Massmart battles one of the worst retail environments yet in SA
By Sunita Menon - Nov 13th 2018, 14:10
Massmart, which is 51% owned by US giant Walmart, is battling one of the worst retail environments yet it has seen in SA, chair Kuseni Dlamini says.
“The environment is very challenging from a retail perspective. It’s one of the worst retail environments we’ve seen in many years,” Dlamini told Business Day on the sidelines of the African Investment Forum last week.
The retailer has struggled in the South African market, which accounts for 91.6% of Massmart’s total sales. Since Walmart acquired its majority stake on June 20 2011, Massmart has lost about 24% of its share price value.
“We need the economy to grow, we need more jobs to be created, we need more consumer confidence, we need more investor confidence in our country and we need to attract investment. Those are the key levers in our country that we need to unlock,” he said.
SA fell into a recession for the first time since the global financial crisis in the first two quarters of 2018. The retail sector, which was also in a recession in the first half of the year, is an important indicator of consumer spending, which accounts for 60% of GDP.
“Growth is so important and it is the goose that lays the golden egg. News that we’re in a recession has to be a wake-up call for leaders to step up to the plate and do what it takes with a sense of urgency. It’s a rallying cry for leaders to do more,” said Dlamini.
Retailers have also felt the pinch of the first VAT rate increase in 25 years that was announced in the February budget and came into effect on April 1.
“Retailers have felt the impact of the VAT increase and that was really a factor if you look at the sales in the second quarter of this year ,” said Dlamini, adding that the increase has also been a burden to consumers who are already under pressure with static disposable incomes and an unemployment rate edging towards 30%.
To grow the economy, SA should identify the quick wins including lifting the visa requirements, reforming the labour environment and sending out the right message around land expropriation without compensation, said Dlamini.
“These are issues that are very urgent and some of them have not been managed very well and in the process, we have done what is almost tantamount to scoring an own goal in local and international investor circles which is really unhelpful and unnecessary,” he said.
“There’s a huge opportunity cost to the country in terms of investments. There are a lot of investors waiting in the [wings] to see how these matters are resolved. We need to have absolute clarity and absolute certainty
This will be important for building trust between business and the government “because historically we’ve always had a trust deficit”.Business Live
Checkers brings world-class retail to Constantia with new flagship store
27/11/2019 - 13:01
Checkers has opened the doors to its state-of-the-art 2 330 m² flagship supermarket at the Constantia Emporium as the retailer continues to take innovation to new heights.
Woolworths carves out market share in SA
27/11/2019 - 10:11
In Australia, David Jones's sales declined 2.1%, with the company saying a store refurbishment contributed to the decline.
Push and pull strategies work together to keep consumers coming back for more
26/11/2019 - 10:20
The retail sector is under increasing pressure as consumers have shrinking disposable income in a strained economy. Maintaining share of wallet is critical. Relying solely on a push route to market strategy from manufacturers into retailers is not enough to get consumers buying products. A pull strategy needs to coexist with the push to drive brand consumption. Integrating these strategies requires intelligent and insightful decision-making. This, in turn, requires data generated through smart technology which provides line of sight across the value chain from manufacturer to distribution, retailer to the consumer.
SA expected to sow fewer maize hectares than in previous seasons
26/11/2019 - 10:06
South African farmers are expected to sow 2.8% fewer hectares of the food staple maize next season than forecast in October after the planting season was delayed by rains, a Reuters survey of analysts showed.
Exclusive leases must fall: Commission cracks whip on Shoprite, Pick n pay, Spar, Woolies
26/11/2019 - 09:57
The Competition Commission Inquiry into Grocery Retail, published on Monday, called for an end to the exclusive leases negotiated by national retail chains in all shopping malls across the country in a bid to open up access to markets for smaller players.