OVERVIEW OF THE SOUTH AFRICAN RETAIL MARKET & YOUR CATEGORY Prepared for XYZ Company Date
Contents THE POPULATION OF SOUTH AFRICA... 4 RETAIL TRADE SALES FOR 2016... 5 YOUR INDUSTRY HERE IN SOUTH AFRICA... 6 CATEGORIES OF RETAIL CHAIN GROUPS IN SOUTH AFRICA... 7 CLICKS GROUP... 7 DIS-CHEM... 8 FOODLOVERS... 9 MASSMART... 10 SHOPRITE HOLDINGS LTD... 12 SPAR GROUP... 13 PICK N PAY SUPERMARKETS... 14 WOOLWORTHS SOUTH AFRICA... 15 BRAND AWARENESS CAMPAIGNS... 16 DISTRIBUTION AND SALES IN SOUTH AFRICA... 16 Wholesalers... 16 Retail organisations... 16 Consumer retail... 16 Franchises... 17 After-sales agents... 17 Agents & distributors... 17 Distributors... 17 PRICE SURVEYS NATIONWIDE... 18 Shoprite... 18 Clicks... 19 Dischem... 20 Pick n Pay... 21 Woolworths... 22 Food Lovers market... 23
THE POPULATION OF SOUTH AFRICA For 2016, Statistics South Africa (Stats SA) estimates the mid-year population as 55, 91 million. Approximately fifty-one per cent (approximately 28,53 million) of the population is female. Gauteng comprises the largest share of the South African population. Approximately 13, 5 million people (24%) live in this province. KwaZulu-Natal is the province with the second largest population, with 11,1 million people (19,9%) living in this province. With a population of approximately 1,19 million people (2,1%), Northern Cape remains the province with the smallest share of the South African population. About 30,1% of the population is aged younger than 15 years and approximately 8,0% (4,47 million) is 60 years or older. Of those younger than 15 years, approximately 23,0% (3,86 million) live in KwaZulu-Natal and 20,4% (3,43 million) live in Gauteng. Of those elderly aged 60 years and older, the highest percentage 26, 1% (1, 17 million) resides in Gauteng. The proportion of elderly persons aged 60 and older is increasing over time. Migration is an important demographic process in shaping the age structure and distribution of the provincial population. For the period 2011 2016 it is estimated that approximately 247 437 people will migrate from the Eastern Cape; Limpopo is estimated to experience an out-migration of nearly 305 030 people. During the same period, Gauteng and Western Cape are estimated to experience an inflow of migrants of approximately 1 216 258 and 363 114 respectively (see migration stream tables for net migration).
RETAIL TRADE SALES FOR 2016 Key growth rates in retail trade sales at current prices Retail trade sales at current prices for the latest three months by type of retailer Total retail trade sales at current prices for previous and new samples: April to June 2016
YOUR INDUSTRY HERE IN SOUTH AFRICA The xyz industry here in South Africa
CATEGORIES OF RETAIL CHAIN GROUPS IN SOUTH AFRICA CLICKS GROUP www.clicks.co.za Clicks Group is a retail-led healthcare group which has been listed on the JSE Limited since 1996. Through market-leading retail brands Clicks, GNC, The Body Shop, Claire's and Musica, the group has over 650 stores across southern Africa. Clicks Group is a leader in the healthcare market where Clicks has the largest retail pharmacy chain with over 360 in-store pharmacies, while UPD is South Africa's leading full-range national pharmaceutical wholesaler. More detail presented in your report.
DIS-CHEM www.dischem.co.za Building on one modest store with which he founded in 1978, Ivan Saltzman has turned Dis-Chem into South Africa s leading chain of discount pharmacy super stores. Estimated Size: 105 stores nationwide in South Africa Since 1978, Dis-Chem has been South Africa s first choice in pharmacies. As a leading specialist in beauty, health food, home care, sport supplements, health and well-being, Dis-Chem offers the widest ranges in these categories, along with expert advice, our famously competitive prices, and our Benefits programme, which rewards customers and gives back to the community through the Dis-Chem Foundation. More detail presented in your report.
FOODLOVERS www.foodloversmarket.co.za Fruit and Veg City (Foodlovers Market) started in 1993 by brothers Brian and Mike Coppin. The Emphasis were placed on good old family values such as wholesomeness, trust, honesty and integrity. Fruit & Veg City Holdings is expanding its grocery range to include international food products from British retailer Waitrose as competition in the food retail space heats up. The retailer, which owns the Food Lover s Market chain, said that it would exclusively stock about 200 of Waitrose s food products to meet consumer demands. More detail presented in your report.
MASSMART www.massmart.co.za Massmart Holdings Limited (JSE: MSM) is a South African firm that owns local brands such as Game, Makro, Builder s Warehouse and CBW. It is the second-largest distributor of consumer goods in Africa, the largest retailer of general merchandise, liquor and home improvement equipment and wholesaler of basic foods. [4] As of 31 July 2016, Massmart operated 404 stores in South Africa and 12 other Sub-Saharan countries. [1] Its head offices are in the Massmart House in Sandton, City of Johannesburg Metropolitan Municipality. Massmart's stores are organized into 4 divisions. The stores included in each division are as follows: Mass discounters
Mass warehouse Makro The Fruit spot Mass build Masscash Walmart acquisition In November 2010, Walmart, the American super chain conglomerate made a bid to acquire majority shareholding (51%), in Massmart. At that time, the offer was valued at approximately R: 17 billion (approximately US$2.54 billion or 1.54 billion). [6][7] On 18 January 2011, Massmart shareholders voted in favor of Walmart's offer of R148 per share. [7] The South African Competition Commission Tribunal gave its approval of the acquisition of 51% of the firm in May 2011. [8] Shortly thereafter, in June 2011, Walmart completed the purchase of 51% of the company's stock. [9] More detail presented in your report.
SHOPRITE HOLDINGS LTD www.shoprite.co.za The Shoprite Group of Companies, Africa's largest food retailer, currently operates 1855 corporate and 359 franchise outlets in 15 countries across Africa and the Indian Ocean Islands, and reported turnover of more than R130 billion for the year ended June 2016. The Company's headquarters are situated in the Western Cape province of South Africa. Shoprite Holdings Ltd is a public company listed on the JSE Limited, with secondary listings on both the Namibian and Zambian Stock Exchanges. Its ownership therefore lies in the hands of its shareholders. The Group is continuing its implementation of a strategic expansion programme to maintain its position as the leading food retailer on the continent. More detail presented in your report.
SPAR GROUP www.spar.co.za SPAR is an international retail group operating in 33 countries, across five continents, with approximately 12,000 stores internationally. While its South African formula has been tailored for local conditions, it closely follows the operating model of voluntary trading instituted by its parent company in the Netherlands in 1932. Estimated Size: 912 stores The Spar format generally operates with selling areas of 700 m2 +, they are focused on providing a neighbourhood / rural supermarket shopping experience. More detail presented in your report.
PICK N PAY SUPERMARKETS www.picknpay.co.za Pick n Pay Stores Limited, through its subsidiaries and associates, operates in the retail sector on the African continent. Pick n Pay is the quintessential family store focused on the customer. Since 1967 when consumer champion Raymond Ackerman purchased the first few stores, the Ackerman family s vision has grown and expanded to now encompass stores in South Africa, Namibia, Botswana, Zambia, Mozambique, Mauritius, Swaziland and Lesotho. Additionally, Pick n Pay owns a 49% share of a Zimbabwean supermarket business, TM Supermarkets. To ensure a convenient and accessible shopping experience the Group operates across multiple store formats, both franchised and owned. More detail presented in your report.
WOOLWORTHS SOUTH AFRICA www.woolworths.co.za WHL Group is a southern hemisphere retail group, with its head office in South Africa, listed on the JSE Limited Securities Exchange (JSE) since 1997. It is one of the top 40 JSE-listed companies and had a market capitalisation of R100.5 billion at 28 June 2015. 40% of revenue (including concession sales) is generated in Australasia. The Group consists of three major operating divisions Woolworths South Africa (Woolworths or WSA) based in South Africa and operating across 11 countries in sub-saharan Africa; More detail presented in your report.
BRAND AWARENESS CAMPAIGNS Grocery retailers dominated value sales in retailers in South Africa throughout the review period. The popularity of modern grocery retailers continues to be driven by the greater brand variety, frequent discounts and product promotions offered through these channels. Additionally, many grocery retailers in channels such as supermarkets continue to increase the amount of shelf space allocated to non-grocery products. Allocated shelf space is a negotiated amount that is additionally charged per category. Local entity Shoprite Holdings continued to lead retailing overall throughout the review period. The group s market share continues to be supported by its diversified portfolio and its presence within various channels such as convenience stores, discounters, hypermarkets, supermarkets, electronics and appliance specialist retailers, homewares and home furnishing stores. In addition, Shoprite has many distribution centres spread throughout South Africa, while the retailer also offers its customers complementary services such as selling mobile phone airtime, bus and flight tickets, money transfers and the payment of utility bills and traffic fines. Retailing in South Africa is expected to record stable growth over the forecast period, although growth is expected to be slower than what was seen over the review period. Growth is also expected to be driven by emerging channels such as grocery retailers and internet retailing. Despite the positive growth which is expected in the country over the forecast period, South Africa s economic and socioeconomic climate is expected to remain subdued, with consumers continuing to face constraints on their disposable incomes. As a result, retailers are set to continue implementing strategies that are focused on attracting cash-strapped consumers during the forecast period. Stimulation of sales achieved through contests, demonstrations, discounts, exhibitions or trade shows, games, giveaways, point-of-sale displays and merchandising, special offers, and similar activities. DISTRIBUTION AND SALES IN SOUTH AFRICA South Africa offers foreign suppliers a variety of methods to distribute and sell their products, including using an agent or distributor, selling through established wholesalers or dealers, selling directly to department stores or other retailers, or establishing a branch or subsidiary with its own sales force. Wholesalers Consumer goods requiring maintenance of stocks and industrial raw materials are often exported to South Africa through established wholesalers. Retail organisations Many exporters of consumer goods sell directly to South African retail organisations including consumer corporations, department stores, chain stores, and co-operative groups of independent retailers which assume the functions of wholesale buying, selling and warehousing. Consumer retail South Africa offers the full spectrum of retail outlets: small general dealers; specialty stores handling a single product line (such as clothing, electronics, or furniture); exclusive boutiques; chain stores (groceries, clothing, toiletries, household goods); department stores; cash and carry wholesale retail outlets; and co-operative stores serving rural areas. Large-scale supermarkets, or hypermarkets, are located in suburban shopping malls and sell large quantities of almost all consumer goods.
About 90 percent of the consumer trade inventories of these stores are domestically sourced. Franchises Franchising is well-established in South Africa, with the sector showing strong and continued growth. Around 30% of South African franchises are non-food systems, with an emphasis on service. Building, office and home services sectors are dominant, with automotive, restaurant, health, education and training franchises also available. After-sales agents For products of a technical nature, it may be necessary to appoint an official after- sales agent in South Africa. This may be a company that does not import or market the product in question, but rather, because of its geographical reach, technical ability and goodwill in the market, acts as the certified service agent. Appointing an appropriate after sales agent is crucial in ensuring that the product develops a respected reputation in the South African market. Agents & distributors In South Africa, the terms "agent" and "distributor" have very specific meanings. Agents: In the strict legal sense, "agent" means a person who, for and on behalf of a principal, either introduces a third party to the principal by soliciting orders from the third party, or concludes contracts with the third party on behalf of the principal. The normal reward for an agent is a commission, which is received from the principal. Key considerations in appointing an agent in South Africa are: You need to appoint an agent who knows your market well. The South African business sector is relatively small, and companies have established methods of procurement that differ from sector to sector. You need to consider national distribution. South Africa is a large country, with nine provinces. Lacking the support of national infrastructure, smaller agents often tend to operate provincially. This means you may need to appoint an agent in each of the larger cities Johannesburg, Cape Town, Port Elizabeth and Durban to cover the country. Larger companies who take on agencies often have an office in each of the major centres, making any agency agreement easier to control. For certain products, South Africa is a trading hub for the southern African region, and you need to consider whether your South African agent should handle business in these countries on your behalf. Distributors A distributor buys and holds stock of a product. In return, they are usually granted an exclusive right to sell the product in a particular area or to a particular type of customer. An agreement with a distributor is similar to an agreement with an agent, except that price and delivery terms will differ because the distributor is a principal. When appointing a distributor in South Africa, the same considerations apply as when appointing an agent.
PRICE SURVEYS NATIONWIDE Shoprite Brand Product Type Description Country Manufacturer Size Price
Clicks Brand Product Type Description Country Manufacturer Size Price
Dischem Brand Product Type Description Country Manufacturer Size Price
Pick n Pay Brand Product Type Description Country Manufacturer Size Price
Woolworths Brand Product Type Description Country Manufacturer Size Price
Food Lovers market Brand Product Type Description Country Manufacturer Size Price
More specific detail to your product portfolio to follow..