days – to various organisations tasked with feeding the hungry. South Africa faces a mass hunger crisis brought on by COVID-19. During the peak of the country’s national lockdown, two out of every five adults said their household had lost its primary income source – and almost half had run out of money to buy food during April. Since the start of lockdown, 327 organisations have received surplus food donations from Shoprite and Checkers supermarkets, which include fresh fruit, vegetables, and general groceries. Given the national hunger crisis, Shoprite took the decision to increase its fleet of Mobile Soup Kitchens from 19 to 26. By mid-September 2020, the Shoprite Mobile Soup Kitchens had served more than 2 million since the start of lockdown. These meals, which include soup and bread, have supported 2,613 organisations. In partnership with its customers, the Group also continues to raise money via its Act For Change Fund till-point donation facility. This fund allows shoppers to donate in any Shoprite, Checkers or Usave nationally and the money collected goes to vetted beneficiary organisations involved in COVID-19 relief efforts in the province where the donation was made.

QUOTE of the week:

“In the long-term, it is our view that accelerating Africa’s industrial development is very important for reconfiguring our supply chains, establishing regional value chains and boosting the manufacturing of essential value-added products. Many countries in Africa do not have the monetary policy space, the fiscal policy space to provide large bailouts in the trillions of dollars for economic recovery. Therefore, for Africa, the stimulus package is the actual AfCFTA – the implementation of this agreement. Increased intra-African trade is what will drive economic development post-COVID-19,” said Wamkele Mene, Secretary General of the African Continental Free Trade Area (AfCFTA) Secretariat, in RetailingAfrica.com.

 

*Stocktake is a weekly roundup of current FMCG retailing and brand news, curated and edited by Retailing Africa Publisher & Editor, Louise Burgers. Keep the industry updated and send your announcements and news to: news@retailingafrica.com.

Louise Burgers (previously Marsland) is the Publisher and Editor and Co-Founder of RetailingAfrica.com. She has spent over 20 years writing about the FMCG retailing, marketing, media and advertising industry in South Africa and on the African continent. She has specialised in local and Africa consumer trends and is a passionate Afro-optimist who believes it is Africa’s time to rise again and that the Africa Continental Free Trade Agreement (AfCFTA) will be a global gamechanger in the next decade.

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