Stocktake: Update on reopening of retail centres & stores

An update on damage to retail stores; which looted malls are reopening; and the reaction from South African retailers which this week will fully assess the damage to stores, stock and distribution pipelines.

Taking stock of unrest damage

Retailers began counting the cost of the unrest last week, issuing more details via SENS announcements, media statements and press releases on their websites, on the losses suffered; as well as which stores have been able to open. These are some of the key announcements made in recent days:

• Pepkor Holdings advised that 489 retail stores, representing approximately 9% of the group’s total retail stores, have been damaged and looted; as well as one of the JD Group’s distribution centres in Cato Ridge, KwaZulu-Natal. The JD Group operates a total of 16 distribution centres countrywide and its KwaZulu-Natal stores, once reopened, will be serviced in the short-term from its other distribution Leon Lourens, Pepkor CEO, stated: “The vast majority of the stores across our footprint remain operational and as a group we are focused and determined to rebuild and restore affected operations as quickly as possible.”
• Massmart confirmed that that protesters gained access to and made off with merchandise in 18 Cambridge stores, 10 Game stores, eight Builders stores, three Cash & Carry and two Makro stores. Two of its Distribution Centres have also been directly impacted. Altogether four facilities have suffered significant damage due to Massmart has activated back-up plans to ensure full and complete business recovery, starting with the responsible reopening of stores as soon as it is safe and practical to do so. At the same time, the group has successfully activated business continuity replenishment plans that involve shifting replenishment capability to distribution centres into which thet have built in backup capacity.
• Eleven Woolworths stores have been looted and severely damaged, with nine of the 11 stores in KZN and two in Gauteng. Although looters gained entry to the Woolworths Maxmead Distribution Centre (DC) in KZN, the infrastructure was not severely damaged and has been secured, together with our other DCs. Operations have resumed and Woolworths has prioritised the provision of food into KZN (Source: Woolworths).
• Woolworths says it is working closely with suppliers and partners to ensure the ongoing availability of stock. They are also engaging with government and industry bodies to support efforts to create a safe environment for the resumption of normal business activity. “Where we believe it is safe and feasible to do so, we have begun reopening stores in most areas of KZN.” (Source: Woolworths, SENS).
• TFG is saddened by the civil unrest and widespread looting and vandalism in KwaZulu Natal (KZN) and parts of Gauteng Province, which has not only impacted its operations and customers, but also its employees, their families, and the supply chains that support the stores in those regions. “TFG, to date, has thankfully recorded no fatalities as a result of the current events. As at the beginning of July the Group had approximately 3,000 stores in Africa, with plans to open another 200 stores by the end of the 2022 financial year. To date, approximately 190 South African stores have been looted and damaged to varying degrees. Furthermore, all KZN stores are currently not trading due to safety concerns. The Group will continue to assess the damage caused to its stores and is quantifying losses to be recovered through its insurance policies. The loss of profit due to business interruption is also being quantified. Trade continues as normal in the rest of the Group’s South African and African regions supported by strong supply chains – this includes the Group’s own manufacturing capacity which remains largely unaffected, which is encouraging.” (Source, TFG, SENS).
• Pick n Pay Group CEO, Pieter Boone said in a statement that they were “shocked and saddened by the violence and destruction which afflicted so many communities, businesses and institutions earlier this week”; but heartened to see so many communities and individuals coming together to bring an end to the violence. “The situation remains fragile. But we want to assure customers and communities that our Pick n Pay and Boxer teams are working flat out to bring essential supplies from Gauteng and the Western Cape into the affected areas. Key to this is N3 highway between Gauteng and KwaZulu-Natal, which has just reopened. This enables us to begin the task of transporting large volumes of essential products to the communities that most need them. We have already reopened many of our stores in KwaZulu-Natal and the affected parts of Gauteng. We plan to reopen even more in the coming days. Our message to the affected communities is this: The relief effort has begun. The relief is coming.”
• Pick n Pay and Boxer already has an active Feed the Nation programme in place to assist communities in need during the COVID-19 crisis, and the group is expanding this work to assist the humanitarian effort following on from the recent unrest.
• Tiger Brands reported that its rice and snacks and treats division was particularly affected by the civil unrest; and estimated that it had lost stock in excess of R150 million due to looting and vandalism. It also suspended bakery operations and the distribution of bread last week. “As the largest food manufacturer in the country, we are working closely with our supply partners to ensure ongoing production at our operations. However, security of supply to consumers is subject to the re-opening of key transport routes and access to the operations of our retail and wholesale partners.” (Source: Tiger Brands, SENS).
• Essential services at Galleria Mall and Arbour Crossing in KZN have been open and trading since Saturday, 17 July. These include Checkers Hyper, Pick n Pay Hypermarket, Food Lover’s Market, Pick n Pay supermarket, Game, Woolworths, Clicks and Dis-Chem. Both centres are expected to be fully open for trade this week (Source: Resilient REIT).
• The Shoprite and Game stores at Mams Mall, Pretoria, reopened for trade on Saturday, 17 July. The Pick n Pay, Clicks and Dis-Chem stores that sustained limited damage will open on Wednesday, 24 July. The Boxer store and Nizaams that were damaged and looted are undergoing repairs and are scheduled to reopen on Friday, 23 July (Source: Resilient).
• Jabulani Mall, Soweto, that was extensively looted has been cleared and cleaned in partnership with the local community and other support groups. The Shoprite store is anticipated to reopen by month-end. Opening of the remaining shops is constrained by the limited availability of shopfronts and glass (Source: Resilient).
• Biyela Shopping Centre, Empangeni, KZN, looted and has suffered a degree of structural damage due to a fire; Evaton Mall, Gauteng, extensively looted, damage restricted mostly to non-structural elements, including shopfronts; Palm Springs Shopping Centre, Orange Farm, Gauteng, was looted and suffered several small fires in individual shops, all of which were contained and extinguished; Tembi Mall, Tembisa, Gauteng, one shop looted and damage contained to non-structural elements and shopfronts; and Yarona Shopping Centre, Tembisa, Gauteng, looted and sustained non-structural fire damage (Source: Fortress REIT).

Effective looter deterrent

The memes had started before the fires were even out, as one of the best things about South Africans is our sense of humour to uplift even the most dire situation, as the unrest and looting the country experienced last week. This Shoprite store which protected itself from looting by spreading cooking oil infront of the store to deter looters certainly won the day as the store was left virtually untouched. Next level thinking by the retail staff! I hope they all get bonuses for saving the shop. Here’s the video.

N3 corridor opens again for business

The Road Freight Association (RFA) welcomed the reopening of the N3 highway over the weekend to all traffic. “Whilst we anticipate some delays and congestion due to the high traffic volumes, we are now able to resume the vital task of delivering goods both countrywide and beyond our borders. We are doing our best to get essentials in to where they are needed and to address the massive backlog that has occurred as a result of the happenings over the past week. We are doing our best under trying circumstances to ensure that no-one endures food, fuel and medicine shortages – working closely with our compatriots in the retail sector, to allow them to re-supply stores. The N3 is a strategic corridor: every day the value of goods that travel on this highway alone is estimated to be around R3-billion. Thankfully, trucks can now start the wheels of the economy along this corridor turning again, enabling many businesses to resume operations,” said Gavin Kelly, RFA CEO. “Whilst what has happened has had an enormous impact on every company and every person in South Africa, it has been heartening to witness communities coming together, protecting what is theirs and actively working together to start re-building what we have lost. The protection of trucks, the employees, the loads and distribution centres remain paramount for the RFA and we call upon law enforcement to remain active and vigilant in protecting the N3. The safe passage of goods and people on this important route is vital. We cannot allow a repeat of last week’s senseless violence and looting.”

This week in numbers

117.9%

Woolworths online sales grew by 117.9% over the current year, contributing 2.3% to South African food sales. This was further supported by the expanded Click-and-Collect offering and the roll out of our on-demand delivery service, Woolies Dash. Woolworths reported today that South Africa’s recovery during this phase of the COVID-19 pandemic has been set back by the onset of the third wave of infections occurring towards the end of the fourth quarter. “The consequential level 4 restrictions have further dampened already-weak consumer confidence, which is expected to limit discretionary spend. Furthermore, the civil unrest and related widespread destruction of property will also negatively impact economic conditions, consumer sentiment and constrain our ability to trade in impacted areas.” The Woolworths Food business grew both market share and volumes during the period despite the high base set in the prior year driven by stockpiling ahead of the first lockdown. It further reported: “Sales for the current year grew by 6.9%, and by 5.7% in comparable stores, on price movement of 5.2% and underlying product inflation of 4.9%. Net space increased by 0.6%. Sales in the second half of the current year grew by 3.2%, and by 16.9% over a two-year period, reflective of the investment in innovation and our robust business model. Whilst there has been some reversion in customer shopping behaviour, frozen foods and groceries continue to deliver strong growth.”

QUOTE of the week:

“Seeing our stores under attack is heartbreaking for all of us at Makro and Massmart. But while we are angry and sad in the moment, we are turning our attention to the clean up, rebuild and reopening of all our stores. We are deterined and resolute,” said Doug Jones, CEO, Massmart Wholesale, in a statement on the looting and unrest in South Africa last week.

Main image credit: Pick n Pay.

*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.

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