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News this week includes earnings reports; new digital customer communications channels; ecommerce investment and online shopping projections.
Pepkor grows earnings by 28%
“Consumers will remain under pressure for the rest of the year, and we’re concerned about how rising inflation and increasing levels of unemployment will further impact consumers,” said Leon Lourens, Pepkor CEO, commenting on the results. “As a group, we remain vigilantly focused on doing what we can to continue offering accessible, affordable products. We’ll continue to leverage the organic growth opportunities in the second half of the year, by opening more stores than in the first half and more than in the comparable period, bringing our total number of new stores up to 350 for this year, which is an even bigger number than last year.” JSE-listed Pepkor, which owns household brands including PEP, Ackermans, Tekkie Town, The Building Company and Incredible Connection, delivered a strong set of interim results underpinned by a robust growth strategy. During the period under review, Pepkor also opened 144 new stores and completed its strategic acquisition of well-established Brazilian value retailer, Grupo Avenida, which currently operates 130 stores. The group generated R4.1 billion cash during the period. Pepkor has a retail footprint of more than 5,500 stores on the continent. “Over a comparable two-year period, the group achieved exceptional sales growth of 15.4% with substantial market share gains. We opened 144 new stores (versus 108 stores in the comparable period) and we’re on track to surpass this number in the second half of the year with an additional 205 new stores.” The clothing and general merchandise segment continues to be the largest contributor to group revenue (65.7%) and operating profit (81.8%). As customers are becoming more digitised, the various Pepkor brands are responding through e-commerce and ‘click & collect’ offers such as in Ackermans, which provides customers in rural towns access to the full product range through leveraging of its expansive 900-store retail footprint.
Tiger Brands on impact of increasing commodity costs
Tiger Brands’ performance for the six months ended 31 March 2022 was impacted by a poor first quarter, driven by significant volume declines in Bakeries and a protracted strike at the company’s Snacks & Treats division. This was compounded by the inability to offset the unexpected cost push through sufficient price increases and availability challenges on certain raw materials, ingredients and packaging. The group’s improved top line and profitability in the second quarter fell short of negating the slow start to the year. Total revenue from continuing operations increased by 2% to R16.8 billion. Volume growth in Exports and International was offset by domestic volume declines in Milling and Baking, Snacks and Treats and Home and Personal Care. Out of Home showed strong volume growth recovery in line with post lock-down demand and Rice, Beverages and Groceries delivered good performances respectively. “We are acutely feeling the full impact of the global supply chain squeeze and related inflationary pressures in the level of cost increases coming through. We expect the challenging economic climate to remain with pressure on the consumer likely to intensify. In this environment, we are increasing our efforts to reduce costs and further drive efficiencies to minimise the need for selling price increases. Nevertheless, significant price increases across most of the portfolio are inevitable,” says Noel Doyle, Tiger Brands CEO. Through a strategic private sector partnership with the national Department of Small Business Development, Tiger Brands will work to further unlock the potential of the informal market, valued at R164 billion a year and the ‘township economy’. The Tiger Brands’ Venture Capital Fund made its first investment in Herbivore Earthfoods, a business specialising in the manufacture and sale of plant-based and vegan products. To access the unaudited group results and dividend declaration for the six months ended 31 March 2022, click here.
Dis-Chem rolls out WhatsApp chat
Clickatell, a CPaaS innovator and Chat Commerce leader, has been selected by Dis-Chem Pharmacies, to enable WhatsApp as its customer communication channel. Dis-Chem customers can now access various services through WhatsApp by sending “Hi” to 0860 347 243. The easy to navigate menu then allows shoppers to choose which action they want to perform. Utilising a conversational approach through WhatsApp, Dis-Chem’s millions of customers can register for a Benefit Card; and existing members can update their personal details; check their loyalty points balance; report lost or stolen cards and receive a digital replacement immediately; and register for Dis-Chem’s Baby Programme. Dis-Chem will also use the channel to alert customers when their repeat medication is due for collection or when delivery from their preferred store is ready through “Pack My Meds”, Dis-Chem’s online repeat medicine ordering platform. Lastly, the channel provides a general FAQ section that has information about clinic services, delivery services, and other store information. Retailers using Chat Commerce technology can enjoy significant gains including higher revenue growth, stronger customer retention, reduced service costs, and increased marketing effectiveness. An Aberdeen Research survey commissioned by Clickatell shows organisations can benefit from a 75% boost in annual revenue growth and a 48% increase in customer retention rates.
Massmart acquires Wumdrop to improve CX
Massmart’s 100% acquisition of local last mile delivery firm, WumDrop, is providing an improved customer experience through its digital channels. Makro, (and other Massmart brands in the future), will be able to clip its three to five-day delivery lead time promise to two days for deliveries within 30km from any store, as soon as the end of June. The move forms part of a multi-year e-commerce strategy that has seen the group buy up a number of innovative companies to strengthen its capabilities in last-mile delivery, particularly Wumdrop. Massmart is the number one general merchandise retailer in South Africa and the second largest retail website traffic generator, achieving a 56% increase in ecommerce Gross Merchandise Value in 2021. WumDrop operates a unique store-to-customer model, which enables faster delivery for customers within a 30km radius of a Makro store. In some cases, the waiting time from check out to parcel drop could be as little as three hours. Simon Hartley, founder of WumDrop and delivery services executive at Massmart eCommerce says, “Through the use of proprietary technology, we’re able to take deliveries directly from stores to customers which eliminates the need for our own warehouse and allows drivers to easily navigate South Africa’s unique spatial environment, which can be a challenge for traditional couriers.”
Zapper merchants now take mobile card payments
Independent mobile payments, insights, loyalty and rewards platform, Zapper, has announced that their merchants will now be able to accept tap-on-phone payments. The new functionality gives them access to virtually all digital payments without the need for any additional point of sale hardware and irrespective of whether consumers have the Zapper app. “After a successful pilot phase, we have rolled out new functionality available to all Zapper merchants which enables them to accept physical card payments as well as mobile wallet payments, such as Samsung Pay, Apple Pay, Garmin Pay and others. The consumer simply taps the physical card or mobile device on the merchant’s compatible Android smartphone,” explains Brett White, CEO of Zapper. The upgrade also supports pin on glass functionality, which means consumers who have exceeded their verification limit can safely enter their pin on the merchant’s Android smartphone and proceed with their transaction in the same manner as they would on a normal pin entry device when checking out. All consumers in South Africa will be able to make use of the new payment option whether they have the Zapper consumer app on their phone or not.
INTERNATIONAL NEWS
The Wall Street Journal is reporting a massive shift back to pre-pandemic shopping, like gyms, restaurants and travel, causing unprecedented demand spikes. For example, restaurant and bar sales are 55% higher than January 2018 and now have the largest gap increase vs food and beverage in the last four years.
Victoria’s Secret has launched an inclusive-focused online marketplace. The VS&Co-Lab, which is described as an inclusive shopping experience for all customers, will be featured in a new section on the Victoria’s Secret website, where it will showcase brands that align with its values of innovation and inclusivity.
Target saw shifting demand to events, toys for kids birthdays and travel related items like luggage (up 50%). Traffic to Target’s store and website rising nearly 4% year over year. However, profits missed by 30%. This was in part because of increased discounting, to compensate for misallocated inventory as consumer demands changed. “As we developed our plans for the quarter, our task was to anticipate how spending would change under circumstances no one had ever seen before, given that we were about to compare over two years of historically high federal stimulus payments,” Christina Hennington, chief growth officer at Target, explaining the company’s markdowns. “Despite this careful approach, the mix of actual demand materialized differently than we had anticipated.”
*Additional sources: AdWeek, Total Retail Report, Perch Interactive, Kantar, Onclusive, CMO Council, Wall Street Journal.
Meme-of-the-Week
As the petrol price skyrockets and impacts most other categories of business, consumers are caught between humour and terror at what the near future will bring in terms of a rise in the basic basket of groceries, as well as other household and business expenses.
This week in numbers
38%
Despite the already stellar growth of online, 38% of consumers still say they prefer to shop at their local store. The reason for their reticence was revealed in a NielsenIQ Consumer Outlook study based on online research conducted in December 2021. This saw 35% of respondents saying they shop in physical stores more as they can’t rely on online delivery times; while 28% said they prefer bricks to clicks as there are a different set of products (available) to buy online versus in a physical store. On the plus side, 26% said they shop online to limit their exposure to risks in-store; and 23% because they are home to receive deliveries, as they are still working from home. In addition, 44% of respondents in the same survey said that they still anticipate working from home in the future. For those returning full time or to partial in-office work, we may well see a shift in demand for specific delivery times. This will bring into question in-store and delivery capacity to fulfil orders at those different times of the day.
QUOTE of the week:
“For retail sectors, the metaverse has the potential to transcend any current real or digital customer experience,” writes Leanne Goott, Marketing Manager, Mobile in Africa, on Retailing Africa.
Main image credit: Pixabay.
*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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