Tag: growth

Caxton: the Naspers antithesis

Caxton and CTP Publishers & Printers, which is still earning most of its keep from newspapers, magazines and printing and packaging, could well be regarded as the antithesis of Naspers. Whereas Naspers has been ripped away from its print-media roots by an array of technology investments, Caxton still seems content to tinker with its (well-managed) traditional operations.

That’s not to say there’s not much to like about Caxton. In fact, there may be more than a few contrarian market watchers who prefer the conservative vision of Caxton prime-mover Terry Moolman to the all-conquering global thrust of Naspers chair Koos Bekker.

Caxton, on a trailing earnings multiple of around 10 times, may seem a fair rating, noting the changing media landscape. It’s worth noting the company’s operations are still churning out convincing free cash flows, and the allocation of this capital will determine Caxton’s long-term viability. The fair value of cash and cash equivalents topped R1.9bn, with cash generated by operating activities increasing over 20% to R782m — equivalent to around 195c/share. There was a R356m investment in property, plant and equipment – a large portion of this earmarked for the packaging divisions to facilitate a restructuring of the Gauteng operations. Caxton also made several acquisitions during the year, spending R158m. Perhaps the most eyecatching event is listed under the R85m investments and loans to associates. Though the most significant seems to be a 30% investment in Universal Labelling, the far more intriguing tilt is the shareholder loans made to “rapidly growing” fibre-to-home associate Octotel.

Caxton notes that Octotel will have connected more than 50,000 homes by the end of the year, making it the Western Cape’s largest independent open access fibre operator. Post-balance-sheet events may also raise market interest. Though the R11m acquisition of self-adhesive label business Tricolor in the Western Cape reinforces the old-economy tag, Caxton made a big move in clinching a 50% stake in Private Property SA, one of the leading digital real-estate portals, for R123m.

Caxton is clearly a business at an interesting juncture. I suspect the share price, which (aside from an odd spike) has dribbled downwards for five years, may find some traction fairly shortly.

Safety in numbers

Stellar Capital Partners (SCP) has pretty much been defined by its investment in JSE-listed Torre Industrial. That masks the fact the company did a rather good deal in buying out security technology firm Amecor, now apparently the subject of two takeover bids by other investment companies. Amecor delivered normalised earnings before interest, tax, depreciation and amortisation (Ebitda) of R52.3m for its year to end-March — justifying SCP’s purchase price of around R270m. If Amecor is for sale, could SCP — noting prevailing economic conditions — ask north of R300m? Market talk is that SCP may be offering Amecor in a package deal, with the stake in electronics manufacturer Tellumat tossed in as well.

Over the rainbow

RCL Foods is still counting on chickens, and executives seem determined to dismiss notions that the Rainbow poultry business will be put up for sale. This is despite the industry looking anything but the picture of plump prospects, with cheap imports still flying in and an ill-timed outbreak of avian flu.

RCL’s recent results, though, did show the poultry segment looking slightly pluckier, with a stronger second-half performance. The business model change — which will result in a volume reduction, with quick-service restaurant offerings favoured over commodity offerings like individually quick frozen — will hopefully yield further margin improvements.

It’s encouraging, too, that RCL’s chicken business is once again excelling in the “freezer to fryer” section, where market share at the end of June grew to a category-leading position of almost 40%.

By Marc Hasenfus for BusinessLive

Inside Shoprite’s giant new distribution centre

The Shoprite Group’s new Cilmor distribution centre in Brackenfell, Cape Town, spans 123 000m² and is described by the group as one of the most technologically advanced distribution centres on the African continent.

It consolidates the activities of five different distribution centres spread throughout Cape Town and provides jobs for about 3 500 people at the facility and a further about 500 people indirectly. The centre consolidates about 500 suppliers and it is anticipated that about 20 000 products will be stored there.

Construction of Cilmor began in February 2016. Its name is derived from farmer Cecil Morgan (Cilmor) who formerly owned the land.

The distribution centre consists of three different sections, namely ambient (operational since August 2017), frozen and chilled (both operational in 2018).

The ambient section includes a “chocolate box” where temperature-sensitive items such as chocolates are stored.

According to Photy Tzellios, general manager of supply chain at Shoprite Checkers, the company looked at various methods all over the world in order to develop Cilmor.

“It is not about four walls and inventory, but about how things are put together,” he told Fin24 during a tour of the facility on Tuesday.

“We looked for solutions for the flow from suppliers to the centre and from the centre to our stores. It is about anticipating what our customers need without the stores having to store stock. It is all about inventory management.”

This means warehouse space is not needed at stores and more stores can be “mushroomed” over a greater area.

Source and images: Supermarket and Retailer

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

Africa the superpower

What a difference a century makes. If we stepped back in time to a hundred years ago we’d find an undeveloped China; a Middle East that had yet to discover the riches of oil and most of Southeast Asia consisted of countries that were barely distinguishable from medieval societies. It was an entirely different world.

Roll back two hundred years and many European nations would be far removed from the modern countries they are today. It is an enduring myth that fools us to believe everything has always been like it is today; that the societies at the top of the pile have always been there. Technological and social revolutions have molded the modern world and opportunity is out there for the taking.

When asked why I am so optimistic about Africa my answer is simple: look at how far we have come and look at how fast we are moving forward.

By 2050, it is estimated that Africa will boast a $29-trillion economy. It will have the largest youth labour market in the world and if guided and educated correctly, the same youth will be the workforce of that world.

Even today, the future is starting to glow in Africa. Many projects and initiatives are delivering and being joined by new catalysts every day. According to Jake Bright, co-author of The Next Africa: An Emerging Continent Becomes a Global Powerhouse, there are already over 200 innovation hubs on the continent, 3,500 tech-related ventures and $1 billion in venture capital injected into local start-ups.

Africa is modernising at an unmatched rate. Its tremendous mobile device adoption proves this fact. African companies and people simply accept that new technologies will improve their lives and if what they need does not exist, they will create it. From new solar power systems to the much-celebrated M-PESA mobile banking, Africa innovates at the edge. While other countries wonder about delivering packages with quadcopters, we are already pioneering intelligent drone systems sophisticated enough to track poachers. It was an African student who developed a new rocket fuel – in his mother’s rural kitchen!

This culture of innovation leapfrogging is one of Africa’s secret weapons, supported by a rising tide of SMEs. Though policy and leadership have been slow to respond, we hear new voices promoting SME and innovation cultures every day. Rwanda, for example has reduced new business registrations from over 18 days to as little as 6 hours through a series of reforms that include technology and paperless processes. As a result, more companies were registered there in 2009 than the total five years before that – and it keeps growing. Skills are central to Africa’s future and I see a lot of promise in the growing pool of related projects across the continent. Technology skills are being brought to schools everywhere with innovations including container classrooms and maker hubs. Tertiary skills are also being reinforced through partnerships with universities, as well as award-winning programmes such as SAP Africa’s Skills for Africa and Africa Code Week, the latter which trained over 86, 000 youngsters in basic coding skills last year.

But this is not a services revolution. Africa’s resources and agriculture remain important. They benefit acutely from innovation. One example is the partnership between SAP and GIZ, developing systems used by cashew farmers in Benin, Burkina Faso, Côte d’Ivoire, Ghana, and Mozambique to better manage their supply chain.

Thanks to the continent’s demand for hardy and meaningful technology, which is being driven by partnerships that reinforce Africa’s role in creating a better world, Africa is where others will look for the best in new innovation. The SAP Rural Sourcing Management solution is one direct result of this. Refined on African farms, it will serve as a blueprint to meet agriculture and food challenges across the world.

I believe that Africa will emerge to be the third centre of global power, settled in between the worlds of the East and West. The world needs Africa. It needs its resources, its people, its skills and its insights and Africa is rising to meet those expectations. Yes, it has not been a smooth ride, but the winds of change are blowing in the right direction. This will be Africa’s century.

By Brett Parker, MD of SAP Africa

EduWeek is bigger and better

Originally pegged for the 4th and 5th July 2017, EduWeek has been moved to accommodate the huge growth that it has experienced and will leave Hall 5 at Gallagher to take up larger space in Gallagher’s prestigious Halls 2 & 3. This move of date and venue for EduWeek provides the best possible environment to launch new big features to the event and space for exhibitors and visitors to network and interface, which is what EduWeek is all about.

EduWeek has also moved on from its partnership with SABC and is now partnering with Mindset Learn Channel.

The EduWeek African Trade Exchange takes place on the 11 July in Sandton and EduWeek takes place on 12 and 13 July from 09:30 – 18:00 and 09:30 – 17:30 respectively in Halls 2 & 3 at Gallagher Convention Centre in Midrand.

Event Director, Tanya Jackman says “We are pioneering a new breed of education events which addresses the broader role of education as well as the practical every day components. In turn this will provide more opportunities for businesses in education to be exposed to new verticals of growth, including health and energy, whilst creating greater exposure in core sectors such as science & technology.”

EduWeek, a firm supporter of the United Nation’s 17 SDG’s and South Africa’s NDP’s, is a two-day exhibition and conference which will host over 180 local and international product & service providers, seven dedicated EduTheatre/conference tracks and 5,500 visitors.

Those who will attend EduWeek include:

  • Global Organisations & NGOs
  • African Ministries
  • South African Provincial Government
  • CEOs, CIOs, COOs & Directors
  • Institution Leaders
  • Educators, Lecturers & Heads of Departments
  • Education Specialists

Event director, Tanya Jackman says “As an attendee you will be exposed to a full itinerary of networking, knowledge sharing, practical seminars and hands-on interaction with breakthrough technologies & products in a truly innovative environment for an unbeatable experience”

Multiple segments of the sector will converge at EduWeek to discuss the advancement of education including Vocational & Higher Education, Early Childhood Development, Basic Education, Inclusive, Sports & Recreation, Technology, Health and Finance.

The exhibition has grown to host over 10 major product areas including Fitness & Nutrition which is a new addition for the upcoming event:

  • Technology
  •  Maths & Science Equipment
  • Publishing
  • Educational Toys
  • School Supplies
  • Stationery
  • Inclusive Education
  • Services for Educational Institutions (Financial services, training services etc.)
  • Safety & Security

Another highlight of the EduWeek calendar is the EduWeek Awards which take place on the evening of the 12th July. The EduWeek Awards recognise excellence across the African education ecosystem. From the inception of the most innovative and life-changing products and/or services to our local heroes who go above and beyond to assist their communities and the lives of our precious learners.

Contact
To enter the EduWeek Awards or nominate a worthy recipient, visit: http://www.educationweek.co.za/awards/

Should you wish to sign-up to EduWeek’s monthly newsletter, the Educ8tor, please go to wwe.eduweek.co.za and register your details.

 

 

 

When you need to buy a new kitchen gadget, a designer lipstick, a branded razor, a calendar and that vital cable for your television — what’s the one easy place you can turn to?

That’s right, there isn’t one in Australia. You’re facing hours going shop-to-shop, picking up second-rate products from a local mall or ordering from various websites with delivery fees on each item and mixed rules on returns.
Amazon is the game-changer our retail landscape needs, one that transformed shopping in the UK and US years ago. Despite the hand-wringing from the retail sector that has dominated reporting on the online giant, this is mostly good news for the consumer.
You will be able to buy what you want, when you want it. It will typically be affordable. Existing brands will have to work harder to compete. It will be the arrival of Uber, or Aldi, all over again.

I lived in the UK more than four years ago, and buying books, travel accessories and homeware couldn’t have been easier. Every Christmas now, I log on to Amazon and select the perfect toiletries, chocolates, booze, games, DVDs, hiking gear and toys that I want for all of my relatives, adding wrapping and a message where needed. It’s the work of minutes.
In the four years I’ve been in Australia, waiting for Amazon, the company has grown enormously, and it’s in fashion that investment bank Morgan Stanley now sees the biggest threat.

Its report “The Amazon Effect in Australia” says $800-million will be wiped from the earnings of chains including JB Hi-Fi and Harvey Norman, but the single biggest impact will be on Wesfarmers. The nation’s largest retailer, which owns Target and Kmart, could lose more than $428 million in earnings by 2026.
The report said department stores would be the sector worst hit, as Amazon generates up to $12 billion in sales by 2026.

Online retailer Catch Group this week announced it is having a makeover to ensure it becomes number two in Australia after Amazon, rebranding Catch of the Day as Catch.com.au and turning it into a marketplace.
Amazon Fresh will take on the grocery sector, and it is aggressively building its Amazon Prime video membership service, making inroads into streaming and refusing to stock Apple products in favour of its Fire TV sticks. Amazon entered the Artificial Intelligence field in 2014 with its Alexa speaker. This week it emerged that its shares (and those of Google) have just reached $US1000, putting them in an elite club of mega-companies.

In December, it opened the first Amazon Go store at its Seattle headquarters, a convenience store with a tracking system of sensors, algorithms, and cameras instead of cashiers or checkout lines.

Australians haven’t migrated to online shopping in the landslide once predicted. Figures released by the National Australia Bank last week showed the Online Retail Sales Index — a measure of spending on retail goods — fell by 0.8 per cent in April. But even if you prefer to visit a store and try clothes on, it’s being able to get those small essentials without the painful search that will hook you in.

And Amazon is moving offline, too. In December, it opened a prototype Amazon Go grocery store at its headquarters in Seattle, Washington, which uses a tracking system of sensors, algorithms, and cameras instead of cashiers or checkout lines. The eCommerce giant opened its first physical bookstore in New York last month — its seventh in the US. Amazon Books, like the Go store, does not accept cash, with Prime members using the app on their smartphone to pay and non-members using a credit or debit card.

Maxim Group today predicted a future in which Amazon will run everything from petrol stations to credit lines, Dow Jones reports.

“Consumers will be able to save money at the Amazon gas station because they belong to Amazon Prime, much like Costco members today,” said Maxim’s Tom Forte. “They will also be able to pick up and return their merchandise ordered online at the Amazon gas station.”

They’ll book their travel on Amazon, and have the firm send their suntan lotion ahead to the resort so it’s there when they arrive, he added.

But just as with Uber and co, there are serious questions over Amazon’s omnipotence. Critics say the retailer has a monopoly and is destroying small businesses — book stores, boutiques, grocery stores. There are also questions over how it pays tax.
There have been regular accusations that the company mistreats workers, with reports in December of “intolerable conditions” at a Scottish warehouse, with badly paid staff forced to sleep outside in tents to save on commuting costs.

A Sunday Times investigation found temporary workers at the warehouse were being penalised for taking sick leave and put under immense pressure to hit targets, and that water dispensers were often empty despite the intense physical nature of the job. Unions said workers were falling ill from overwork.

In the US, where Walmart is buying up smaller online retailers as it battles to compete with Amazon, there have been dozens of stories about inhumane conditions at its warehouses. But workers who spoke to Mental Floss in 2015 said conditions were relatively typical for warehouse work. In 2012, after an expose on the searingly hot summertime conditions, Amazon announced plans to spend $52 million to install airconditioning.
The company is now recruiting for hundreds of jobs in Australia as it prepares for its highly anticipated debut. It has broadly positive reviews on job sites Indeed and Seek, although there were complaints about difficult management, tough targets and short lunch breaks.

Amazon is a massive tech corporation and — mirroring Facebook, Apple and Google — there are justified concerns over its practices and treatment of employees as it grows.
However, it is time Australia caught up with the rest of the Western world and actually knew what those were.

By Emma Reynolds for www.news.com.au

It wasn’t long after smart phones, tablets and ubiquitous Wi-Fi that workplace experts predicted the end of the office. And while a telecommuting trend took root for a while, it is now beginning to reverse with large American companies like IBM, Honeywell and Yahoo leading the change.

But also thanks to offices that are now much more human friendly.

Richard Andrews, MD of Inspiration Office, says:  “The thinking went along these lines: if technology allow people to work anywhere, then who needs the office?

“As it turns out, the vast majority of workers do—because work, at its essence, is a social process. Even people armed with the latest mobile device still come to the office to connect with other people and to access technology they can’t carry around.

“The office didn’t go away, but it’s now evolving into something fundamentally different.

“We are in the midst of an office renaissance.”

And the proof is evident in some of the world’s biggest companies.

After several decades of allowing employees to perform their jobs remotely, IBM recently announced that it wanted many of its remote workers back in the office.

Between 1995 and 2009, the company shrank its office workforce. Other companies soon followed suit: Work-from-home became a desirable perk of many white-collar jobs.

Yahoo has also reversed its stance on home workers and said that since calling back its staff, employee engagement was up, product launches increased significantly and teams were thriving.

American conglomerate Honeywell also joined the back to the office trend by banning telecommuting for most of its workers worldwide.

Says Andrews: “It’s not surprising there is a swing back to the office. The workplace has become a catalyst for energy and buzz.

“People are again looking for inspiration and creativity at work, as well as human-centered technology that makes life easier. These ideas are being embraced and adopted at a rapid pace thanks to new people friendly design and facilities.”

Traditionally, offices were focused on uniformity and standards. Much of the space was dedicated to individual workstations, separated into departments, where people spent the majority of their time working alone. A cafeteria provided a place to eat lunch and large meeting rooms were used mostly for collaboration.

But by reducing the number of dedicated individual workstations and creating an ecosystem of spaces, people now have the freedom to choose how and where to work.

“Appealing offices now have a social hub, previously just a cafeteria, which shifts away from supporting just nourishment to now also becoming a place for workers to connect and collaborate,” says Andrews.

“They also have a nomadic camp—purposely placed near the social hub— to support mobile behaviours. The additional settings offer mobile workers a place to work alone or with others. Workers can see and be seen by coworkers, or choose a private setting for focused work.”

The concept of a ‘resident neighbourhood’ is also proving popular and includes spaces for managers in the open plan to promote learning and quick problem solving. Resource centres offers workers a space to securely store coats and bags and access meeting tools.

“People want to feel a connection to the places where they work, where they can see themselves in the space, versus something that feels imposed upon them. Well designed offices and productivity gains from working closely with smart people is driving the office renaissance,“ Andrews concludes.

Record numbers for London Stationery Show

The London Stationery Show is held annually during National Stationery Week in the UK.

The seventh London Stationery Show closed its doors last week after recording its highest ever visitor numbers.

Visitors were up 9% on 2016 with registered attendees from 43 countries.

The show, which was purchased by Ocean Media Group last year, has seen consistent growth in the number and size of stands being requested by exhibitors and this year more than 160 exhibitors and 300 brands were represented. at the show. The show recorded the highest number of entries for its Stationery Awards, which this year topped just over 400.

“The show continues to grow and attract more support from the industry and interested buyers. We’ve had an excellent response from exhibitors wanting to book for next year, and strong interest in our new show, which will be based in Manchester,” Tim Willoughby, managing director at Ocean Media Group, which also owns the National Stationery Week program.

This year’s show, held at London’s Business Design Centre, introduced a LaunchPad competition to help aspiring stationery designers and companies get started in the industry. This resulted in 12 winners being given free stands at the show.

The 2018 London Stationery Show will be held on 24 to 25 April, 2018.

Source: www.stationerynews.com.au

The death of retail as we now know it is greatly exaggerated. Retail isn’t dying; it’s evolving. Just like it has done before. There has always been disruption in the retail sector. A major disruption occurred in the late 1800s when Sears introduced the catalog and brought the entire store into the homes of U.S. consumers. This gave Sears the same advantage over brick and mortar stores that ecommerce sites have today. Sears was simply responding to the needs of its customer since 60 percent of the U.S. population lived in rural areas at the time and didn’t have convenient access to stores. Sears would bring the store right to them.

The same principle of meeting customer needs holds true for the current retail evolution, which is being driven by a confluence of change. Changing consumer attitudes, behaviors, and demographics; ongoing channel and digital disruptions; and increasing competition for consumer mindshare and dollars are forcing a shift in long-held paradigms – continuing the status quo is no longer an option.

It’s now about customer engagement, not customer acquisition. Rather than a multichannel strategy, the strategy now needs to focus on the customer and finding new ways to deliver the products they want, when they want them, whether online or at a physical location. It’s no longer about brands, big logos, and price promotions, it’s about engaging consumers with experiences, personalization, quality, service, and value.

The traditional retail business model that has stood the test of time over the decades is now transforming at the speed of light. Retailers competing to stay in the game are turning their ecosystems on end, breaking down old-school beliefs, and reinventing themselves. Amidst all of this change, however, is one constant that has been a guiding principle of retail since it began and that is: know thy customer. Those retailers and brands that survive and thrive are those that base their decisions on the needs and wants of their customers; those that know their customers best and act on that knowledge.

Knowing Thy Retail Customer

Consumer Economy:

More than eight years after the Great Recession, the U.S. economy is improving at a slow and steady pace, but the consumer landscape has been fundamentally reshaped. Consumers entered 2017 with more confidence in their financial situation than they have had in years, but their attitudes and behaviors around spending have changed.

Even though incomes are improving, real income is still comparable to where it was in 2007, and that is impacting consumer spending decisions. The growth in single-person households has also decreased the number of dual-income households. Healthcare costs are growing exponentially and will continue to erode disposable income. National student loan debt is at an all-time high-and is expected to double in 10 years, causing Millennials to delay marrying, purchasing cars, buying homes, and making other major purchases. Retail sales and overall consumer spending, key drivers of economic growth, are suffering as a result of lackluster income growth and increased expenses. Looking at sales across the broad set of industries tracked by NPD, we see spending slowing in many categories, particularly in traditional bricks-and-mortar channels.

When consumers do spend, they have a variety of options vying for their dollars, including many that are not tangible products. Consumers are exhibiting an interesting shift in spending to the experiential, demonstrating their desire for something more, and something different – like activities, travel, and entertainment. For example, the U.S. government reports that from 2010 to 2015 consumer spending on sports and recreational vehicles increased by 45 percent, spending on foreign travel by 36 percent, and on hotels and motels by 43 percent. Spending outside of measured consumer goods categories is typically increasing faster than total consumer spending on average.

A Multicultural/Multigenerational Mosaic:

Today’s retail consumers collectively represent a multicultural, multigenerational mosaic. By 2044, the U.S. Census Bureau projects that more than half of all Americans will belong to a minority group, which is any group other than non-Hispanic White alone. By 2060, nearly one in five of the nation’s total population is projected to be foreign born. Overall, Millennials are more diverse than the generations that preceded them, with 44.2 percent being part of a minority race or ethnic group. Even more diverse than Millennials are the youngest Americans: those younger than 5 years old. In 2014, this group became majority-minority for the first time, with 50.2 percent being part of a minority race or ethnic group.

Millennials and Boomers are still the sweet spot demos for many retailers. Millennials have now surpassed Baby Boomers as the nation’s largest living generation and they are coming of age, working, developing careers, and raising families. Some 1.3 million Millennial women gave birth for the first time in 2015, and they now account for the vast majority of annual U.S. births, according to the U.S. Census Bureau.

Baby Boomers are refusing to be pushed aside by the younger generation or ignored by retail, and still account for the bulk of consumer spending growth in major products and goods categories. As Boomers age, over the next 10 years we will see dramatic growth in the population of consumers over age 65, influencing spending in new ways. As consumers retire, they have less disposable income and spend less. More than half of households over the age of 65 are in the bottom 40 percent of income. Also, older consumers tend to spend disproportionally more on services and experiences instead of products.

To know thy consumer is to also understand that within each of these demographic groups are sub- segments that think and behave differently from others in the same group. The needs and wants also vary. Fortunately with the use of data, insights, and analytic solutions, like consumer segmentations, retailers can get to know their customers up close and personal.

Onward and Forward

Whether driven by want or need, consumers will always be in the market for goods and services. Retail, in whatever format —physical or virtual — will continue to exist. Retailers and brands that are in it to win it will recognize the need to rethink the retail experience they provide. They will build business models that offer experience, service, and value to their customers and reflect the diversity of generations, life stages, and other influences that make up our world today.

By Marshal Cohen, Chief Industry Analyst – Retail, The NPD Group

The country’s gross domestic product contracted 0.3% in the fourth quarter of 2016, according to Statistics South Africa (Stats SA).

Stats SA released the data in Pretoria on Tuesday. Overall GDP grew by 0.3% in 2016. This is lower than growth of 1.3% reported in 2015.

The main contributors to negative GDP growth were the mining and quarrying industry and the manufacturing industry.

Commodities showed a declining trend, according to Michael Manamela, chief director of national accounts. Mining and quarrying decreased by 11.5% due to a drop in the production of coal, gold and other metals including platinum.

Manufacturing decreased by 3.1%. This was brought on by a decline in manufacturing of food and beverages, petroleum, chemical products, rubber and plastic products as well as motor vehicles, parts and accessories of transport equipment.

Agriculture declined by 0.1% but although negative, it showed signs of improvement, said Manamela. “What is important is that the trajectory is upward and we should see an improvement in 2017.”

The primary and secondary sectors declined by 9% and 1.8%, respectively.

The tertiary sector grew by 1.3%. The largest contributors to GDP include trade, catering and accommodation industry and finance, real estate and business services.

Expenditure on GDP

Expenditure on GDP decreased by 0.1%, and overall expenditure lifted 0.5% in 2016. This is lower than the expenditure of 1.2% reported in 2015.

Household final consumption expenditure increased by 2.2% in the fourth quarter. It contributed 1.3 percentage points to total growth. The largest contributors to growth include food and non-alcoholic beverages which went up 2.4%, and clothing and footware which rose 10.4%.

Growth in semi-durable goods grew 6.8%, followed by services at 3.2% and non-durable goods at 0.3%. Durable good spend only increased by 0.2%.

Government final consumption expenditure increased 0.3%.

Growth in investment expenditure increased by 1.7%. The largest contributor to growth was construction works, which increased 3.6% and contributed 1.2 percentage points to growth.

Net exports contributed positively to growth in expenditure, said the report. Exports increased by 12.5%, due to higher exports of precious metals and mineral products. Imports increased by 6.1%.

Fin24 previously reported that economists were expecting low growth in the fourth quarter. South Africa’s GDP growth rate on a yearly basis until the end of September 2016 was at 0.7%, which was impacted by a 0.1% contraction in the first quarter of 2016 and low growth in the following quarters.

South Africa’s GDP growth rate on a yearly basis until the end of September 2016 was at 0.7%, which was impacted by a 0.1% contraction in the first quarter of 2016 and low growth in the following quarters.

Further, the Business Confidence Index declined to 38 in the fourth quarter of 2016 from 42 in the previous period, explained Giacomo Bonavera, head of foreign exchange trading at Capilis Asset Managers, who wrote in Finweek on Monday.

“An increase in activity in the finance, transport and communication, real estate and construction sectors was offset by a decline in the agriculture, mining and manufacturing industries,” he said.

National Treasury said in its budget in 2017 that it expected the country to grow by 1.3% in 2017, and by 2% in 2018. It also sees inflation falling to 6.4% in 2017 and 5.7% in 2018.

By Lameez Omarjee for Fin24

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