Message from the Chairman: March

Dear members

Sitting at home in lockdown may be the most surreal situation many of us have ever been in.  Just two months ago nobody could  have anticipated what was going to happen.

We read and heard about this coronavirus in Wuhan but I, for one, didn’t think it would develop into a global pandemic – and so fast, too.

But here we are – and all we can do is stick to the rules: stay at home; keep your distance; wash your hands; self-isolate if sick; and so on.

Apart from one’s health, the impact on the global economies and closer to home, South Africa, will be devastating.
We at shop-sa can only hope that you’ll find a way for your business to survive – not to mention your employees.
We will try to assist by publishing helpful information and examples from other countries and companies in our industry.
Although nobody knows how long the pandemic will last, we hope that South Africa can “flatten the curve” and contain it, so as to minimise the impact on everyone.
Luckily the Internet and technology in general allows us to stay in touch, meet up with family, friends and colleagues, and run certain aspects of business online.
Covid-19 will, in time, pass – and the global economy will recover.
Until then: keep your sense of humour, and stay safe!
Hans Servas

Source: Fin24

On a conference call this morning on Thursday 26 March, Edcon CEO Grant Pattison broke down, telling suppliers the company only has sufficient liquidity to pay salaries but is “unable to honour any other accounts payable during this period”.

Following the president’s first announcement on Sunday, 15 March, Edcon’s turnover has declined 45% in comparison to the same period last year.

Pattison told suppliers that by the end of today, when the country goes into lockdown, Edcon “will be about R400m below forecasted sales and cash for the month”.

Pattison confirmed the authenticity of the recording, saying, “I am gutted”.

He says Edcon is prioritising paying salaries to staff during these extremely uncertain times.

“We are not giving up, we will work closely with government and funders to find a way to continue trading after the lock down has ended. Our problems just highlights the challenge of necessarily pushing pause on the economy, knowing you will have to restart it when safe again,” said Pattison.

In the call, Pattison told suppliers that they would next week turn their attention to building a re-opening plan.

“I am not sure what this looks like or even if it’s possible. We will be heavily dependent on business support packages offered by government and other agencies and funders. We also can’t really be sure how long this lock-down will last. We will be, during this lock-down time, keep some parts of credit, insurance and the call-center open as required by the regulations.

“Management will continue to look at all options – and there may be some really tough recommendations to be made to the board after the lockdown period, including having to consider business rescue. CIPC have for the moment issued a practice note explaining they will “not invoke its powers under Section 22 of the Companies Act” for reasons related to the Corona Crisis, for a period of time.

“I am therefore unable to make you any promises other than to keep you updated of developments or plans the Board approves. For your own planning, it would be prudent for you to consider that orders already placed with you may be cancelled, the DC will remain closed, and that any future trade between us will be dependent on your own assessment of our ability to pay for both arrears and future purchases.”

Towards the end of the call, Pattison begins to cry and wishes the suppliers well over this time.

“In the midst of our own stress and fears, we acknowledge the material impact our financial situation has on you and your businesses and the devastating effect our decisions will have on your operations, which we can only sympathise with. We hope that we will all emerge from this and get an opportunity to repair the collective economic damage. The Management and Board of Edcon wishes you, your employees’ and your families’ safety and good health during the coming weeks.”

An anonymous supplier who was on this call commented, “I have just been on a conference call with the CEO of Edcon to suppliers . They will honour salaries and nothing else this month. I do not want to kick anyone while they are down, I simply want it to be known that Grant Pattison (CEO), took the call himself, was in tears at not being able to pay suppliers but told us all the truth. His courage and bravery should be recognised when so many other business people are ducking and diving to avoid having difficult conversations.”

A statement issued by Edcon later states that in addition to the abovementioned shortfall, the Presidential lockdown order means Edcon will lose a further R800m in turnover during the 21 days, thus expecting a significant shortage of cash by end of April.

“Edcon Management is currently focused on implementing the lockdown, but once this is done, Edcon will focus its attention on building a business plan for when the lock-down ends.

“We will be working closely with government and other stakeholders to understand what sort of assistance they can provide to us and will confirm with the various stakeholders once decisions have been made,” the statement added.

By Gerhard Papenfus for The Gapp

The President, on 23 March 2020, announced a national lockdown with effect from midnight on 26 March 2020.

The President further indicated that certain measures will be put in place within a few days, however, limited detail as to these measures were provided.

While we await the regulations, which will stipulate how these measures will be implemented, employers will need to consider the following options available to them:

• employers who are able to continue paying their employees during the lockdown period, without compromising the viability of the business, are encouraged by government to do so;
• employees who can continue to work from home may be allowed to do so if it is feasible and practical;
• employers may place their employees on annual leave and exchange this with the shutdown in December, if possible and feasible. Payment of leave entitlement should occur at the same intervals as normal remuneration payments i.e. weekly or monthly;
• employers may consider staggering payments of monies due in order to manage cash flow effectively; or
• employers may implement a lay-off for their employees which entails that employees will not be paid as the company has to observe the lockdown.

The President also indicated that employers may opt to participate in the Temporary Employer/Employee Relief Scheme (TERS) in terms of which employees are placed on training during the lay-off period and the employer is exempted from certain statutory obligations and only needs to pay a portion of the employee’s salary. For more information on TERS please click here. However, due to the inherent requirements of this training (face-to-face and on site), this does not seem to be a viable option.

Employers should note that these options may change considerably due to the regulations that government is expected to issue. However, the Minister of Employment and Labour has indicated that interventions and assistance by his Department are still under discussion at NEDLAC and may only be published tomorrow, or even later.

By Emily Peagram for Craft Business 

The greatly anticipated London Stationery Show has been moved from its original date in April to 11th September 2020 in order to protect exhibitors and visitors from the ongoing COVID-19 pandemic.

The show has released the following information:

Due to the ongoing situation with coronavirus (COVID-19), we have taken the difficult decision to postpone the London Stationery Show.

The new date is 11 September 2020 and the show will still take place at its usual venue, the Business Design Centre in Islington, London. All existing registrations will remain in place for the rescheduled date and pre-registration will stay open to enable visitors to register for fast-track entry on arrival at the event.

Whilst we would have loved for the show to take place next month, at this present time our number one priority is the health and well being of our visitors, exhibitors, staff and their families. We are very sad to have to postpone but in light of the current pandemic and clear government guidelines re-scheduling is the best course of action.

From the team here at London Stationery Show and Ocean Media Group, we would like to wish you good health and look forward to welcoming you to the show in September.

By Ivan Israelstam, chief executive of Labour Law Management Consulting

Section 194 of the Labour Relations Act (LRA) allows arbitrators and judges to grant employees compensation for unfair dismissal where reinstatement is not appropriate.

A compensation order is one that requires the employer to pay the employee an amount of money in recompense for unfair dismissal or an unfair labour practice. This payment is not one for measured damages or quantified losses suffered by the employee. Such compensation is not intended as an order for damages but merely as a payment made to ‘console’ the employee for the loss of a right (the right not to be unfairly dismissed). As a result the calculation of the compensation amount is not required by the LRA to be based on any specified criteria or hard and fast rules except that the amount must:

• Not exceed 12 months where there has been an ordinary unfair dismissal

• Not exceed 24 months where there has been an automatically unfair dismissal

• Be fair and equitable in all circumstances.

Judges and arbitrators have a very wide discretion in view of the fact that the term “fair and equitable” is itself not defined and is open to interpretation.

In Hoffman vs SA Airways (CLL Vol. 15 No. 3 October 2005) the Court said that the determination of appropriate relief calls for the balancing of various interests that might be affected by the remedy. This must be guided by the following objectives:

• To address the wrong resulting from the infringement

• To deter future violations

• To make an order that can be complied with

• Fairness to all affected

• To take into account the nature of the right infringed and the nature of the infringement itself

In practice, many Labour Court orders contain some explanation of how the judge arrived at the compensation amount but many arbitration awards do not contain any reasons for the amount of the compensation awarded. Many of these decisions appear to the onlooker to be arbitrary. It is therefore often unclear whether the arbitrator attempted to apply his/her mind to making the award “just and equitable” and as to the basis on which such an attempt might have been made.

Just as problematic is the fact that, in those case where reasons for the compensation amount are given, there is little consistency in the reasoning from case to case. A multitude of reasons for the compensation amount have been given including the following according to CLL Vol.15 No.3 (October 2005):

• The circumstances and consequences of the dismissal

• Whether or not the dismissal was grossly unfair

• The employer’s circumstances

• Any loss that the employer might have suffered due to the employee’s misconduct that gave rise to the dismissal

• The employee’s circumstances

• The seniority or length of service of the employee

• The employee’s actual income or other specific amount lost

• The need to punish the employer or to deter employers from dismissing employees unfairly

• Whether or not the employer acted in good faith or was misguided

• The blameworthiness of the employee.

The fact that the calculation of compensation is largely unregulated and is so varied makes it entirely unpredictable. Employers therefore need avoid getting into a situation where they have to pay compensation, the amount of which may be at the whim of an arbitrator.

Message from the Chairman: February

I’m writing this before the “lights go out”, which begs the question: how does your business cope, and more importantly, how does load-shedding affect your company?
Unfortunately, in my view, the SONA address didn’t offer much encouragement – not to mention the comedy playing out before the speech!
In our industry the announcement that CNA was sold by Edcon wasn’t really a surprise – and it was long overdue. The fact that the new owners and management (ex Exclusive Books) will reinvent CNA and focus on stationery and books is good news for the industry/suppliers. It seems they’ve looked at Rymans and WH Smith in the UK, who appear to be doing reasonably well there.
We wish the new CNA all the best going forward.
Finally, we hope you took note of the Crime alert about the hijacking of a Faber-Castell shipment. This is the time when we, the industry, must stick together. Anyone can be the next target if the culprits aren’t caught.
Hans Servas

Andrew King to be appointed Mondi Group CEO

Mondi has announced that Andrew King, group CFO and a director of Mondi, will be appointed as Group Chief Executive Officer (CEO) with effect from 1 April 2020. King will succeed Peter Oswald who, as announced on 10 January 2020, will be stepping down as CEO and leaving Mondi on 31 March 2020.

David Williams, chair of Mondi, commented:

“I am delighted that someone of Andrew’s calibre has agreed to succeed Peter as CEO. This appointment follows a formal review process, assessing both internal and external candidates, which convinced the Board that he is the right person to lead the Group. During his time with Mondi, Andrew has consistently demonstrated considered and effective leadership.

King’s 17 years’ experience with Mondi in various strategy, business development and finance leadership roles will benefit the Group enormously. He has been instrumental in defining the Group’s strategic direction since listing and I am confident he will bring significant insight and leadership to the role of CEO.”

Commenting, King said:

“I am excited to accept the role as CEO of Mondi. We have a clear strategic focus, robust business model and many talented and dedicated people. At Mondi’s core is our purpose of contributing to a better world by making innovative, sustainable packaging and paper solutions, with a strategy aimed at creating long-term value for the benefit of all our stakeholders. I look forward to working with the Board and the wider leadership team to continue the successful development of the Group.”

A formal process to recruit Andrew’s successor as CFO will commence immediately and will include external and internal candidates.

More than 12-million tonnes of paper and paper packaging have been recovered for recycling in South Africa over the past decade. This, according to RecyclePaperZA, the country’s paper recycling association, has ensured that waste paper is diverted from landfill and recycled into new products – tissue products, newsprint and paper packaging for the agricultural, manufacturing and retail sectors.

In 2018, South Africa collected 71.7% of recoverable paper and packaging*, amounting to 1,285-million tonnes.

“South Africa is in the enviable position of being able to use up to 90% of its recovered waste paper locally by recycling it into new paper, packaging and tissue,” says Anele Sololo, general manager of RecyclePaperZA. The balance of waste paper is exported.

A difficult time for paper industry, but don’t stop recycling
Currently, the global paper recycling industry is faced with over-supply. “This means there is more waste paper available than there is use for it,” says Sololo. There are various economic factors at play, not least of which is China’s stricter requirement for cleaner waste imports since 2017. This means that around 30 million tonnes of waste paper from around the world needs to find a new home and use.

In South Africa, the severe drought in fruit-growing regions has had a knock-on effect for the paper packaging sector. “Corrugators produce less boxes for fruit with the result being that mills produce less paper which affects waste paper consumption rates,” explains Sololo.

“It is important to understand that collectors are paid for the recyclables they collect, and the higher the value of that recyclable, the more likely they are to collect it,” says Sololo. The lower demand in the market will effect a price drop as mills need to ensure they remain commercially viable, and unfortunately this affects recycling collectors and traders.

The South African paper industry is however investing in research and development of alternative uses for recycled paper to ensure that recyclable paper and paperboard continues to be diverted from landfill and help improve demand for recycled paper fibre.

Different recycled paper products need different ingredients
On the home front, some citizens may be a little confused about why some types of paper – such as newspapers – are not wanted by collectors.

Just as chocolate cakes may differ slightly in terms of their ingredients, so too does paper. Printing paper, tissue, cardboard boxes, paper bags and sacks all require different types and quantities of raw materials. “The difference in paper recipes may even be customer-specific which makes papermaking an exact science,” says Sololo.

Historically newspapers were required as a raw material for newsprint manufacturing. The declining newspaper consumption, largely due to online media, has resulted in the closure of newsprint machines in South Africa, leaving only one operational newsprint machine. “In 2011, South Africa produced 316,725 tonnes of newsprint,” says Sololo, adding that in 2018, the annual newsprint production was less than half the 2011 figure at 113,912 tonnes. This in turn has reduced the demand for used newspapers by paper mills.

Newspapers are still used in the manufacture of moulded fibre products such as egg cartons, takeaway cup holders and fruit trays. “This is where brand owners and retailers can help make a difference – by moving from plastic to paper for their packaging,” notes Sololo. A classic example are polystyrene vegetable and fruit trays – these can be made effectively from paper pulp.

Some grades of paper are in higher demand than others. As an example, there is more use for white paper as it require less deinking and cleaning than newspapers and magazines. White paper also contains better quality fibres for “paper recipes”.

What are the various types of paper recycled into?

  • White office paper is made from certified, sustainably produced virgin wood fibre, especially if it is made in South Africa. White paper, which contains good quality fibre, is recycled into tissue products and is also added to the other paper recipes.
  • Brown cardboard boxes are repulped into new cardboard boxes and brown kraft paper which in turn can also will be converted into sacks and bags.
  • Liquid packaging board (beverage cartons and paper cups) comprises long, strong virgin fibre, also from sustainably managed forests, which is a great ingredient for paper products that require strength. The plastic and foil layers in liquid packaging board are separated from the paper in the recycling process and can be used in a range of applications such as plastic garden furniture.
  • Common or mixed paper and cardboard packaging (cereal and dry food cartons, coloured paper, magazines, toilet roll cores) are classifed by the industry as “common mixed waste”. These go into recipes for various paper products even tissue – if the mill has a de-inking plant.

What should we do with “old news”?
Fortunately newspaper is very versatile and can be used for many things. Here are our top five but you can find a more comprehensive list here.

  • Animal shelters – donate your old newspapers to animal shelters who will use them to line the kennels and catteries.
  • Compost and worm farms – earthworms love a tasty snack of newspaper. Add dampened, shredded newspaper to your compost heap or worm farm.
  • Fruit and vegetable drawer liners – place sheets of newspaper at the bottom of the fruit and vegetable drawer in your fridge. They will absorb any mess from rotten produce, and will also keep the drawer free from odours.
  • Gift wrap – use newspaper to wrap gifts and decorate with some string and sprig of rosemary or lavender.
  • Table padding – lay newspaper underneath a table cloth. It’s an excellent replacement for expensive padding, and will help protect your table from spills and other damage.

Where should I take my paper recycling?
In November last year, Mpact Recycling, a RecyclePaperZA member, announced the discontinuation of its kerbside collection programme. While we recognise that this causes inconvenience to a number of its loyal supporters, there are other options available:

  • Support your neighborhood recycling collectors – find out what they collect and put this in a separate bag for them. You may opt to support the same person each week or simply put a bag out on your pavement on a first come, first serve basis.
  • Support a school or community centre under the Mpact Recycling paper bank programme. The company is in the process of upgrading some of its sites so separation is key: white paper in one bag, cardboard in one bag, beverage cartons in one bag, cereal boxes, coloured paper and where applicable magazines in one bag. Look for your nearest paper bank here.
  • Support recycling collection businesses which offer a paid service. Do a web search for “recycling collection services” for your area.
  • Explore your local shopping centre and find out if they have a recycling zone.

So keep up with those recycling efforts! And keep your paper clean and dry, and separate from other waste.

* Recoverable paper excludes paper which is unrecoverable or unsuitable for recycling. For example, toilet tissue and sanitary products, cigarette paper and archive material.

Source: Fin24

The paper and packaging producer Sappi has reported a grim set of results for the three months to end-December, with sales down 8% to $1.3-billion. Its profit slumped, with headline earnings down 73%.

Its net debt rose by 23% to $1.9 billion (R28 billion), in part due to the acquisition of a Canadian pulp mill.

Sappi’s share price was up almost 2% at the start of trading after the announcement, but continues to trade around its lowest level in six years.

Meet the new Staples

By Janelle Nanos for The Boston Globe 

The company is reinventing its stores to reflect the way many of us work. The floor-to-ceiling aisles of Post-its, pushpins, pencils, and printer ink? History. The endless rows of three-ring binders and hanging file folders? Gone.

Instead, there are light-filled co-working spaces with snack-stocked kitchens, digitally tricked-out meeting rooms, and podcasting studios. There are workshops on mindful organising and “finding your customer”.

Meet the new Staples: it’s not just an office supply superstore anymore. It is, as the company puts it, a “destination dedicated to continued curiosity, growth, and development.”

Staples built a leading national brand as the traditional stationery store on steroids. But in the three decades since the company’s conception, the workplace — and how we shop for it — have undergone transformational changes. Cloud-based computing, telecommuting, and the ease of one-click ordering have diminished the demand for big-box stores stocked with reams of paper. Now, in a dramatic effort to stay relevant, Staples is recasting itself as a place where you can co-work, record a podcast, stock up for your next Uber shift, or even get fingerprinted for a job.

“It’s not about product anymore. That’s something you can buy anywhere online,” Michael Motz, chief executive of the Staples US Retail group, said as he toured one of its newly renovated Staples Connect stores in Needham. “It’s about how can we provide solutions for you? It’s the connection to your everyday life.”

Whether the makeover will be enough to steer the company into better financial health remains to be seen.

Customer service and quick solutions — remember the Easy Button? — were once the calling cards of the beleaguered Framingham-based retailer, which was taken private after a failed attempt to merger with Office Depot. To compete with Amazon online, Staples’ new private equity owner, Sycamore Partners, split its e-commerce business from its US and Canadian retail operations and expanded business services for online corporate customers. Staples rebranded its digital operations last spring, emphasizing “worklife fulfillment.” Now it’s extending that same service-oriented model to its storefronts.

“It’s about us being more relevant and part of the community,” Motz said.

Suba Srinivasan, who chairs the marketing department at Boston University’s Questrom School of Business, said Staples seems to be trying to reach freelancers, small entrepreneurs, and others who work outside of big corporations, including many young people who increasingly look to work — as opposed to religion or organized social groups — for community and affirmation.

It’s “a place for the millennials and the startup community and entrepreneurs to work, meet, and collaborate, and make it more about the services rather than pushing products,” Srinivasan said. Staples, he said, seems to be “moving away from the commodification of staplers and stacks of paper, toward a higher-level calling.”

That’s an extraordinarily “high bar” for the brand, she said, but it’s a smart way for the company to use its brick-and-mortar footprint. “They want someone to say: ‘I went to Staples and heard a really great talk on leadership,’ ” she said. ” ‘And I also bought my supplies for the month.’ ”

Staples has experimented with co-working before, partnering with Workbar to install shared workspaces in three of its stores in 2016. The companies parted ways last year because, Motz said, Staples “wanted to actually control all aspects of customer experience and make it seamless.” Staples has converted those stores in the Boston market to its new Staples Studio co-working model and now has rental desks in seven area locations.

Timing might be an issue. Boston is seeing a slowdown in new co-working leases since WeWork’s recent IPO implosion. And Staples’ largest competitor, Office Depot — which the company tried and failed to acquire in 2016, after the Federal Trade Commission blocked the merger — is experimenting with the onsite co-working concept and now offers rental desks in nine US locations.

But the trend toward more remote work, plus the region’s ongoing congestion woes, could make Staples a viable alternative for downtown employers who want to rent a few desks for their staffs in the suburbs, said Liz Berthelette, research director at the Newmark Knight Frank real estate firm. “I’m sure they’ll make more money renting hot desks to entrepreneurs than housing paper.”

Staples used to devote just 10 percent of a store’s footprint to services like printing and shipping, said Brian Coupland, vice president of retail merchandising. About half the redesigned Needham store’s layout is dedicated to services now, with desks renting for $299 a month, and private offices for $599 a month. (In downtown Boston, co-working desks rent for $499 a month and offices go for $999 monthly.)

Members and store customers can get free access to fancy AV-enabled meeting rooms that will also host seminars and workshops. And members can use podcast studios gratis (available to nonmembers for $60 an hour). Concierge services like legal, funding, or HR advice are available for small-business customers. And anyone can apply for a TSA PreCheck, a special state license, or a background check.

The store aisles feel less cluttered and more playful than they once did; in the pen section, doodle pads invite customers to try a drawing challenge, and a crafting section includes displays of paper cut into floral designs. Coupland said outside consultants helped them upend their traditional approach to office supplies, resulting in products like the new patented “squircle” highlighter markers. (They have square edges so they won’t roll off desks.) And kiosks offer gig-economy accoutrements: An Uber station has charging cords, candies, and bottled water; Airbnb hosts can find Nest thermometers, smart locks, and Wi-Fi hubs.

Whether the new approach will succeed depends on how well the enlightened Staples connects with its consumers. The company said it has more than 400 members across its various locations, but when a reporter toured the newly designed downtown space earlier this week, the co-working site was empty.

Peter Cohan, a business professor at Babson College, questions how the Connect stores will compete with other co-working spaces.

“Is it going to offer something that’s different from a WeWork or Cambridge Innovation Center?” he asked. Beyond sleek furnishings, the allure of most co-working spaces is in the community you’re joining, Cohan said. Offering services and formal coaching for small businesses might be “a more compelling proposition.”

But Charles Smith has been co-working at the Staples Brighton location since 2016 and now rents a dedicated office in the space. The cannabis consultant also regularly works at the Needham store and says he loves its flexibility: He can get downtown easily for meetings, parking is free, and he can get home to his three kids in Wellesley in minutes. “Having a commute that’s half of what the average person commutes is a big advantage,” he said.

He said he has found mentors onsite and regularly uses his discounts for printing and marketing tools, so he’s excited the company is expanding its offerings.

There are some adjustments that come with working inside a Staples, however. Smith stopped wearing red shirts, for example, to avoid being mistaken for a Staples employee. “I often think it would be a funny sitcom,” he said. “All these people working in the back of a big-box store.”

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