Africa Emerging

𝗗𝗼𝗲𝘀 𝗖𝗼𝗺𝗺𝘂𝗻𝗶𝗰𝗮𝘁𝗶𝗼𝗻 𝗪𝗶𝘁𝗵𝗼𝘂𝘁 𝗔𝗰𝗸𝗻𝗼𝘄𝗹𝗲𝗱𝗴𝗲𝗺𝗲𝗻𝘁 𝗖𝗿𝗲𝗮𝘁𝗲 𝗗𝗶𝘀𝘁𝗿𝘂𝘀𝘁?

As a manufacturer/ supplier, cost is always top of mind. Some of the costs include raw materials, manufacturing costs and the cost to make a product available on a Supermarket shelf. As a consumer yourself, do you believe that the manufacturer/ supplier should communicate more broadly to the public if the volume of a product has changed?

I am not talking about those value added promotional products that say, “ Now 25% more!”

It is those cases when on closer inspection you notice that the volume has been reduced, however the price remained the same or in some cases, the price had been increased. As an example, 2L ice cream tubs now being sold as 1.8L tubs.

When the sugar tax was rolled out, Coca Cola reduced their 500ml buddy bottles to 400ml bottles with no change in selling price in some fast food restaurants. There were a few fast food chains that placed a notice stating that consumers could contact the supplier directly if there is any dispute around the volume change.

*Now there could have been some argument at the time around when the tax was actually implemented and any concessions made around securing future volumes without the sugar tax. However this is a different topic altogether.

What really occurs is that a change in volume is communicated through the law of sale in South Africa. The manufacturer/ supplier would have performed their due diligence in changing the artwork on the product, therefore it is the consumers duty to ensure they audit the volume information prior to purchasing it.

Now the question is, does communication without acknowledgement create distrust?

In South Africa, competition law is primarily governed by the Competition Act, No. 89 of 1998. The primary objective of this legislation is to promote and maintain fair competition in the market, protect consumers from anti-competitive behaviour, and ensure the efficient functioning of the economy.

It's important for businesses to be aware of and comply with competition law to avoid legal consequences. Non-compliance with competition law can result in significant fines, penalties, and legal actions. Businesses should seek legal advice to ensure that their practices align with South Africa's competition regulations.

Value-Based Selling is Key.

Key Performance Indicators (KPI's) are essential for assessing the effectiveness of various aspects of a retail or distribution business. These KPI's help measure performance, identify areas for improvement, and make informed decisions. As a supplier it is your duty to understand your customers KPI's and work with them towards achievement.

Monitoring these KPI's allows businesses to make data-driven decisions, optimise operations, and enhance overall performance.

𝗪𝗼𝗼𝗹𝘄𝗼𝗿𝘁𝗵𝘀 𝗖𝗮𝗳𝗲𝘀 𝗚𝗼𝗶𝗻𝗴 𝗖𝗮𝘀𝗵𝗹𝗲𝘀𝘀: 𝗪𝗵𝗮𝘁 𝗜𝘀 𝗔𝗹𝗹 𝗧𝗵𝗲 𝗙𝘂𝘀𝘀 𝗔𝗯𝗼𝘂𝘁?

As of 16 January 2024 select Woolworths Cafes have gone cashless. Meaning that only card payments will be accepted [Debit or Credit]. This led to an outcry on social media by some as they believed that Woolworths in its entirety would be impacted. According to the Daily Investor, “Woolworths has clarified that some of its WCafes stores are experimenting with cashless payments.”

The signboard at select stores stated that, “We have joined a global responsible business initiative that prioritises customer and staff safety.” It should also be noted that the S.A. Reserve Bank has stated that Woolworths has the right to go cashless.

So let us dissect this topic, now that we have had a look at the facts. Woolworths have stated that this is a global initiative relating to customer and staff safety. Although I do commend them on their efforts to keep people safe. It just raises a bit of an eyebrow, as to why this initiative was never a great enough concern be locally addressed in the first place.

The article also went on to state that, “The retailer said the decision for its WCafes to go cashless was based on data it had collected, showing that they received relatively few cash payments.” Now there could be an argument that they chose a segment of their business that receives fewer cash payments from consumers in order to manage potential disruptions, but would risk be a more reasonable calculating factor? How did they calculate risk when they selected these specific Cafe stores? Risk impacts safety.

Now lets look at a possible argument behind this ‘global initiative’ and what does cashless mean for South African consumers:

To drive loyalty we find that many banks have offered attractive reward programmes for the use of their credit and debit cards. Some institutes even offer cash-back rewards which can be seen as more useful than points which may only be redeemed through a predefined network of vendors. During a previous post, I mentioned that 𝟰𝟳% of South Africans were reported to be relying on social transfers. So how does the use of card payment affect social grant recipients and those that choose to use cash as primary payment?

Well if you look at the merchant charges for the use of their facilities the average cost is around 3% for every swipe, which the Retailer/ Wholesaler must be responsible for. This 3% is then built into the cost of goods and services, and since a large chunk of South African citizens transact with cash they basically are funding the rewards for card holders with loyalty programmes. Everyone pays 3% more for their goods/ services but only the card holder on the loyalty programme will receive a reward.

Social grant recipients are more likely to spend the limited amount of money they have on commodities and live from month to month with limited or no access to credit facilities. If they receive a grant of R1000 then they will most likely spend R1000 during the month. When the government made the additional COVID grant of R350 per month available, it was one of the quickest ways to stimulate the economy through the sale of fast-moving consumer goods. A large chunk of these FMCG goods were commodity items.

There are a few things we should think about, when considering the greater impact:

1. Is this just a global effort to regulate and track consumers?

2. Has the centralised banking system become increasingly concerned with decentralised methods of payments (The rise of Cryptocurrency)?

3. The global economy are facing major challenges, especially with ongoing political conflicts. Is this their initiative to gain authority and take control of the global economy?

So far we see UNIQ by Checkers that have launched cashless stores, with Starbucks deciding to go cashless towards the end of 2023 in South Africa. It may seem of very little significance in South Africa at this point, but we must consider the implications for the future.

Merchandising strategies play a crucial role in the trade, influencing how products are presented and promoted to customers.

Successful merchandising involves a combination of thoughtful planning, strategic positioning, and responsiveness to market dynamics. Regularly reviewing and adjusting merchandising strategies based on performance metrics and customer feedback is key to sustained success.

There are several pricing strategies that a Sales Manager can employ in their respective trading channel. The most suitable strategy depends on factors such as the product, target market, and competitive landscape.

It's essential for businesses to analyse their specific situation, market dynamics, and customer behaviour to determine the most effective pricing strategy for each channel. Additionally, periodic reviews and adjustments to pricing strategies may be necessary to adapt to changing market conditions.

𝗥𝗲𝘁𝗮𝗶𝗹 𝗦𝘁𝗼𝗰𝗸 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁: 𝗖𝗼𝘂𝗻𝘁𝗶𝗻𝗴 𝗧𝗼 𝗭𝗲𝗿𝗼

Stock management can be a real nightmare sometimes, especially when there is shrinkage involved. Oh, I remember how difficult it used to be to count cheese. This was due to the fact that each block of cheese was priced per weight, therefore their pricing was unique per block and needed to be recorded separately. Now due to its weight per crate, it was usually packed right at the bottom of a stack of 10 - 12 crates. I quickly realised that it was difficult for some of the other stock controllers to locate the blocks of cheese and count them one by one in the cold room.

Every evening a Stock on Hand Discrepancy report was generated and there was a hunt once the doors of the store closed at 8pm. Now amongst other duties, this report needed to be completed before all the staff left at 10pm. It was crucial that stock counts be accurate for the ordering system to work correctly. Now, we didn’t want a crate of cheese to be ordered if there is one already in the cold room. Consequences of this would mean expired cheese, loss of sales and potential disciplinary action.

Now I remember when I first took on the role of controller. The stock counts were horrendous. After some time though, I began generating reports with zero discrepancies in stock count. Some of my colleagues could not understand how it was possible. The store manager even thought that I was altering the system, by generating multiple reports and just manually entering the differences to balance out the counts. I was not deterred and continued generating very low to zero discrepancies during my shifts. My other colleagues had high discrepancies and that was viewed as the benchmark.

When I began my shift and took over from the previous controller there was a guaranteed discrepancy in stock count for the evening. When one of the other controllers took over from my shift, they were usually guaranteed a zero stock discrepancy. I actually figured out what was going on. Some of the other controllers were not consistently counting all of the stock on the report during their shifts. They either did not look for the products on/off shelf, and some of them just did not go through all of the crates. The root cause of this was that merchandisers were packing out partial stock and leaving left over units in multiple crates and in different areas within the stock room and trading floor.

My solution for this was to drive education with merchandisers on grouping the same items within crates and helping them understand the impact of it all. It took some time, but eventually stock counts became fairly evened out between shifts and there was a realisation of the impact from my actions.

FMCG (Fast Moving Consumer Goods) sales involve products that are quickly sold at relatively low prices, and they typically have a short shelf life. Common examples include food and beverages, toiletries, cleaning products, and over-the-counter drugs. Here's some content related to FMCG sales.

𝗧𝗵𝗲 𝗜𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝗰𝗲 𝗼𝗳 𝗚𝗮𝗶𝗻𝗶𝗻𝗴 𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗧𝗵𝗿𝗼𝘂𝗴𝗵 𝗧𝗵𝗲 𝗨𝘀𝗲 𝗼𝗳 𝗗𝗮𝘁𝗮

In an ever changing and developing market, the ability to assess your competitors presence and monitor your own brands shortcomings is crucial. When I worked for a multi brand company years ago, there was a clear gap in the market. There was an opportunity to gain market share by entering into an existing sub category that we were never previously apart of. This space was already monopolised by a competitor with a legacy brand. The business I worked for also had a legacy brand and an extension into this category only seemed inevitable.

We were ready to cut our competitors market share "pie" in half!

The product was launched to everyone's excitement, but very little support was provided. The packaging was dull, on shelf pricing was not competitive and trade marketing support was non-existent, but there was a clear expectation that we would move ahead as there was greater support from those more senior. However, progress remained stagnant.

Upon further investigation it was found that marketing had not invested in market share information for the category. The feedback was the it was too 'expensive'. This meant they had entered the category blindly, and counted on brand equity to place them ahead of the competition. Eventually, it became a bit of a blame game and it was implied that Sales wasn't getting the listings and was not promoting the product on broadsheet often enough. This was absolutely nonsense and they could not hide their incompetence any longer.

The bottom line was that marketing had absolutely no insight into the category and the information that they had was essentially an overview of the category, it was not enough but only provided them with a key hole perspective. To top things off, they did not have concrete launch support plans and had no clear insight into investment avenues. Sell out data was not available and this meant that the demand plan had to be drastically reduced in order to prevent overstocking of customers and our own warehouses.

Eventually, the product was completely discontinued and the millions of Rands worth of stock that had been left behind in our warehouses was used as promotional giveaways for cross category support.

The lesson here is that Brand Equity is not self sustainable and an armour of protection. If you want the success to last you must be prepared to do the work, and in this case includes using the appropriate data to bring a vision into a sustainable reality.

In South Africa, Traditional Trade typically refers to a distribution system that involves the sale and exchange of goods through traditional or informal channels. It often contrasts with Modern Trade, which involves formal retail outlets like supermarkets, hypermarkets, and chain stores. Traditional Trade in South Africa can encompass various aspects, including the points highlighted on the slides.

It's important to note that the landscape of Traditional Trade can vary across regions in South Africa, and it may undergo changes over time due to economic developments, consumer preferences, and other factors. The coexistence of Traditional and Modern Trade channels is a characteristic feature of many developing economies, contributing to the overall diversity of the retail sector.