HomeChoice makes progress in difficult retail environment

HomeChoice International PLC, the leading participant in southern Africa’s retail homewares and financial services sectors to the expanding urban middle-income mass market, announced steady growth despite a tough second half for the year ended 31 December 2018. Revenue increased by 8,5%, and headline earnings per share remained largely unaltered from the previous year, at 507,7 cents. The group declared total dividends for the year of 194,0 cents per share, up 1,6%.

Chief executive officer South Africa, Shirley Maltz, commented: “Notwithstanding the challenging retail environment, we are seeing the benefit of our continuous investment into improving our customer experience and accelerating our digital transformation, which are both key strategic focus areas for the group. Credit extended via digital channels increased by 43,9% to R1,6 billion.”

Maltz expanded: “Another highlight for us is that the group continues to attract more than 20 000 new customers monthly, attracted by our curated product offers. The group’s active customer base increased by 10,0% this year.”

Capital expenditure, at R126 million, has increased notably in this period and has involved rolling out four additional showrooms and two ChoiceCollect containers, opening a second distribution centre in Gauteng to provide quicker, more convenient deliveries and re-platforming and upgrading technology across the business.

Financial results exhibit moderate growth and strong investment

Group revenue increased to R3,2 billion (2017: R3,0 billion), benefiting from a solid contribution from the financial services business, with loan disbursements up 21,5%. This was tempered by weaker retail sales of 6,3%.

Group EBITDA (earnings before interest, tax, depreciation and amortisation) increased by 3,6% to R821 million. Despite significant cost focus, the group could not sufficiently mitigate weaker top-line growth in the second half of the year. Headline earnings increased by 1,3% to R529 million. The group declared a final dividend of 99 cents and a dividend cover of 2,6 times was maintained.

Retail disappoints in H2

Retail revenue increased by 7,4% to R2,5 billion. After a strong sales growth of 18,9% in H1, trading in the second half of the year was impacted by operational challenges at the South African Post Office (SAPO), with delays in the delivery of catalogues and parcels. The non-delivery of monthly catalogues had a substantial impact on sales. The group spent significant effort to assist SAPO and has also sped up the roll-out of showrooms and container hubs to provide additional channels for customers to collect their products. Increased marketing expenses to stimulate sales and additional courier charges to deliver the products to customers were incurred, translating into an EBITDA decrease of 2,9% to R453 million.

The business is however well-positioned to continue its strong historical performance in 2019. Digital sales contribution increased to 16% and will be further enabled with the launch of new e-commerce site. Supporting the much-loved HomeChoice private label, there are now 120 external retail brands on offer which provide variety to existing customers and attract new customers looking for quality homeware, fashion, furniture and personal electronics. The group has also had very positive customer response from the showrooms and ChoiceCollect, with further rollouts planned for 2019.

“Longer-term targets are for 20 showrooms and up to 100 ChoiceCollect containers across the country,” said Maltz.

Financial Services generates solid performance

Loan disbursements in the financial services business increased by 21,5% to R1,8 billion. Pleasingly, loans to existing customers increased to 84,5% of total disbursements, with strong acceptance of MobiMoney, our three-month, digital-only facility product. Revenue increased by 12,2% to R746 million and EBITDA grew by 13,7% to R357 million, highlighting the annuity aspect of the financial services business. Over 40 000 new customers were acquired during the year, increasing the base by 11,4% to 176 000.

Insurance has demonstrated strong growth in funeral products. Gross written premiums increased by 70% over 2017. “The opportunity remains to add more personal insurance products to the portfolio. This vertical represents an attractive growth opportunity to diversify income and increase customer share of wallet,” added Maltz.

At least 86% of customers are now registered on our digital platforms and a third of loan transactions concluded, are done outside of normal trading hours. The richer Mobi platform creates a portal for a multitude of products and value-added services to be offered to customers via their smartphones. The introduction of airtime, data bundles and electricity sales has indicated the potential opportunity to increase customers’ digital engagement with the group.

Stable credit

The group continued to expand a quality credit book with gross trade and loan receivables increasing by 7,5% (on an IFRS 9 comparable basis) to R3,5 billion. Group debtor costs at 17,2% of revenue was marginally above 16,8% in 2017, and remains within the group’s acceptable risk tolerances. Non-performing loans declined, while NPL cover was bolstered by increased provisions.  The improving performance metrics are testament to the group’s ongoing conservatism in managing its credit book.

Strong cash generation

Cash generated from operations increased by 32,0% to R474 million, driven by a decrease in retail credit growth in H2, good cash collections, a reduction in loan terms and actively managing cash requirements in working capital.

“The strong cash generation capability of the business is evidenced by the fact the group has managed to grow a credit book of more than R3,5 billion while maintaining a net debt to equity ratio (excluding property) of 22,2%,” Maltz said.

Outlook

“We will continue to position ourselves as a leading digital partner in the mass market, with an omni channel offering that provides an attractive and seamless retailing experience across all channels,” concluded Maltz.

The group has serviced this market for more than 30 years and has built up a loyal customer base of more than 870 000 active clients. This base, together with our established digital platforms, offer enormous opportunity to extend our product ranges and service offerings.

About HomeChoice International PLC

HomeChoice International plc is an investment holding company listed on the JSE Limited. The group provides retail and financial services to the mass market in southern Africa. HomeChoice services its large, primarily female and middle-income customer base through two trading operations, HomeChoice (Retail) and FinChoice (Financial Services).

 

African retailers have the opportunity to re-imagine a data-driven sector

By Toros Esim, head of Digital Retail and regional director of Digital Strategy for the Middle East and Africa at Orange Business Services

Transforming retail starts with the business model, not the technology

In a continent the size of Africa, comprising more than 50 countries, it can be very tempting to make sweeping generalisations about the adoption of digital technologies, and the transformation of the retail sector across the continent.

The potential scale of the opportunity cannot be ignored – the large and young population, emergence of a middle class, strong retail revenues and second fastest growing consumer region in world. The successful transformation of the sector starts with addressing the business model, built on new streams of customer data, and enabled by technology. The opportunity for retailers in Africa is to re-imagine the retail sector across the continent through a business transformation process.

Industry statistics suggest that the Africa retail sector is growing strongly but it’s a much more complex picture across such a very diverse range of countries. Half of the consumption in growth in Africa is expected to come from just three geographic areas, East Africa, Egypt and Nigeria.

Retail covers such a broad spectrum of operations from the informal family-run store to the large malls, from fashion to fresh foods. Despite all this variation, we can see that there is recognition in parts of Africa of the potential to follow the global shift to an increasing emphasis on e-commerce and online shopping; the first movers are already making their moves not just in Africa – but also beyond.

African companies are now buying European companies – more than $1,5 billion was spent in acquisitions 2015 alone with Shoprite, Spar, and Foschini Group, for example, all on the acquisition trail. Scale is important and 10 of the fastest growing retailers in Africa are present (on average) in eight countries across the continent and have a store count of around 900 stores. Acquisition provides additional scale, expertise and technologies that can be transferred to the region.

Yet, there is some common ground – a large and growing population (1,3 billion) of young people (average age under 20) combined with strong internet penetration is resulting in a generation of tech savvy young people and creating the potential to make digital leaps based on the ubiquitous mobile phone.

As in many regions around the world, consumers in Africa are ahead of the curve when it comes to the adoption of mobile technology and established players in a range of industries are playing digital catch-up, from banking to retail, while new digital native companies look for the opportunity to disrupt the industry.

But the digital transformation of retail goes beyond the physical/online store, as the retail sector draws together manufacturing, production and processing, with logistics and supply chain, and then selling/transacting and customer service, culminating in the consumer experience.

For retail, this means that the real opportunity for digital business transformation is the development of a new business model, aligned with the customer expectations and driven by customer data. This includes  ̶  but goes far beyond – e-commerce.

Abstract Futuristic infographic with Visual data complexity represent Big data concept node base programming

Speed is of the essence

To build a new business model for retail, retailers first need to understand what they want to improve. Asking the right questions is the first step in finding the answers. A data culture is created by making better business decisions.  This starts with collecting data, analysing it, and then creating inferences from it to improve your decision-making capacity. This enables a business to identify the possible improvements to the existing models and to explore potentially new business models that could deliver much more than just incremental improvements to business performance.

However, the commitment to becoming a data-driven company needs to be solid and consistent across the entire organisation. This enables all your employees to become data ambassadors and data translators.  Fundamentally, this is all about appreciating that your data is a key differentiator for your business and creates unique value, and sharing this belief and commitment as part of your organisation’s data culture.

The opportunity for retailers in Africa is to transform their businesses and become data-driven operations, harvesting increasingly rich customer data, from an expanding range of digital and physical customer touch points.

The digital business transformation process is a change management challenge, led by management, driven by people, enabled by technology. Successful retail transformation means understanding the value of different forms of data and the six key steps of the data journey, while not being mesmerised by the technology – whether it’s AI, IOT or Cloud.

The technology enables the creation of retail customer data that can be harvested to benefit retailers through the deeper insights data can provide into customer behaviours. This leads to the capacity to be able to anticipate behaviour. The shift to a data-driven retail business model does not mean losing the physical stores and retail environment. Retailers in Africa are already introducing new e-commerce platforms, which create a new set of digital touchpoints with customers, in addition to the rich customer touchpoints of the physical retail store experience, and all producing new data.

But it’s not just about the in-store experience

By re-imagining the business model, retailers can adopt the enabling technologies that will create efficiencies and reduce costs across the supply chain and enhance the customer experience online and in-store – it’s a digital transformation without the risk of external disruption – in effect, retailers should transform themselves before someone disrupts their business from the outside.

Collect  ̶  Collecting data from multiple streams is a challenge and must respect the privacy and regulation requirements from a wide range of sources and sensors including financial transactions, social websites, connected objects and devices, and robots.

Transport  ̶  Data transport is all about networks, including mobile, fixed, international, virtual, wireless sensing networks using (LPWAN), and more. The key is to combine technologies to provide the most reliable tailored solutions for customers, while paying extra attention to questions of governance, privacy and security.

Secure  ̶  It should be a given that data must be secured end to end to ensure trust; cyber defense must meet the need for more efficient methods of combatting cyber threats, combining technology and people power to secure organisations’ activities and help protect them against multifaceted threats. Security models must be improved, enriched and reinvented on a permanent basis meeting the challenge of finding a balance between agility and security.

Store and process  ̶  When it comes to data storage, cloud experts must roll out tailored solutions – public, private or hybrid  ̶  for their customers, while paying extra attention to questions of governance, privacy and security.

Analyse  ̶  The challenge is to transform the precious commodity of data into pertinent and rewarding information and successful transformation is achieved through data-driven strategies that cut across silos at every step, from developing a data project to measuring performance.

Collaborate and create  ̶  Cyber intelligence experts help organisations turn information into insights and transforms it into value. Application design helps develop simple and intuitive decision-making tools. Data intelligence offers a multitude of data management tools and analysis services to support decision-making: dashboards, data visualisation tools, business sector indicators.

The shift to a data-driven culture is technology enabled but not technology-driven.

It is a deeper, more radical transformation and this needs a lot of imagination.

 

I-Drop Water and Bluewater unveil innovations in affordable drinking

South African innovator, I-Drop Water, have revealed the Waterpod, the latest and most advanced water purification solution designed to offer a self-service drinking water refill solution for shoppers in all locations, at an affordable price.

With the growing emphasis on alternatives to single-use plastic water bottles and sachets, the drinking water industry and large-scale retail are starting to embrace this alternative approach to the sale of safe drinking water. Since 2016, I-Drop Water has installed water purification and refill machines in over 100 retail outlets in five African countries, all of which has culminated in the development of the new Waterpod.

According to James Steere, co-founder of I-Drop Water and director of Bluewater’s African operations, “The Waterpod is a completely new and innovative way for affordable drinking water refills to be sold in retail environments across Africa and beyond. It is the result of almost four years of product development, testing and data that we’ve gathered from across the length and breadth of Africa.

“The self-service purified drinking water refill industry is gaining traction around the world, primarily for the significant price and environmental benefits it offers to shoppers compared to bottled water,” said Steere.

“In the United States, self-service drinking water refills are available at tens of thousands of grocery stores. However, to date, water refill options in Africa have typically only been available through small dispensers in offices or gyms, or costly, semi-industrial purification machinery in kiosks and stand-alone water franchise shops.

“The Waterpod provides an opportunity to open up the entire market by offering the benefits of a small, compact water refill machine with the high-spec purification power of much larger systems, all designed to deliver a great user refill experience for sizes between 1 litre and 25 litres, even in the most complex African water environments.”

How the Waterpod works

“What we know from our work across Africa is that water conditions vary far more than anyone could imagine. One part of Johannesburg can have a completely different water composition, pressure and reliability of supply to a neighbouring suburb,” says Steere.

“The compact and versatile Waterpod represents a step-change in this industry by delivering the optimal purification for a specific water environment by combining the necessary technologies ideal for each site in less than one square meter of floor space. Cost savings are passed to the shopper through a lower price of up to 90% less than bottled water, and to the shop owner through a high gross profit on a per-litre sale. All of this is monitored in a real time GSM internet of things platform that we’ve developed specifically for this application.”

Bluewater investment in I-Drop Water

The development of the Waterpod has been boosted by investment from Bluewater, which has partnered with I-Drop Water to introduce Bluewater’s SuperiorOsmosis™ water purification technology to the African market. The “Bluewater Pro” is designed for direct consumer application and is a powerhouse point-of-use water purifier that helps both professional environments and homes create their own supply of pure drinking water from municipal or borehole sources.

The partnership between Bluewater and I-Drop Water has also given rise to the development of the Bluewater Trailer, a mobile solution for pure drinking water on location and used by large-scale events and with applications in the film, mining and construction industries, where location-based water purification is required.

“This exciting new tech rollout is another step towards meeting the challenges of a water-stressed Southern African region and indeed the world,” said Anders Jacobson, president of Bluewater. “This innovation embodies our partnership mantra of ‘Swedish ingenuity meets African innovation’, and is a unique offering aimed at reaching a market of over 2 billion people around the world who still risk their health every day by drinking unsafe water. We are excited to be on this journey with I-Drop Water and look forward to further sharing Bluewater’s unique technology and products throughout the African continent,” said Jacobson.

About I-Drop Water

I-Drop Water is a for profit, mission-driven company established to bring safe drinking water to everyone. We’ve built an innovative business model that uses nano-purification water filtration technology and GSM-enabled platform to empower grocery store owners anywhere to purify and sell safe, affordable drinking water to their customers. Shoppers refill multi-use containers and pay by the litre for the drinking water they need. With I-Drop Water more people can afford safe drinking water, less plastic waste is produced and local economies benefit by supporting their local grocery stores.

Visit www.idropwater.com

Logistics and e-commerce: evolution through technology

21 September 2018

Logistics and e-commerce: evolution through technology

The impacts of technology are widely felt across all sectors. The advancement of technology as it pertains to the logistics sector is detailed in Broll’s recently released 2018 Logistics Report where the evolution of the logistics sector is discussed. It also highlights commercial activity around South Africa’s four main economic hubs: Johannesburg, Durban, Port Elizabeth and Cape Town.

The report clarifies the difference between the singular function of a warehouse as compared to the multiple functionality of a distribution centre (DC) and the activities involved in logistics. Holistically logistics comprises services that support the physical movement of goods, trade across and within borders including warehousing, brokerage, express delivery, terminal operations and related data and information management.

“A DC offers value-added services including the likes of cross docking, packaging, product mixing and more. DCs also store products, although generally for a shorter time period in comparison to warehouses, and emphasis is placed on the moving of goods to either wholesalers, retailers or even consumers.”

“With the integration of technology and material handling equipment, cyber security is becoming increasingly important as automation and robots are likely to become the norm,” the report notes.

The report reflects on e-commerce and technological enhancements that bring about adaptations in the sector that respond to the changing demands of consumers. This has resulted in multiple channels in the supply chain.

Following the now well founded “sharing” system around services, there are various apps available for the transportation of goods. These apps connect shippers and carriers and allow for real-time freight tracking, alerts, reports and analytics, upfront rates, quick automatic payments and more. A shipper is able to see trucks which are close by and select only the jobs it wants.

Design
Another aspect of the evolvement is the importance of design with particular attention to green-building compliance. “Factors such as lighting, building insulation, water conservation and solar panels are increasingly sought- after for an increased green footprint, as well as potential cost-saving measures. “

Among the factors listed for consideration in the design are intended use, equipment selection, flow of facility; with one-way found to be the best option.

The report explains the complexities of logistics and its influence over tenants and investors and how they select locations. These include proximity to metropolitan areas, regulatory concerns, demographics, transport infrastructure and the total cost particularly as it relates to supply chain.

Having decided on location, other factors need to be considered. Some of these include layout and amenities; inflows and outflows of goods; the size of the facility; fire safety and security among others.

Regional focus
The report, in highlighting the important logistic nodes, describes Johannesburg as South Africa’s main economic hub contributing about 16% of the country’s GDP. The backdrop to this is the turn in economic tide to one that is knowledge-based, with a focus on technology, e-commerce and financial services.

In Durban the high activity areas are in the southern and northern industrial basins, with the area to the north of the city the most active in recent years.

Durban’s industrial land costs are the highest in the country, the report claims, and, “Developers are having to come up with creative ways of increasing yields on these buildings – for example, placing docking doors and dock levellers at 45-degree angles to the yard traffic flow to lessen required yard space and increase yields.”

In Cape Town one of the two prominent logistics areas is the R300 Corridor which includes the industrial nodes of Brackenfell, Stikland Blackheath, Kuilsriver and Bellville South. According to the report, these nodes are easily accessible off the R300, N1 and N2, making this a preferred location for logistics and distribution.

The Coega Special Economic Zone (SEZ) is Port Elizabeth’s centre of logistics. It offers investors “world-class infrastructure, tax incentives, rebates and a duty-free zone.” Existing tenants include Famous Brands, DSV Sun Couriers, ID Logistics, Digistics, FAW and Vector Logistics.

The report expresses the view that logistics should embrace technological influences, innovate where necessary and align with requirements at the basic level, which include reliable connectivity and technology-based security.

To download the full report go to www.broll.com/publications

 

The importance of efficient supply-chain logistics in Retail

The importance of efficient supply-chain logistics in Retail

A Case Study

Clinton White, Managing Director of CEVA South Africa

Shopping & Retail SA recently met with the world-renowned CEVA Logistics company with a view to gaining insight into this crucial aspect of Retail. Clinton White, Managing Director of CEVA South Africa, provided us with considerable detail around the following recently completed project.

At the outset
This project began some five months ago where an existing CEVA client required assistance with bulk warehousing and forwarding and clearing solutions due to existing operational and planning issues which were imposing serious delivery constraints.

Kraft-Heinz imports a significant volume of products and also manufactures locally at its factories in Wellington and Atlantis in the Western Cape.

In consultation with Kraft-Heinz, CEVA initiated an in-depth supply-chain value assessment – at their own cost – in order to demonstrate to the client what level of improvement, and importantly, cost-savings, could be achieved with a professional forwarding and clearing and warehousing strategy.

“With this approach the client was able to see and interact with our strategic direction, leading up to what is clearly a win-win scenario – one which vastly improved and stabilised their entire logistic scope,” said White.

The objective:
The primary focus points of the project were as follows:
– improve cash flow;
– reduce stock holding;
– operate using the Just-in time- model (JIT);
– get the optimum product mix into the distribution centres (DCs); and
– ensure that the many facets of the project work smoothly and seamlessly together.

(Photo by Scott Olson/Getty Images)

The process:
Working in close collaboration with the Managing Director of the Kraft-Heinz Company in Southern Africa, Morné Fourie, the CEVA team of five interviewed over 30 Kraft-Heinz staff, touching on every aspect of the Kraft-Heinz forwarding and clearing operations, warehousing and product distribution.

“Buy in from top management in Kraft-Heinz was as imperative prerequisite for the success of implementation and ongoing smooth operation of the project,” continued White. “During our preliminary confidential interviews with staff operational problems and issues were identified which required to be addressed and overhauled.”

For example the inefficient application of transport between Johannesburg and Cape Town was costing the company dearly, as not only was there an inordinate number of transport contractors – over 30 in all – but also in many instances trucks were returning to or from their delivery destinations empty – resulting in costly futile trips.

The CEVA team focused on the two primary categories of the client’s logistical product supply-chain, namely:
the “ambient” – or non-perishable product line, such as bottled and canned products; and
the “frozen” – or perishable product line, which includes pies, sausage rolls, dough and so on.

The current supply-chain configuration was plotted and analysed, with reverse logistics being applied to establish solution options.

The solution
Within three months CEVA presented a solution which would satisfy and surpass the following criteria:
reduce stock-holding;
focus on specific “final mile” distribution to retail; and
realise measurable cost-savings – this being key to the project overall.

A CEVA manned and operated “control tower*” was put in place at the client’s Western Cape premises to directly manage and operate the following:

– warehousing and distribution centres (DCs)
– forwarding and clearing operations
– end-to-end transport management
– sales and operations planning (S&OP) was to be kept in-house with Kraft-Heinz

* A “control tower” in the logistics sector is jargon for a flat-structured management team, in this instance comprising CEVA specialists working in close collaboration with the Kraft-Heinz Logistics Manager. Globally CEVA runs massive control towers for numerous individual companies.

As the control tower is designed to operate as a separate entity, it is important that is remains totally objective in all its functions. To achieve this, control tower staff and management must – in all their actions – always be consciously unbiased, objective, transparent and aware of the bigger picture. In addition, high visibility of their activities, openness and strong collaboration with the client are also key factors.

The outcome
Two bulk facilities were proposed – which opened up much-needed factory space for Kraft-Heinz. In addition, the number of transport service providers was reduced to 10, enabling an exceptional level of efficiency. Much improved use of available transport and bi-directional loads was achieved together with far greater ease of management of this function.

After five months the Kraft-Heinz logistics function has been overhauled from end to end with all related disciplines now functioning smoothly as one.

As a result significant cost savings have been realised throughout, particularly in transport.

“The importance of a recognised professional external company taking control of the entire logistical chain is an essential element for suppliers and manufacturers for the retail sector,” says Fourie. “What CEVA has achieved for Kraft-Heinz has been remarkable indeed, and one can only look on in awe at the level of professionalism and efficiency they have applied in the roll-out of this project.”

CEVA Logistics makes business flow. As one of the world’s leading non-asset- based supply-chain management companies, CEVA designs and implements industry-leading solutions in both freight management and contract logistics.

Over 42 000 dedicated employees, working in 17 regional clusters around the globe, deliver operational excellence – to provide viable answers to the most challenging supply chain questions.

CEVA applies its renowned operational expertise to provide best-in-class services across its integrated worldwide network, where our focus is equally on general business and the specialist needs of the automotive, consumer and retail, energy, healthcare, industrial and aerospace and technology sectors.

 

Broll reveals state of play in SADC property market

Broll reveals state of play in SADC property market

For a prospective investor or developer who has set their sights on expanding a retail or commercial property portfolio in Southern Africa, or one who is entering the region for the first time, the way forward may appear complex and uncertain. Conflicting reports, dubious statistics and misconceptions can cloud their route. So how can an investor or developer who wants to spread their investment wings in Southern Africa make an informed and strategically sound decision?

Broll Property Group’s latest research report on certain SADC (Southern African Development Community) countries, entitled SADC Market Snippet 2018, is a powerful and invaluable tool, designed to assist with understanding some property market conditions in the region.

Lyttelton Shopping Centre, one of many managed by Broll

The SADC was established in Windhoek in 1992 to grow the economies of Sub-Saharan African states and foster cooperation and peace amongst its members. Broll Research has put a group of SADC countries, where property investment opportunity presents itself, under the spotlight, and has crafted a brief report which looks at:

  • Country facts;

  • Economic indicators;

  • Global rankings on indices e.g. corruption or competitiveness; and

  • Key indicators in the retail, office and industrial property markets.

 

Research that’s key to investment

Broll Research specialises in converting property data into market knowledge, providing clients with decision-making research that spans the retail and commercial property sectors.

Broll’s research teams across sub-Saharan Africa enable the company to add value to clients’ portfolios, by partnering with them to make well-informed decisions and grow the performance of their investments.

In Mauritius average rental yields of 7.75% – 8% are being achieved within the retail market”

The Broll SADC Market Snippet Q1:2018 takes each of the countries in turn and presents an easily readable and accessible six-part picture to guide the investor on property market conditions in each country.

Investors get the big picture

By extracting data such as GDP alongside ease of doing business rankings, as well as office rentals and yields, there emerges an absolutely fascinating picture tailor-made for investors. As an example –

Country

Real GDP Annual Growth Rate (%)

Real GDP per Capita/ US $

Ease of

Doing

Business

2018

(Rank/190)

Commercial Market

Prime Net Achieved Rent (US$/m²/month)

Average Yield (%)

Average Vacancy Rate (%)

Botswana

4.3

7,767

81

10

8-9

N/A

Madagascar

5.0

429

162

14

14

20

Malawi

4.4

492

110

10

9

20

Mauritius

4.0

10,568

25

13

8.5-9

4-10

Mozambique

4.8

528

138

28

9.5

65

Namibia

3.1

5,935

106

15-18

9

2

South Africa

2.0

7,571

82

15-17.5

8-9

5-15

The report is packed with a wealth of critical data for investors and decision-makers. Taking a closer look at a particular country in the report, for example Mauritius, one finds a country of 1.3 million people, rating well on the democracy index, which is managing to keep corruption levels at bay and is high on the best-countries-for- business index. This ranks it as a favourable location in the SADC region in which to do business.

Mauritius with 58.6% of the population urbanised, intense mobile phone usage at 142 phones per 100 people, internet access with 46.2 users per 100 people and a Real GDP annual growth rate of 4.0%, offers potential for investors and developers. Asking rents are being achieved within the retail market with average yields of 7.75% – 8% being evident. The average yield for offices is generally a bit higher at 8.5% – 9% and demand within the market is forecast to be stable with supply increasing over the next 6 months.

The Broll SADC Market Snippet 2018 is an outstanding guide for retail and commercial property investors, packed with useful data and statistics that will make decision-making that much easier.

To download the “SADC Market Snippet 2018” report go to www.broll.com/publications

Tibani Shopping Centre to boost Limpopo economy

Tibani Shopping Centre to boost Limpopo economy

Take 34 000 households that have to walk or, if they are lucky, ride kilometres to the nearest formal retail facilities. Then multiply by five to get the number of people in this predicament. And there you have it – a community of 170 000 people in the catchment area of Tibani in Polokwane, with no convenient access to formal shopping. Then and only then, can one see the positive impact the building of an 11 500m² shopping centre will have on the lives and pockets of its potential customers, while offering an excellent trading opportunity to the retail industry.

Tibani Shopping Centre, which is due to open in August 2018, is being developed by GMI Property Group with Retail Network Services as the retail and leasing specialists to the project.

The centre is situated 70km from Mokopane (formerly Potgietersrus) along the R567 near Tibanefontein, one of the villages which forms part of the cluster making up the rural Tibani area. The nearest major town is Polokwane, 60km away.

500 residential stands are planned next to the shopping centre site in Tibanefontein. This project is known as the Juno Demarcation Project and is under the auspices of the Department of Housing. Such a development will greatly facilitate the creation of a prominent node at the proposed site, together with complementary facilities. In addition, a formal taxi rank is located at the junction between the R567 and Main Road, not far from Tibanefontein Village. The rank serves the various villages in the area, thereby creating awareness of and exposure to the shopping centre site.

Tibani Shopping Centre has been designed over one level with 52 shops and close on 400 parking bays.

Shoprite and Cashbuild are the anchor tenants with Shoprite planning a spacious and comprehensive 3 000m² store. The balance of the tenant mix will offer more convenience shopping as well as a selection of popular fast food choices.

Well-known retail brands opening in the centre include Ackermans, Tekkie Town, Furn 4 U, Russells, Sleepmasters, AutoZone, AlphaPharm, Alera Hair, Checkers Liquor, Jet, Pep, Pep Cell and Capitec. Food outlets ChesaNyama, KFC, The Fish and Chip Co and Debonairs Pizza will appeal to the strong youth base in the area.

Employment in the centre’s catchment area is mostly formal thereby ensuring steady incomes derived from the formal sector. The development itself will also provide employment opportunities.

“Tibani Shopping Centre will bring sorely-needed modern retail facilities to people restricted to rural shopping options unless they are prepared to make the long commute to the nearest town,” says Gavin Tagg, CEO of Retail Network Services. “The centre will also provide a safe and pleasant meeting place for the Tibani community.”

For more information please contact Retail Network Services on 
 +27 11 807 6995  |   leasing@rns.co.za  |   www.rns.co.za

Ancora – changing South Africa one youth at a time

Ancora – changing South Africa one youth at a time

Mall of the North West is located along the N14 between the Vryburg CBD and Kuruman. Established nationals and a strong anchor will cement this development as a one-stop destination, servicing all income groups. The centre opens in 2020.

Known as the professionals in unlocking retail potential, Ancora Group has a profound 360 degree retail and leasing capability – and an unusual mission

The story continues…

In our previous discussion with the CEO of Ancora Group, Marianka Victor, in June 2017 Shopping & Retail SA shared the erudite vision of this retail specialist group and its mentor-driven internship programme.

Today we delve even deeper, learning more about the team, its passion to share knowledge and grow people – and we follow the development of the current interns and reflect on the success of the recently ‘graduated’ interns – coupling this to the continued exponential growth of the Group.

The Ancora team
Front Row: Linda Mzana – Office Administrator; Marianka Victor – CEO; Bianca Peens – Retail Leasing Specialist; Bevan Greybe – Retail Leasing Specialist; Samu Khumalo – Marketing Specialist
Second row: Werner Victor – Financial and Operations Director; Aaliyah McKay – Lease Admin Manager; Lesego Kwatlhai – Marketing Intern; Meryl Bessesar – Leasing Executive; Kim van Gils – Legal Advisor
Back Row: Matimba Baloyi – Leasing Intern; Keith van Dyk – Professional Accountant

Background

The Ancora Group, founded by Marianka Victor in 2016, offers its clients in the retail sector a full spectrum service. With the primary focus being on leasing, this 360 degree scope encompasses research and feasibility right through to centre design and collaboration with architects, partnerships with developers, tenant mix selection and placement of national tenants and brands.

The Group is active across the country, from Limpopo to the Western Cape, Gauteng to KwaZulu-Natal.

Their team also offers detailed professional advice to potential franchisees and retailers, analysing viability, best location and related market factors.

The staff of the Ancora Group comprises 12 people, all of whom are under the age of 40.

Feasibility

Ancora’s key offering is a one month basic viability study of the development, in which Ancora examines preparation requirements and undertakes market research for a proposed retail development in order to arrive at an implementation strategy. At this point a Go/No-Go decision can be taken. “We can then very quickly tell the property owner or landlord – as well as potential tenants – of the viability or otherwise of the project,” says Marianka.

Test the market before you spend money”

It’s crucial to have a vision for the area,” she continues. “And I travel a lot to see potential retail properties at first-hand, as land only means something to a developer if it is paired with a scheme.”

Research undertaken on each project by Ancora is essential to enable informed decision-making. For example, timing for the project may be favourable for immediate commencement – or research may show that it may be preferred to put the development on hold for up to four or more years before implementation of the scheme.

Ancora will also recommend and collaborate closely with the architects, quantity surveyors and project managers appointed to the development through to project completion.

Ancora also runs a detailed feasibility study on the property in order to understand the yield required to develop a property in the current market. The team will look at various alternative income solutions which increases the bottom line for developers, such as media, fibre and solar. Having fostered strong relationships with national retailers, Ancora understands the rentals per tenant, per demographical area. The client will then have at its disposal all the knowledge required to make a realistic decision on whether the development will be feasible or not as well as actually having tested the market with prospective tenants.

Many little things make projects successful – right down to defining the shopping centre entrances and positioning of stores and restaurants. We bring in national and local tenants and focus on creating strong business opportunities,” explains Marianka.

On the operational side, Finlay Mall Leasing, a division of Ancora Group, manages all aspects of leasing, advising property owners and landlords which tenants are most suited to the region and the centre and how much space should be allocated to each.

As part of its integrated leasing services, Ancora provides expert and professional assistance to clients in facilitating the conclusion of lease agreements on behalf of its clients, including the negotiation of lease agreements with national tenants and the formulation of hybrid lease agreements. In addition, the company also manages acquisitions, including the sale of shopping centres and collaborates closely with a host of well-known national brands.

In addition, Ancora’s Retail Partners division has the depth and capability to negotiate favourable deals for tenants. One of Ancora’s many inherent strengths is building close relationships with its tenants, taking them under its wing by providing ongoing and personal advice and guidance.

Importantly, this division works closely with the developer and tenant in creating a win-win scenario in the lease agreement. To achieve this the developer meets the tenants’ returns, thus encouraging long term occupancy and minimising losses resulting from tenant turnover. The result is deals which are mutually beneficial to both parties, a stable tenant base – and a successful centre.

Nurturing new talent into the retail industry

It is against this strength and background that Marianka operates her youth mentorship programme, in which Ancora selects graduates with a passion for retail and prepares them for a career in retail and leasing management.

First and foremost is my passion to identify young, ambitious talent and nurture them into the real world of retail operations through our internship programme,” says Marianka. “This is achieved through experience in our business which offers the ideal platform, complete with our directors’ and managers’ hands-on mentorship.”

Marianka Victor, CEO of the Ancora Group, is passionate about training up our youth! It’s in her DNA.

Marianka firmly believes that when young professionals learn to be successful and realise their potential at an early age they will continue to be successful in life. She is passionate about training up our youth! It’s in her DNA.

Each year, Ancora’s core staff of five mentor and groom up to seven interns, each on a one-year internship, equipping them to go out into the retail environment with confidence to build their new careers.

This creates very exciting opportunities, not only for the interns, but for new and existing businesses in the retail sector.

Once the interns have completed their intensive 12-month hands-on internship, they have the exposure, capability and expertise that way surpasses that of many other job-seekers.

Our selection process all hinges on attitude, enthusiasm and ambition” explains Marianka. “We look for people who are hungry for success and have a keen drive with the goal of being ’the boss of the business’”.

Many young professionals in the field are over-priced and sometimes do not meet their employer’s expectations in terms of capability. And as there is a limited number of young people entering the market, we choose to groom them from scratch.”

One of our current interns has reached the stage where she is actually running three developments entirely on her own.”

The 50 000 m2 Umlazi Station Mall is positioned in the third largest township in South Africa. Extensive research has shown a high demand for the specific retail needs this Mall provides

The mentorship programme

Our aim throughout this internship programme is to ensure that each intern will be a success for the rest of his or her life. The business and life skills we instil in them are such that this will indeed be the case,” continues Marianka.

There are always at least three interns actively in progress at Ancora at any given time, receiving close guidance from the core team in the leasing, marketing and administration disciplines. The company is presently canvassing for a fourth intern in its leasing division.

Since the inception of this unique mentorship programme, no fewer than four series of interns have already “graduated” through the company.

As a working mother herself, Marianka has earned the respect of the captains of the retail sector, as well as of the staff surrounding her in this exemplary business. “We lead by example,” she says, “and we convey to all our interns that by following your dream you will also be a better parent, especially the moms. It may be hard to do with kids but it is certainly possible and most rewarding.”

Our main objective is to provide our interns with the correct advice and skills to achieve success, and to this end we offer a platform to help our graduates into responsible positions within the industry.

Lesego Kwatlhai – Marketing Intern

Lesego Kwatlhai

As an ambitious and goal-driven young lady who is passionate about marketing design, Lesego is a firm believer in the power of a strong concept with an unexpected execution – challenging herself to explore any given task. Lesego has graduated with a Diploma in Computer-Based Graphic Development in 2016 from Rosebank College, and is a wonderful and fresh new addition to the team.

Matimba Baloyi – Leasing Intern

Matimba Baloyi

As a young professional who works independently, Matimba holds a BSc. Urban and Regional Planning degree from Wits University. He is passionate about new developments, having co-ordinated various projects as a Junior Town Planner and freelancing on property-related projects along the way. Matimba’s interests include career networking, and he loves indulging in his favourite sport and music in his spare time. His personal drive to see a project through to completion is what motivates him to look at creative solutions.

Ancora – a leading SA award winning Group

In 2017 Finlay was nominated for the Standard Bank Top Woman Award and has been nominated again for the same award for 2018.

In 2016 Marianka Victor was announced as the Regional Winner – Gauteng of the SA Women in Property Awards:

  • Young achiever Award: This award highlights the outstanding achievement of a young female professional who has contributed to the organisation’s positive success and performance through innovative strategies and solutions. This is a woman to watch – who has shown great potential to lead, has a proven track record, excellent business acumen, strategic foresight, and will be recognised for her contribution to the economy and growing employment in their enterprise.

Ancora Group comprises the following three companies:

Finlay Mall Leasing: managing all aspects of leasing of developments

Ancora Retail Partners: representing the tenants

Ancora Alternative Income: focuses on generating additional and/or alternative income for property owners

Ancora Group offers developers and retailers comprehensive 360 degree retail solutions – from leasing off-plan developments and existing shopping centres to tenant representation, legal assistance, alternative income solutions and acquisitions. The Ancora team has gained vast experience in the local market, grounded by in-depth knowledge and insight into the retail development industry and the communities they work in. Whether you’re a local or global organisation, landlord, developer or tenant, you can be sure of expert solutions to all your retail property needs.

Following her appointment as Managing Director of Finlay Mall Leasing in 2016, Marianka Victor proceeded to acquire the company and subsequently established the Ancora Group.

Volta Mall in Lenasia has a GLA of 10 000 m2 and opens in October 2019

SA Retail sector under siege

31 May 2018

SA Retail sector under siege

Anti-crime activist Yusuf Abramjee and Anneliese Burgess, author of the recently published book HEIST!
Photo: John Thomé

Consensus is that should cash crime be allowed to continue unchallenged and unabated at present levels there is no doubt that very soon it will begin have a greater and more profound direct negative impact on all aspects of the retail sector – fundamentally changing our daily lives and freedom of movement.

Presently shopping centres and cash points are high profile targets, where heavily armed brazen criminals, often in gangs of up to 15 to 20 strong, raid crowded shopping centres heedless of life or damage to property.

  • Retailers & businesses have a 1 in 4 chance of armed robbery.
  • 72% of retailers have manual cash handling processes
  • Only 28% of retailers have some form of modern automated cash management system
  • Cash in Transit robberies have increased by 43%

There’s been six arrests in one week in what appears to be renewed resolve from the police, who have even apparently compiled an ‘interest list’ of more than 122 suspects. Is the net at last closing in on cash robberies?

Not good enough – said a panel of experts at a press briefing in May. “What’s needed are arrests and successful prosecutions of syndicates, based on intelligence-sourced information and proper co-ordination between investigators, prosecutors and the courts,” said the panel.

Panel members at the recently held cash-in-transit seminar:
Richard Phillips – joint CEO of Cash Connect – Yusuf Abramjee, Anti-crime activist, Anneliese Burgess – author of the recently published book HEIST! and Dr Mahlogonolo Thobane – who did her masters dissertation on CIT robberies
Photo: Brendan Croft

One member of the panel correctly terms this level of cash crime a form of terrorism. “As communities and business we have to become directly involved. These people are known to someone, somewhere and need to be flushed out – their photographs published as wanted criminals. Many of these individuals are actually known to the police,” he continued.

There have been over 140 heists in the past 140 days and retailers have a one in 4 chance of being hit, said Richard Phillips, joint CEO of Cash Connect, which manages money on behalf of the retail sector. But we shouldn’t ignore other cash robberies – 207 non-residential burglaries every day and 57 armed robberies at retail outlets.

CIT’s should not be seen in isolation – the foot soldiers may change, but the gangsters and syndicates are the same.”

The spectacular nature of CIT heists attracts attention and dominates front page news.

Cash is critical to our economy and cash crime, of which CIT heists form a part, is the real issue here

84 per cent of all transactions are conducted in cash, with R136-billion in circulation at any given time, moving from the Reserve Bank and distributed to the consumer via banks and ATMS on CIT vehicle networks.

There are 59 500 cash collections per day and 2144 armoured vehicles on the road – moving targets and CIT heists aren’t new to the South African criminal landscape.

Dedicated police task teams

There were 467 CIT heists in 2006/7, which were brought under control, thanks to dedicated police task teams. In 2016, the figure stood at 278 and jumped significantly to 378 in 2017.

According to Dr Mahlogonolo Thobane, who did her masters dissertation on CIT robberies, this breed of criminal is at the top of the food chain. They are regarded as heroes and providers in their communities and maintain a certain lifestyle, even boasted on social media. They operate in splinter groups and are recruited for their specific expertise: as drivers, or shooters – known as ‘madubula’ – and ‘off-ramp’ operators who wait nearby and drive the getaway vehicle.

Dr Thobane interviewed 40 cash robbers in prison and said of these only five didn’t consult sangomas, from whom they obtained muthi to become ‘invisible’. Some muthi is hallucinogenic, giving robbers an exaggerated sense of reality. Prison, she said, was no deterrent to cash robbers, merely an interruption to their criminal careers. After being released, most took up where they had left off, which questions the rehabilitative role of prison. Some robberies, she said, are even planned inside prison.

Anneliese Burgess, author of the recently published book HEIST! said very little stolen cash was ever recovered. Of the R465 million taken in the ten heists she details in her book – all of which were prosecuted – only R63 million was recovered and the police stole R14 million of this. Robbers had little fear of being caught because invariably some aspect of the criminal justice system would fail.

The solution, panellists agreed, was not only for cash companies to increase security measures by further reinforcing vehicles, or by finding other innovative ways to guard cash. Although the technology is available, it’s simply too expensive for an industry that needs to balance what retailers can afford with the cost of cash collection and maintenance. Instead policing and crime intelligence needs to improve.

Crime specialist Dr Johan Burger from the Institute for Security Studies said crack police squads, like the Cato Manor Unit in KZN, which had helped bring down armed robberies to an all-time low in the province before it was disbanded in 2012, needed to be reintroduced.

Anti-crime activist Yusuf Abramjee said CIT robbers were currently able to run rings around over-stretched police, precisely because there are no dedicated teams to deal with sophisticated criminals. CIT heists are difficult to police because cash is transported over vast distances and there’s no way of knowing where they’ll strike at any given time. One minute there’ll be a heist on a busy Gauteng highway, the next on some rural byway in the Eastern Cape, or Mpumalanga.

Dr Thobane said research from incarcerated robbers indicated that there was no way to commit these cash robberies without inside information and police involvement.

They all have insiders and intelligence from within the industry…they have even used police cars as getaway vehicles because they knew no one would stop and search them.”

Dr Burger pointed out that there had been a sharp increase in all aggravated robbery crimes – ATM bombings; kidnappings and cash heists – but said Police Minister Bheki Cele was taking the right approach by speaking to the right people. With the appointment of a permanent Crime Intelligence head and a new head of the Hawks, things could begin changing.

But the impact will be slow – there’s plenty of ‘internal fixing’ that needs to happen within the police. We need dynamism. We need priority committees to deal with priority crimes.”

Re-establish the Justice Cluster

Minister of Police Bheki Cele, who is widely commended as the “right man for the job”, is meeting the police national management forum on June 4 to make “serious pronouncements” on how police will “turn around the crime situation in this country”. “South Africans soon will be safe,” said Minister Cele.
Image: TimesLive

Phillips agreed: “There are solutions out there, we just need a coordinated response. We are waiting with huge anticipation to find out what plans Minister Cele has to combat cash robberies. But my call is that the Minister should consider the broader issue of cash crime as it affects, Banks, ATMS, Retail and Cash in Transit.

Cash crime, is a crime against the economy and thus the state. In my opinion, the only way to take control is for all components of the Justice Cluster to work together in a coordinated approach. It worked well once in the ’90s and there’s no reason it shouldn’t work again,” he said.

Infographic – Cash & Crime

Into Africa – Choppies ups the ante

Into Africa – Choppies ups the ante

Choppies’ expansion programme in Southern Africa and East Africa is in full swing

Choppies Enterprises Ltd is expanding its presence into new regions as it recently begun operations in Namibia. The grocery retailer is also gaining market share in South Africa. Namibia is the eighth country in the Southern African region where Choppies expanding its operations.

Currently, the group has operations in Botswana, South Africa, Zimbabwe, Zambia, Kenya Tanzania and Mozambique. Choppies Enterprises Ltd is listed on both Botswana Stock Exchange and the JSE.

During the six months to end December the group opened 33 new stores, to take its total to 235 stores in the continent, the company said recently. This number is compared to 31 December 2016.

It generates 40% of its revenue in Botswana and it reports in Pula currency. In the results, it reported a 22% increase in revenue to P5.8billion (R7.15bn), while gross profit was up by 23% to P1.1bn.

Despite the subdued economic environment in the country (Botswana), we maintained our market share and continued to improve our efficiencies,” the group said.

In South Africa, the group said significant improvement in the North West stores resulted in like-for-like revenue growth of 43%.

This growth has brought us to profitability in this region and we expect this trend to continue in the second half of financial year 2018.

“Segmental revenue increased by 43% and earnings before interest, tax, depreciation and amortisation (EBITD) was up by 33.5% compared to the corresponding period,” the group said.

In South Africa it is taking on retail giants Shoprite and Pick & Pay, which have also been expanding their presence in the rest of Africa.

In KwaZulu-Natal Choppies acquired a further eight stores effective from November 1, 2017. “Increased benefits of scale and other efficiencies will improve further as we expand our footprint in this region.” The total retail space for the group increased by 17%to 340 973 m².

Zimbabwe also recorded encouraging improvement, and the company said it continues to perform better in that region despite the depressed economic conditions. “Revenue grew by 25%and EBITDA by 12% as compared to last year.

It said overall performance had improved in the other regions, but it had yet to achieve profitability.

The opening of new stores and distribution centres in other regions is in accordance with strategies adopted by the board. In the six-month period, three stores were added in Zambia,” the group said. The group did not declare a dividend as it declares it once a year on annual results.