SA’s top 5 supermarket brands battle it out for the hearts and minds of South African consumers

In the war for the consumer’s share of wallet, South Africa’s top five supermarket brands will need to do much more to fully differentiate themselves on the many complex drivers of customer satisfaction.

The “South African Customer Satisfaction Index (SA-csi) for Supermarkets (2018)”, conducted by Consulta, provides highly scientific insights into the overall level of satisfaction of customers of South Africa’s big five supermarket brands: Woolworths, Pick ‘n Pay, Spar, Checkers and Shoprite.

While Woolworths maintained the best overall customer experience in the 2018 supermarkets index, it was with a decrease in overall score from 2016, while the differentiation is increasingly eroded between the top performing brands. The gap between Woolworths and the rest of the supermarkets measured is now too small to give Woolworths the outright best-in-category classification that they enjoyed before.

Focussed strategic planning and implementation by Spar since 2014 on convenience location, freshly prepared foods and customer engagement are paying dividends, with Spar enjoying significant and consistent year-on-year improvements in almost all measures of customer satisfaction.

The latest SA-csi for supermarkets clearly shows the increasing complexity faced by supermarket brands in meeting customer expectations. As South Africa heads into an environment of extreme economic pressure, retailers will need to invest in understanding how such an environment impacts consumer behaviour, and how they will create exceptional experiences for their customers.

The SA-csi is a causal model that links customer expectations, perceived quality and perceived value to customer satisfaction (the SA-csi score), which in turn is linked to customer complaints (and recovery) and customer loyalty intentions. The 2018 sample for the SA-csi for supermarkets included 1 619 customers who were randomly selected to participate in the independent survey which measures customers’ overall satisfaction and includes a customer expectations index, a perceived quality index and a perceived value index.

Highlights from the 2018 SA-csi for supermarkets in a nutshell:

  • On meeting customer expectations: Industry expectations for supermarkets have increased from the previous measure in 2016. All brands are meeting customer expectations. Woolworths, albeit with a decrease in score from 2016 to 2018, and Spar are leaders in this regard.
  • On perceived value: which measures how much value customers feel they received for the price paid against the quality of the experience, Checkers comes out as the leader, although Spar was the only brand that showed a marked increase in its perceived value score from 2016. It is notable that Woolworths struggles with this aspect of their value proposition and is driving the perception of being the most expensive supermarket brand.
  • Complaints handling: in general, the supermarkets category of the SA-csi performs well on the degree to which complaints are handled by comparison to world standards (close to 50%). Checkers performed best at handling complaints while Shoprite was rated lowest. Pick ‘n Pay recorded the most customer complaints specifically about expired food, incorrect shelf prices and its Smart Shopper loyalty card. All brands experienced an increase in complaints while complaints handling and recovery showed a decline across the board  ̶  complaints handling scores have a direct correlation to customer loyalty.
  • Customer loyalty: Shoprite had the lowest customer loyalty score and a marked decrease in its score from 2016. Woolworth has the highest loyalty score with a marginal increase from 2016 and is indicative of the strong brand equity that Woolworths still enjoys. Woolworths outperforms the industry average on net promoter score (NPS) at 46,8%, which measures the likelihood of a person recommending a brand, while Pick ‘n Pay has the lowest NPS score which also falls well below the industry average. Spar and Checkers are the only brands that have shown an improvement in NPS scores from the 2016 measurement.
  • Best overall customer experience: Woolworths maintained the best overall customer experience albeit with a decrease in score from 2016. The smaller leader gap between Woolworths and the rest of the supermarket brands is likely to put pressure on the customer loyalty and NPS scores for Woolworths in future. Checkers and Spar both scored on par with the industry, while experiencing solid increases in their overall customer satisfaction scores compared to 2016, with Spar showing the biggest improvement. Shoprite had the lowest  overall customer satisfaction score, well below industry average.

“While there were top performers in each of the measures of customer satisfaction, there were no outright winners who performed best across all categories and who are successfully managing all facets of customer satisfaction. Similarly, while brands may have maintained their lead in certain measures, they have done so with decreasing scores when compared with previous years. It’s clear that competitors are using the Sa-csi data to up the ante on previous shortcomings – evident in a number of significant score improvements – while previous leaders may have been lulled into complacency or suffered reputational setbacks which have impacted their performance and customer perceptions. Scores well below par or in a seemingly stagnant state should be cause for intervention if retailers are to maintain profitability in an increasingly competitive environment where consumers are quick to vote with their wallets and shift loyalty when dissatisfied,” explains Professor Adré Schreuder, SA-csi founder and chairperson.

In a time when extreme economic pressure and the accelerating rate of technological developments are significantly influencing how consumers and shoppers behave, customer satisfaction is a big deal, while getting it right is complex and multi-faceted.

“We have come a very long way from when all it took was some customer service from efficient and friendly staff to do the job.  The context of retail has evolved rapidly to extend across bricks and mortar experience to online and digital presence, while consumer drivers such as value, time, experience, healthy eating and ethical living are all culminating in a continuum of disconnect between shopper expectations and the retailer’s ability to satisfy them,” concludes Prof Schreuder.

Key take-outs based on the findings:

  • In tough economic times which South African consumers are currently experiencing, the price of goods is likely to influence consumer loyalty even though they are satisfied customers. It is important to note that price-motivated loyalty is not permanent, so while customers may display less brand loyalty now, supermarkets cannot afford to stop investing in positive shopping experiences.
  • While Woolworths had the advantage of differentiation in the past in terms of instore design, experience and packaging which appealed to the upper end of the market, competitors have made significant headway in this regard. Woolworths have failed to innovate in the instore experience, while Checkers has made dramatic improvements to instore presence as well as packaging. For many consumers, there has been a shift where consumers believe that they can now get equivalent quality, at lower cost.
  • Spar’s sustained focus on community involvement and a key strategic emphasis on convenience location since 2014 are bearing fruit. Spar has focused on getting the basics right and ensuring that they are able to deliver on being in-stock of every product, every day, making it the go-to for a convenient stop to get the daily incidentals which remains a key driver of consumer behaviour. South African consumers are facing an increasingly stressful, time-starved lifestyle which has created a burgeoning demand for convenient solutions that can help simplify their lives.

As a strategic tool for gauging the competitiveness of individual firms and predicting future profitability, an organisation’s customer satisfaction performance, as measured by the SA-csi methodology, provides a predictive indication of how well the firm will perform in terms of future revenue and earnings growth.

Founded by marketing research doyen and customer satisfaction expert, Prof Adré Schreuder, and supported by both academia and industry, the SA-csi is the first independent, comprehensive national customer satisfaction index with international comparability in South Africa and has collected data from more than 400 000 consumers since its inception in 2012. It produces scientifically robust and independent customer satisfaction benchmarks for a multitude of companies, industries and economic sectors, which together represent a broad swath of the South African national economy. The SA-csi forms part of a global network of research groups, quality associations and universities that have adopted the methodology of the American Customer Satisfaction Index (ACSI) via its international licensing program called Global CSISM.

About the “South African Customer Satisfaction Index” (SA-csi)

The SA-csi forms part of a global network of research groups, quality associations, and universities that have adopted the methodology of the American Customer Satisfaction Index (ACSI) via ACSI’s international licensing program called Global CSISM.

Developed by Prof Claes Fornell at the University of Michigan’s Ross School of Business, the Index uses customer interviews as inputs to a multi-equation econometric model. The SA-csi methodology is distinguished from other measures of quality by four significant characteristics:

 

  • ACSI uses a cause-and-effect model that measures satisfaction quantitatively as the result of survey-measured input of customer expectations, perceptions of quality, and perceptions of value (ie quality for cost).
  • The ACSI model links satisfaction quantitatively with customer-survey-measured outcomes: complaints (a negative outcome) and loyalty (a positive outcome).
  • ACSI has a uniform, customer-based definition of quality: “Customer satisfaction with the quality of goods and services consumed.”
  • ACSI treats satisfaction with quality as a cumulative experience, rather than a most recent transaction
  • The 2018 SA-csi benchmarks customer satisfaction using an internationally-recognised model to achieve an overall result out of 100. It provides a weighted average of various aspects of a customer’s experience with the brand, the degree to which the product or service has met, fallen short of, or exceeded their expectations, and how well it compares to the respondents’ anticipation of their experience.
  • Customer expectation refers to the total perceived benefits a customer expects from a company’s product or service. If the actual experience customers have with a brand exceeds the expectation, they are typically satisfied.
  • One of the ways South African consumers can contribute to the SA-csi measurement is by joining Consulta’s propriety research community, ConsultaPanel. ConsultaPanel allows the general consumer a safe but true community platform to contribute to the total offering of day-to-day consumer products and services, by voicing their opinion and participate in our research activities.

 

Methodology

  • The index represents a weighted average of a range of facets related to customer satisfaction. Consulta, the independent consulting company that compiled the index, surveyed 1 619 randomly selected customers of the biggest supermarket chains in South Africa – including Checkers, Pick n Pay, Shoprite, Spar and Woolworths.
  • The research is conducted independently, without sponsorship from any of the entities, and offers impartial insights into South African supermarkets. The 2018 SA-csi for Supermarkets benchmarks and blends a customer expectations ndex, perceived quality Index and a perceived value Index to achieve an overall result out of 100.
  • The SA-csi provides a weighted average of the various aspects of a customer’s experience with the brand, the degree to which the product or service has met, fallen short of, or exceeded their expectations, and how well it compares to the respondents’ ideal of what they anticipate their experience to be.

 

 

 

 

 

Consumer spending increases despite tight economy

Consumer spending increases despite tight economy

Johannesburg, Wednesday 20 September, 09:00

Despite challenging economic conditions, retail sales growth for July 2017 was the highest recorded for that month since 2015. This is according to the Mastercard SpendingPulse™ report, a macroeconomic report tracking retail sales launched today in South Africa.

Sarah Quinlan Photo: John Thomé

Nominal (not adjusting for price changes/inflation) July retail sales grew 7.2 percent versus the same month last year, marking the 55th consecutive month of positive growth. Volume retail sales – which removes the effects of inflation – for July also saw a positive increase of 2.3 percent year-over-year, indicating that consumer spending remains resilient, despite higher consumer prices.

The continued growth in retail sales in July is encouraging, and points to a slight improvement in the consumer economy as the country emerges from a technical recession,” says Sarah Quinlan, Senior Vice President and Group Head of Market Insights for Mastercard. “South Africa’s consumer has shown resilience in the face of weak wage growth and high unemployment, reported at 27.7 percent in the second quarter.”

The average growth rate of the past three months was up 2.3 percent year-over-year, slightly above the 2.1 percent growth rate in the second quarter of this year. For the past 12 months, volume retail sales are less favourable, growing by only 0.2 percent. This is slightly underperforming GDP, which rose 0.3 percent in 2016 and is forecast to increase to 0.7 percent in 2017.

While consumer spending is showing signs of recovery, South Africans still face a challenging macro-economic environment. The economic health of the consumer warrants close monitoring as the economy looks to regain its footing,” says Quinlan.

Mastercard SpendingPulse South Africa reports on national retail sales and uses aggregated and anonymous Mastercard transaction data, coupled with survey-based estimates for other payment forms including cash and cheque, to offer insight into consumer spending trends and the South African economy. Available to subscribers on a monthly basis, the report also includes an overall retail sales and price index to illustrate whether spending growth is being driven by increased shopping or by inflation or increased promotions.

The consumer is in charge” – Sarah Quinlan

Providing both timely and insightful data on retail spending trends, Mastercard’s new monthly macro-economic report will offer an early overview of market indices to help retailers, investors, card issuers, banks and government agencies in their decision-making processes,” says Mark Elliott, Division President for Mastercard, Southern Africa.

In addition to reporting trends for the retail sector as a whole, the inaugural SpendingPulse South Africa breaks out sales growth trends for General Dealers, and Pharmaceutical, Medical Goods, Cosmetics and Toiletries. These sectors together account for over half of South Africa’s retail sales volume.

Pharmaceutical, Medical Goods, Cosmetic and Toiletry sales have outperformed other retail segments over the past 12 months, with sales volumes rising 3.4 percent. However, momentum has weakened since the start of the year, with sales volume in July rising two percent year-on-year, slightly slower than retail as a whole. Price inflation for products and services in the health sector accelerated from 5.3 percent year-on-year for July 2016 to seven percent for July 2017.

On the opposite end of the spectrum, General Dealer sales have underperformed, with sales volumes falling 0.3 percent year-on-year in July, and the value of retail sales down 1.1 percent over the past 12 months.

Consumers spent less and consumed less, partly because inflation has eroded their spending power. South Africa’s CPI increased 4.6 percent, driven largely by a 6.8 percent rise in food prices,” says Quinlan.

Turning to global travel, Quinlan noted that, in terms of global travel, the US spends the most on air travel. “Americans are not shy to travel long distance,” said Quinlan. “And with the exchange rate in their favour, coupled with the fact that Americans spend up to ten time more than Asians when travelling, makes tourism a prime growth opportunity for South Africa.”

The tourist-spend in the country by foreigners naturally contributes directly to all aspects of retail growth in the country.

Mastercard SpendingPulse reports will be available monthly in South Africa from September.

Mastercard SpendingPulse™ reports on national retail sales and is based on aggregate sales activity in the Mastercard payments network, coupled with survey-based estimates for certain other payment forms, such as cash and cheque. SpendingPulse™ reports and content, including estimated forecasts of spending trends do not in any way contain, reflect or relate to actual Mastercard operational or financial performance, or specific payment-card-issuer data. SpendingPulse is provided by Mastercard Advisors, the professional services arm of Mastercard.

REITs well-placed to weather SA’s current economic and political volatility

REITs well-placed to weather SA’s current economic and political volatility

Downgrading to junk status and ongoing political tomfoolery might make South African investors a little anxious about protecting their investment portfolios against the market volatility resulting from the uncertainty created by the current environment. 

But, as the South African Real Estate Investment Trust Association (SA REIT) points out, REITs are relatively well-placed to weather the expected instability, making them an excellent hold during periods of volatility. 

In spite of these uncertainties, REITs are forecast to post total returns in the range of 8% to 10% for 2017.

Izak Petersen, SA REIT Chairman

 It is important to realise that many SA REIT counters were aware of the possibility of a rating downgrade and had planned accordingly,” says SA REIT Chairman Izak Petersen, who is also CEO of Dipula Income Fund. “This is where the benefit of experienced and professional management can be clearly seen.”

 

Offshore diversification is one strategy that local REITs are also employing. 

SA REITs currently have offshore exposure of about 30% to 40% of their earnings,” explains Mark Stevens, Chairman of the SAREIT Marketing Committee and CEO of Fortress Property Fund. “This provides a buffer against local market uncertainty and serves as a Rand hedge.” 

Interest rate hedging is another strategy. 

REITs in South Africa have on average typically hedged about 80% of their interest exposure with the hedge expiry profile being three- to four-years, making them less vulnerable to interest rate fluctuations due to a volatile Rand. 

And finally, low gearing levels in the sector ensures REITs are resilient to fluctuations. 

With low loan-to-value (LTV) ratios and strong balance sheets, REITs are able to wait out market ebbs and flows, and perform well over the longer-term horizon,” points out Petersen. 

REITs have in fact consistently outperformed other investment sectors in the last 20 years. 

Compared to the 16% average return generated by equities over that time, listed property has achieved a 19% average return,” explains Petersen.

The SA REIT Association represents the South African listed REIT (real estate investment trust) sector, which is one of the most active and innovative sectors on the JSE. SA REIT members comprise all listed SA REITs and represents a market capitalisation of around R400 billion. The quality of these REITs influence our economy and the quality of people’s lives.

2: Image: kfsa.co.za

Marketing in a recession and beyond

Marketing in a recession and beyond

People don’t stop shopping it’s just the consumer’s behaviour that changes

By Gill Randall, Joint CEO of SPARK Media says that markets don’t stop in a recession.

Gill Randall

Through our membership of the Ehrenburg Bass Institute (EBI) for marketing science, we have access to consumer behaviour tracked from way before, during and post the previous recession, and that data has revealed very clear shopper insights. One of the biggest lessons we’ve learned is just how habitual consumers are.

Consumers find it difficult to modify their regular behaviour. So in belt tightening time, they find it much easier to change non-regular behaviours. Regular behaviour would be defined as going out for lunch or coffee or shopping at their favourite stores, they’ll continue to do this, but just at a reduced frequency or expenditure level. Non-regular behaviours, however, like buying big appliances or re-decorating will be postponed or discarded.

The 2008 – 2009 recession resulted in purchase declines across all categories, with the after effects felt and seen in continued declines up until 2013. As the economy recovered, purchasing again picked up between 2013 and 2016 showing increased purchases across most categories.

But even during a recession, life continues to happen: appliances and cars that break down still need to be repaired or replaced, people still get married, move houses, start families, change jobs and so on, money will still be spent, again, just at a reduced level and frequency.

Thinner markets mean that less people are actively buying at any given time. They’re spending less and buying less frequently which generally means that smaller marketing budgets have to work harder. And along with tightening budgets, consumers are also extensively searching for bargains, therefore an increased mental availability for brands in tough times do go a long way in getting those much needed sales.

This is where the now generally accepted ‘reach’ and ‘continuity’ strategy becomes ever more critical. Less active shoppers, shopping less frequently must equate to advertisers adopting a wider reach of the whole category more often (continuously) to maintain conversion rates of available share of wallet.

Additionally, in good times and in bad, the principle of Share of Voice (SOV) applies – so marketers whose ad spend is above (or below) their relative market share tend to improve (or decline) in overall market share during these times. That’s why holding or, (yes please), raising your ad spend in a recession generally leaves your brand’s market share better off at the end of a recession than at the start. It’s simply a matter of SOV. But, if budgets are to be cut, don’t stress too much – competitors are more than likely in the same boat, but do try to ensure the retention of relative SOV.

Extensive EBI analysis shows that at best 50% of a brand’s business comes from regular shoppers and that better than 50% comes from the balance of buyers in the category. The bottom line is that target markets are not just regular shoppers, it’s all buyers in the category. Aim too narrow and ads won’t be seen by the big groups of flirtatious customers!

Local papers remain the only real mass reach print media available. ROOTS 2016 shows that 63% of urban decision makers read their local paper versus 25% of any other daily newspaper or 22% of any other weekly paper.

To sum up, in a recession purchases are fewer and further between than normal and the ratio of ‘need’ purchases to ‘pleasure’ purchases is far higher. Shopping is also less planned and more random. Random shopping can happen anytime, so brands need to be in the market continuously to attract the buyers as they consider their choices amongst a myriad brand offerings.

Know your retail dynamics and consumer markets!

Know your retail dynamics and consumer markets!

An excellent understanding of markets and consumers is vital for successful retail property investment, and this is true whether investing locally or abroad.

Stephan le Roux, Director of Growthpoint Properties Retail Division

(Image: V&A Waterfront)

This is the word from Stephan le Roux, Director of Growthpoint Properties Retail Division, who was recently part of a panel focusing on retail abroad, hosted by the KwaZulu-Natal chapter of the South African Council of Shopping Centres.

Growthpoint is the largest South African primary listed REIT and is well on its way to becoming a leading international property company. It provides space to thrive with innovative and sustainable property solutions in a diversified portfolio of 533 properties it owns and manages, including 473 properties in South Africa, 59 properties in Australia through its investment in Australian Stock Exchange listed Growthpoint Properties Australia and a 50% interest in the properties of the V&A Waterfront, Cape Town. It also owns a 26.9% stake in the €1bn property portfolio of London Stock Exchange Alternative Investment Market-listed Globalworth Real Estate Investment, the largest owner of office space in Romania.

Growthpoint has successful international investments in the office and industrial sector, but it has yet to enter the international shopping centre investment arena.

“Retail is much more than investing in bricks and mortar. It is one of the most difficult investments to make successfully,” explains Le Roux.

He adds that with the economy looking rather depressing in South Africa, the allure of offshore property investment is stronger than ever. However, he cautions that investing in malls and shopping centres abroad certainly isn’t simple or straightforward.

“The motivation behind many South African companies investing in property overseas is simple: the positive spread between yields and funding costs of properties in Eastern Europe – a real estate investment destination that has most recently become a favourite with South African property companies – and, to a lesser extent, in Western Europe, are significantly better than in South Africa,” notes Le Roux.

For a prime shopping centre in South Africa today, assuming you can get one, you are going buy at a 6% to 7% yield. However, you can develop in Eastern Europe for close to 9%. You can buy at yields slightly better than 7%. However, the real advantage is that you can fund your investment at rates around 2,5% to 3%. This creates a positive spread between the yield and cost of your capital.

This favourable dynamic does not exist in South Africa in the current market. Today, if you want to buy any decent retail property asset, you will have to subsidise the property income to the tune of about 2%. You effectively have to wait two or three years before the income from the property is equal to its cost of funding.

“Without a doubt, moving into other international markets can give listed property companies a great boost, especially during the first year of investment,” says Le Roux. However, he cautions that even with these benefits, it is vital to understand the dynamics in these foreign markets and know local consumers. Looking at an asset in isolation of these factors is a mistake.

He believes the property industry in South Africa still seems to be coming to terms with understanding its own consumer markets.

“There is a lot of data and analysis, but few seem to be able to get to the heart of it. Looking at shopping centres that have been coming up in South Africa, they are being developed on the back of research and surveys. All these centre’s sites should have been rated 70% or over to be successful, but many clearly aren’t successful,” points out Le Roux, referring to the oversupply of retail space and cannibalisation, which has become plain in some areas.

He also highlights that we have to accept, at some point, that South Africa is essentially fully developed for shopping centres. “There shouldn’t be a burning need to continue to develop,” stresses Le Roux.

Over development comes at a high price. The information coming out of the USA, for example, is dismal with 8,000 projected store closures during 2017. It is estimated that 30% of its shopping centres will close in the next five years.

“Retail is a dynamic and changing industry,” comments Le Roux.

When considering the rise in competition from e-commerce, Le Roux feels that we are perhaps fortunate that South Africa has huge logistical problems. However, in countries like the USA, with more efficient delivery systems, bricks-and-mortar retail has lost a lot of growth in consumer spend to the likes of Amazon.

“We are an industry that is under pressure, and we are going to remain under pressure. I think we are going to have to look elsewhere for new retail investments. The big question is where?”

While it isn’t easy to invest successfully in unfamiliar developed markets, it has also proven difficult to make retail developments work in emerging markets. This includes other countries in Africa and in India, even with their emerging market synergies and notwithstanding that South Africans have everything that it takes to deliver successful shopping centres in these markets.

Wherever retail property investment is focused, Le Roux emphasises that looking at the shopping centre asset alone isn’t enough to make a well-informed investment decision.

“You need to look at what happens around the asset, the habits, travel patterns, beliefs, and preferences of people in its catchment area,” reveals Le Roux. “There are so many intricacies that go into the success of shopping centres, and it is essential to be very careful and thorough when looking at unfamiliar markets, whether they are in another city, province or country.”

 

Baywest leads Rebosis’ strong retail performance

Baywest Mall, Port Elizabeth

Baywest leads Rebosis’ strong retail performance

In April Rebosis Property Fund reported a net property income growth of 74,6% for the six months ended 28 February 2017. A JSE listed Real Estate Investment Trust (REIT) Rebosis’ strategy is directed toward dominant retail malls.

The company’s Chief Operating Officer, Andile Mazwai, said: “We saw strong retail performance despite a depressed retail sales environment. This performance was largely led by Baywest Mall, which held the highest trading density growth at 11.6%, and Bloed Street Mall. Alongside this performance we reduced our retail vacancies to 1.5% in the reporting period.”

Rebosis’ South African retail portfolio makes up 62% of its South African assets and consists of six high-quality, dominant shopping malls with strong anchor national tenants delivering income streams escalating at 7,4%.

Expanding on this solid performance, Rebosis plans to embark on extensions to its Mdantsane Mall in Pretoria, as well as implement a R55 million upgrade to Hemingways Mall in East London.

Forest Hill City, Pretoria

Rebosis concluded the watershed R5 billion Baywest Mall (Port Elizabeth) and Forest Hill City (Pretoria) acquisition during the reporting period and at the same time internalised its asset and property management entities. This gave rise to the increase in market cap growth and share price appreciation and saw the fund achieve its stated objective of becoming a retail-focused fund with an internalised management function.

Rebosis’ Chief Executive Officer, Sisa Ngebulana

Rebosis’ Chief Executive Officer, Sisa Ngebulana, said, “We achieved exciting growth in both total assets and income during the 6-month period under review. We were also able to hedge 100% of our debt and extend debt maturity profiles in order to mitigate potential risks that arise as a result of a market downgrade and low economic growth. To have achieved a 38% increase (74.6% including new mall acquisitions) in net property income while reducing our overall vacancies to 2.4% bears testament to our defensive office-sovereign underpin and the dominant retail strength in the portfolio, which we believe will continue to perform well in a sluggish economic environment.”

The retail portfolio delivered a strong 6% trading density growth and the fund’s remaining industrial property is presently under offer and is being held for disposal.

Further detail of Rebosis performance reveals that total distributable income increased 32,7% to R389 million from R293 million over the period. Following various acquisitions during the period, assets under management rose a significant 51% to R17,9 billion from R11,8 billion.

A dividend of 60,08 cents per share has been declared for the six month period. This amounts to 7,07% dividend growth year-on-year, which is in line with the 7% to 9% guidance expected for the financial year.

Rebosis also concluded the acquisition of Ascension Properties which led to the listing of the Rebosis-A shares at a market capitalisation of R1.6bn (thus giving Rebosis a combined market capitalised value of R9.8bn). The Rebosis A-shares were listed on the JSE on the 19th of April 2017.

The completion of this acquisition consolidates Ascension Properties under Rebosis’ direct properties and has bolstered the Rebosis asset portfolio by a further R17.9 to R21.3bn.
The combined SA properties now constitute 8 retail shopping malls, 42 office buildings and two industrial properties.

The commercial properties are located in nodes attractive to government tenants and are mainly single-tenanted buildings let to the National Department of Public Works, providing for average escalations of 8,2%.

The dividend growth in the period is in line with the Rebosis Board’s view that the dividend per share will grow by between 7% and 9% for the full year to 31 August 2017, provided there are no unexpected or drastic deteriorations in the South African economy.
This forecast outlook is issued by the Board, and has not been reviewed or reported on by the company’s auditors.

Rebosis also holds 67,5% in New Frontier Properties which owns the dominant shopping centres in the English towns of Blackpool, Middleborough and Burton-on-Trent.

Hemingways Mall, East London

 

2017 will see our economy grow a little faster: Roodt

Dawie Roodt

2017 will see our economy grow a little faster: Roodt

Acclaimed economist Dawie Roodt shared his insights on the local and global economic landscape for retailers at the Gauteng leg of networking breakfasts hosted by the South African Council of Shopping Centres (SACSC) in February.

Roodt addressed those in attendance at Sandton’s Balalaika Hotel, by touching on how Trump’s presidency will affect not only America’s economy but also Africa’s and the rest of the world. He also commented on South Africa’s increasing unemployment rate and how high debt will further send our economy on a downward spiral if no actions are taken immediately. “There are approximately nine million unemployed people in the country. We need to grow our economy steadily in order to curb the unemployment rate and in doing so we will strengthen the rand and this will have a positive knock on effect in the future,” he said.

Roodt made mention of the country’s retail industry and how resilient local retailers are in this tough economic climate. “We are faced with challenging times, in saying that I am impressed by how steadfast our retailers are. The retail industry at large is a vibrant and dynamic one. No matter where you go in the world, you are sure to find a retailer of sorts. This means that there are many opportunities-even in these tough economic times. The bottom line is that if retailers can survive under these challenges, they will fly once the economy stabilises. This year we will see our economy grow a little faster,” he said.

“My advice to retailers is that currently, the country is experiencing low interest rates at the moment. Capitalise on this low interest environment and capitalise now for the future. Position yourself towards economic growth because once our economy strengthens, retailers who have prepared for this can capitalise and succeed. I would also like let consumers know that we are all going through a tough time as well. The greatest weapon of all time is the pen and with the pen, we can decide who to put in power. With strong leadership, economies strengthen, unemployment decreases and people succeed,” added Roodt.

These quarterly networking breakfasts hosted by the SACSC take place in Cape Town, Durban and Johannesburg and are attended by retail, property and industry heavyweights. “Dawie Roodt is an acclaimed economist and his insights definitely have relevance for the retail industry,” said SACSC CEO Amanda Stops. “Collectively, these types of events give everyone a chance to monitor trends, exchange ideas and share knowledge to support our industry growth and deliver value to our members.”
The highly-regarded Dawie Roodt, who is currently Chief Economist at the Efficient Group, Limited, is renowned for his insights streaming from over two decades of economic and political analysis experience.

His career includes nine years as an Economist at the South African Reserve Bank and the Economics editorship of the financial magazine Finance Week and Finweek. He holds a Master’s degree (cum laude) in Economics.