Pressure on retailers may lift in Q4

While there is no outright good news for retail, analysts say the last quarter of 2017 is unlikely to plunge the sector to new lows.

“The interest rate cut and lower inflation numbers should see conditions improve for consumers on the balance,” says Old Mutual investment professional Meryl Pick.

“There may be a lag and the improvement could be muted to begin with. We may see a marginally better fourth quarter compared with last year.”

The South African Reserve Bank surprised markets with an interest rate cut of 25 basis points in July. In the same month, inflation fell to its lowest level since November 2015.

Inflation, as recorded by the consumer price index, dipped to 5.1% in June, from 5.4% in May.

Pick says despite this encouraging data, retailers had indicated that trading conditions would remain tough for the rest of 2017.

Cratos Wealth portfolio manager Ron Klipin says there was good news for retail shares at their current prices.

A year ago, Pick n Pay’s share price was trading at about R80.76. The share currently trades at about R62.84.

Mr Price Group was at about R228.50, but has since fallen to about R175.66.

“Looking at retail counters, prices are becoming more attractive and may see some buying because of the value they offer at these prices. But the conditions in the sector itself aren’t great,” says Klipin.

Klipin says there was a lack of confidence in the market and the economy, while household incomes were under pressure.

“There are a lot of pluses and minuses and anything could change the balance. There is still a possibility for a downgrade, but the lower level on inflation appears to be a positive aspect.”

In clothing retail, Pick and Klipin says Mr Price Group and TFG were best placed to survive the economic environment.

In food retail, Klipin says Shoprite would fare best, being affordable for most consumers. The retailer’s African operations would also help support it.

By Colleen Goko for Business Day www.businesslive.co.za

Vodacom bows to pressure to reduce prices

Vodacom will actively participate in the Independent Communications Authority of South Africa’s (Icasa) consultation process on the draft regulations regarding data expiry periods and out-of-bundle billing.

Vodacom told Fin24 that it was committed to the process of drafting new regulations, after the communications regulator stepped into the going feud between consumers and networks over the high cost of data.

“Vodacom is aware of the draft regulation gazetted by Icasa regarding data expiry periods and out-of-bundle billing,” a company spokesperson told Fin24 this week.

“Vodacom is committed to bringing down data prices and has brought down effective data pricing by 44% over the last three years.

“Through the likes of Just4You, which offers customers hourly, daily, weekly and monthly bundles, Vodacom has made significant inroads in recent years in its pricing transformation journey,” the spokesperson said.

The latest step by Icasa to join the #DataMustFall campaign was aimed at regulating data expiry dates, according to a notice published in the Government Gazette on Monday.

Icasa intends to encourage networks to extend the validity of data bundles.

“With regard to out-of-bundle billing, Vodacom reiterates its position on this matter in that it remains fully committed to addressing these and has already started to implement its plans,” Vodacom told Fin24.

“We remain committed to consulting with the regulator in our shared quest to continuously address customer needs and improve the customer experience,” the company added.

The public has until September 19 to submit comment.

Prior to the recommendation, the regulator announced it would hold an inquiry to try reduce high data costs. This inquiry will be conducted over four phases and completed in March 2018.

These phases include a market study, discussion document, public hearings, and findings document. Members of the public would have 45 days to submit comments following each phase, News24 reported.

By Kyle Venktess for Fin24

Brave new world of retail bad for workers

South African grocery retailers are taking their cue from global players, and as a result the retail workforce may be under threat as technology continues to rattle the sector.

About three years ago the biggest retailer in the world, US-based Walmart, embraced smaller-format stores as its superstores began falling out of favour with customers, and signalled it would employ a more rationalised workforce.

This year, the group announced a further reduction in staff as it focused more on e-commerce business. About 18 000 people lost their jobs out of a workforce of 2.3 million employees globally.

Similarly, UK-based retailer Tesco cut 1200 staff jobs in its head office after cutting 1 100 jobs in its call centre.

Walmart competitor Amazon has only 34400 staff, although it said in January it expected to add 100 000 people to its workforce in the next 18 months.

Andre Roux, head of the future studies programme at Stellenbosch University, said technology had been a significant disruptor in recent times, but several other issues were influencing the way companies were seeing the labour force.

“Robots can work for up to 40 days in a row for 24 hours a day”.

Robots would gradually replace human labour, he said.

“No one owes anybody a job. There’s no entitlement. You are only going to be employed if you can make an efficient contribution,” said Roux.

The fastest-growing employment was self-employment, as opposed to working for one organisation for many years.

“The whole idea of cradle to grave or womb to tomb is becoming more and more outdated,” Roux said.

“In the future, people will probably work for 20 or more organisations during their careers – just a couple of years at a time.

“That has implications for how one builds up one’s pension fund. It becomes one’s own responsibility.”

But in a country such as South Africa, which was part of a developing region, there was a disjuncture between adopting first-world ways of doing business on the one hand, and dealing with issues such as an unskilled labour force on the other.

“Although we are a developing country, these days you’ve got to be as good as the best.

“We have to follow new trends but at the same time be aware of our own unique challenges.

“As it is we have a surplus of unskilled labour and a shortage of appropriately skilled labour.”

According to the Quarterly Labour Force Survey, South Africa’s unemployment rate was 27.7% in the first quarter of 2017, the highest unemployment rate since September 2003.

In the current retail climate, Pick n Pay’s self-service checkout points may be the biggest threat of all to labour.

Bones Skulu, general secretary of the South African Commercial, Catering and Allied Workers Union (Saccawu), said the union was challenging the installation of self-service checkouts.

It would continue calling on workers to embark on industrial action in response to technology that had the potential to replace labour.

He added that Saccawu was expecting further job cuts by Pick n Pay across various divisions.

For those on the shop floor, the changes are telling. Perceptions among staff are that more work has to be done by fewer people.

By Palesa Vuyolwethu Tshandu for Business Live

PNA stationery festival hits PE

Hardworking teachers stand to be rewarded with a share of R20 000 worth of essential classroom supplies when they visit the PnA Stationery Festival at Baywest Mall on Friday, 11 August.

The festival, which will be held in the Centre Court, will showcase the latest back-to-school products, office consumables, and related supplies and services from a range of national suppliers.

Baywest Mall marketing manager Lindsay Steele said the festival was an important initiative to recognise dedicated teachers who often invested their own time and money in teaching materials and classroom stationery.

“Aside from the competition for educators, all shoppers are welcome to walk through and see the latest stationery offerings. The festival runs until the Saturday and one lucky shopper could walk away with a Baywest Mall voucher worth R1 000.”

As far as the teachers’ competition was concerned, festival organiser and PnA Baywest owner Francois Steenekamp said there would be 10 product hampers to the value of R1,000 each, plus the grand prize of a R10,000 PnA voucher, up for grabs.

“To enter, teachers can collect an entry form at the festival, complete it by visiting each of the exhibitor stands, and drop it into the entry box provided.”

Steenekamp said 11 entries would be drawn on the Friday evening, and those finalists would be contacted to return for the attendance draw at noon on the Saturday.

www.rnews.co.za

Bic lowers full-year growth forecast

French company Bic, known for its disposable lighters, ball-point pens and razor blades, has seen its sales stagnate over the past six months. The board has immediately lowered its full-year growth forecast.

1.063 billion euro turnover
Bic achieved a 1.063 billion euro six-month turnover (+ 0.3 % compared last year’s first semester), thanks to the Stationary division that grew 3.3 % and is the company’s largest division with a 428-million euro turnover. Distributors responded well to Bic’s novelties for the upcoming schoolyear, the Clichy-based company said.

Bic’s disposable lighters also continue to sell well and contribute 356.9 million euro, up 0.8 %. Its razor blade division did not do as well, as its turnover slumped 4.3 % to 236.4 million euro, mainly because of weaker sales in the United States. By comparison, Europe and the growth markets did display growth for the razor blade division.

Even though its second quarter turnover outperformed the first quarter, the board still dialed back its full-year growth forecast. “As markets remain volatile for the balance of the year, coupled with recent signs of lower consumption in Brazil, we now expect to trend between 3% to 4% Full Year Organic Net Sales growth”, Bic said. Only three months ago, it targeted a 5 % increase, but analysts had already stated that number was far too optimistic. The French group published a 2.026 billion euro turnover and a 249.7 million euro net profit.

By Karin Bosteels for www.retaildetail.eu

Tech trends SA companies care most about right now

Dimension Data has released its latest digital workplace report, highlighting which technologies South African companies are currently developing and working with.

In South Africa, Dimension Data spoke to 73 respondents of companies with at least 1 000 employees, from large businesses with headquarters in the region.

The companies surveyed reported that mobility was still the most important area for supporting broader digital workplace initiatives.

27% of organisations said that embracing multiple-device-ownership models (BYOD, COPE, company-liable) is the most important technology trend, and 89% identify mobile devices and business applications as being technologies that support business process improvement.

This was followed by an embracing of the consumerisation of IT (25%) as well as an increasing demand to make video communication more pervasive (21%), said the report.

“Ensuring that employees are well-connected and empowered with mobile technologies and applications has resulted in enterprise mobility becoming a key theme of broader digital transformation efforts,” said Dimension Data.

“Those leading on enterprise mobility strategy development and implementation should therefore ensure that mobility initiatives map well against broader digital transformation business objectives.”

Cloud

South African organisations are also turning to the cloud as an alternative to traditional on-premise deployments of workplace technologies.

For communications tools, such as WebEx and desktop video conferencing, 34% of South African organisations have deployed these in their own private cloud environments.
For collaboration applications, such as SharePoint and enterprise social, 22% of South African organisations have deployed these in their own private cloud environments.
For business applications, such as ERP, 18% of South African organisations have deployed these in their own private cloud environments.
“A better cost model is the top reason South African organisations are moving to cloud applications,” said Dimension Data.

“In time, organisations will rely more on fully hosted services for a wide range of digital workplace technology. The opex model is attractive to companies trying to rein in capital expenses, and cloud-based applications are considerably easier to keep up to date.”

However, it noted that many cloud-based applications do not yet meet the security and compliance requirements of many organisations.

Organisations also have existing assets that they own, that work well, and that do not need to be retired, it said.

“For example, 62% of South African organisations host business telephony applications on-premise, with only 5% being deployed in a private cloud environment. For this reason, managed services remain attractive for large organisations, which rely on them heavily as a way of keeping IT costs to a minimum.”

Enterprises are also turning to hybrid deployment models to keep one foot firmly planted in the current world of premise based technology whilst taking their first steps toward the cloud.

Hybrid deployments let organisations move some workloads to the cloud whilst retaining others on premise.

“Organisations with security or compliance concerns can keep applications on site or in private data centres under their own management whilst moving other, less sensitive applications to the cloud. Enterprises with significant investments in systems and applications deployed on premise can transition them to the cloud over a period of years, retiring legacy technology slowly as it becomes obsolete.”

Looking forward

Consumerisation and migrating to the cloud may occupy the minds of CIOs focused on here-and-now issues around digital transformation. However, those keeping an eye to the future see the dawn of a whole new set of technologies that will shape the digital workplace for years to come.

These primarily take the form of augmented reality which has practical uses for field technicians and other specialists needing instant access to information and AI/machine learning which are helping organisations derive insight from vast quantities of data and helping get the right information to the right people at the right time.

Unsurprisingly, the Internet of Things is also dovetailing with – and increasingly driving – a greater reliance on automation in the enterprise, as sensors variously monitor and control lighting, door locks, vehicles, medical equipment, manufacturing machinery, surveillance cameras, and other systems.

75% of South African organisations say they will have a practical use case for augmented reality technologies within the next two years.

The percentage of South African organisations (26%) that say they will never have a practical use for augmented reality technologies aligns quite closely with the global findings, which show that 34% of organisations see no value in this technology.

“It is still very early days for augmented reality technologies, especially in the enterprise context,” the group said.

“The focus is still very much on the hardware, as opposed to the new business outcomes that the hardware could potentially help support. The value of augmented reality technologies needs to be better communicated and in contexts that resonate with enterprises. A more enriched app ecosystem that supports the core technology will be vital to its enterprise success.”

“As this develops, and as the use cases for the technology become better contextualised, the value proposition of AR will be better understood by organisations across industries.”

21% of South African organisations are investing in intelligent agents now, and 18% are investing in IoT, but investment will increase significantly in those
areas over the next 24 months.

“Undoubtedly, however, it is analytics tools that interest South African organisations the most. Strong investment is planned in the area of workplace analytics, with 94% identifying that some form of investment will be made in this area over the next two years.”

“The most important use case for these analytics tools will be in managing the employee lifecycle and improving the customers experience.”

Source: Business Tech

South Africa’s tech billionaires

When the Sunday Times published its annual Rich List for 2016 at the end of last year, it included several billionaire tech executives based on their public investments.

BusinessTech provides an update on the Sunday Times list, using the latest shareholdings of the top executives in the industry against the current share price of that particular company.

Unsurprisingly, the list is littered with Naspers executives who have cashed in on the company’s growth which is largely as a result of it’s share in Chinese Internet and media firm, Tencent, which has enabled Naspers to work up a tidy market cap of R1.1 trillion.

Koos Bekker sits atop the list when it comes to wealth in tech, despite having stepped down as CEO of internet giant Naspers, several years ago.

Bekker is seen as having transformed Naspers into a digital media powerhouse, primarily due to his 2001 bet on Tencent.

During his tenure as CEO, which began in 1997, Bekker oversaw a rise in the market capitalization of Naspers from about $600 million to $45 billion, while drawing no salary, bonus, or benefits, Forbes noted.

He was compensated via stock option grants that vested over time. Bekker, who retired as the CEO of Naspers in March 2014, returned as chairman in April 2015.

Forbes said that over the summer of 2015 he sold more than 70% of his Naspers shares, with his total fortune put at $2.2 billion (R30 billion).

Also on the list are brothers Mark Levy and Brett Levy, who have been busy at Blue Label Telecoms in 2017 as they look to tie up an acquisition deal and recapitalisation of mobile operator, Cell C.

Also featuring on the list is founder and CEO of tracking firm, Cartrack, Zak Calisto.

One of the darlings of the JSE for a number of years, IT service management company, EOH has endured a shaky 2017 so far including the resignation of its long serving chief executive, Asher Bohbot, and a probe from the Competition Tribunal.

Shares in EOH are down from R163 at the end of December, to R124, which has meant a big dent in the wealth of Bohbot, and non executive director and largest shareholder, Danny MacKay.

How many billionaires are there in South Africa?

According to BusinessTech, the distribution of high net worth and ultra-high net worth individuals (UHNWIs) is a as follows:

 

Source: Business Tech

Daylight robbery: Eskom drives up prices

The average four-person South African household should pay R290 a month for electricity, yet Eskom is charging them roughly R1,200, says a lobby group.

Now Eskom is seeking a 20% tariff increase from the National Energy Regulator of South Africa (Nersa).

Energy analysts have described Nersa, which starts its public hearings into the proposed tariff increase in Pretoria today, as the only thing preventing disaster.

Presentations by the Organisation Undoing Tax Abuse to parliament’s public enterprises portfolio committee this week reveal the power utility should be relying on its capital expenditure budget and the government and not on ordinary South Africans to float it.

Finance Minister Malusi Gigaba this month said the government was considering granting Eskom a favourable loan or possible bailout.

StatsSA yesterday released its findings of Capital Expenditure by the Public Sector 2016 report, which showed that capital expenditure by public sector institutions rose to R284-billion from R265-billion.

The report shows that capital expenditure by state institutions has increased by R1.2-trillion over the past five years. Eskom accounted for R73-billion, with the new Medupi, Kusile and Ingula power stations accounting for R70-billion.

Outa’s energy specialist Ted Blom said they revealed to parliament Eskom had a qualified audit of R3-billion in irregular expenditure without supporting documents.

“Explanations are needed as to how the R3-billion was processed without the documentation. Either there is a magic password which allowed this or there is an old chequebook lying around. Either way Eskom’s chief financial officer, Anoj Singh, must explain.”

Blom described the electricity tariffs the average four-person household was paying as “daylight robbery. There are three cost drivers to the power utility. They include the financing costs of money borrowed, their power plants and the operations.”

Only Eskom’s operations were subject to inflation, so increases should be a third of inflation, as two-thirds of costs were fixed.

He said on the assumption Eskom was efficient in 2005, and the cost of electricity for a four-person home was R160, the cost now for electricity, based on an annual escalation of a third of CPI, would be R290.

Blom said compounding Eskom’s financial problems was the building of Medupi and Kusile power stations.

Blom said Eskom recently announced that they need to borrow R325-billion over the next five years to finish off the two stations, 10 times higher than initial estimates.

He said Nersa should, and could, dramatically reduce the electricity tariff.

Nersa spokesman Charles Hlebela would only say that Eskom’s application would be considered in terms of the law.

Eskom spokesman Khulu Phasiwe said they would respond to allegations in parliament and not through the media.

By Graeme Hosken for TimesLive

Consumers travel far and wide for bargains

People are deserting retail stores’ butchery aisles, cutting out the middleman and turning to buying meat in bulk. Seemingly, it is proving to be a great saving.

“If I were to buy the same amount of meat at retail stores, I’d need a loan the following day, meat is so expensive,” says Bongani Qansane, of Germiston, who spends R1,500 a month on meat.

“Once a month I make the trip to Heidelberg.

There’s an Eskort butchery where I get my pork cheaper than at retail shops, and I go to a Karan Beef butchery in the same area for beef and mutton. It’s great value for money.” Sipho Dube teams up with a friend to buy wholesale.

“I spend R400 a month and an additional R40 for fuel so I’m saving big time.”A mother of two says she travels close to an hour with her friends every two months to Eskort.

“We buy and freeze,” she said, estimating that she spent 40% less than she would pay in retail shops. “Not only is the meat cheap, it’s fresh. I’m glad I made this decision.”

Pieter Prinsloo, of the Red Meat Producers’ Organisation, said last year’s drought contributed significantly to the increase in meat prices. He said meat was more expensive at retail shops because “its convenience shopping”.

“If you take lamb, for example, you can buy it wholesale for around R70 a kilogram. The cheapest at a retailer would be about R99 a kilogram.

“You can buy beef wholesale from a farmer for R48 a kilogram. That will give you a 30% saving,” he said.

Zeyn Adrian Jenkins, of Durban, said he paid around R350 for 10kg of chicken quarters in Durban. “It’s R200 in Pietermaritzburg and Port Shepstone.”

For six Soweto women, bulk buying allows them to keep meat on their tables for longer.Thoko Nkosi explained that they put away R150 a month for 11 months. Come the festive season, they can afford to stock up on meat.

“Last year, we were able to buy a beast for about R6,000 and we told the butcher how we wanted it cut. We all walked away with different cuts of meat — from rump steak to T-bone steak, ” Nkosi said.

“If I hadn’t joined the group and I walked into a [retailer] with R1 600, I would only get enough meat to last me about two months.”

The Times found stewing beef at a City Deep wholesaler in Johannesburg was priced at R65.95 a kilogram. Pick n Pay sold it for R79.99. It went for the same price at Spar and Checkers sold it for R10 more.

A kilogram of brisket was sold for R65.95 at the wholesalers, for R87.99 at Pick n Pay, R92.99 at Checkers and R98.99 at Spar.

An Alberton butcher said it was important to note that it was not only the price of meat that could differ from one place to another but also the cut and grade.

Source: Supermarket & Retailer

How to identify a scam e-mail

Spam, scam e-mails and phishing: every day we receive hundreds of e-mails that may or not be linked to criminals trying to steal information from us.

My Office News took a look at an email we received and dissected it piece-by-piece to show you how to identify spam.

 

When the short link is clicked, it redirects to a site that downloads malware to your device.

Should you receive an email from someone claiming to be a service provider (such as a bank or ISP), rather call their main office to check the validity of the information.

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