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  • Study reveals which retailer offers the best prices

    A study to reveal the cheapest retailer will definitely send some companies back to the drawing board.

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    A study to reveal the cheapest retailer will definitely send some companies back to the drawing board. The research by JPMorgan Chase will present consumers with a clear map as to where the best prices can be found.

    The supermarket pricing survey uses a low-end and mid-end market basket store account to allow for the wide income disparity of consumers.

    Prices across all the fast-moving consumer goods were looked at with a sample of 30 items per basket. The study, which was conducted in January in Gauteng, attempts to capture a broad spread of product categories including processed food, personal care, dairy, meat, fruits and vegetables. These are the kind of details that both retailer and customer need.

    Retail sales grew only 2.2 percent in February, indicating that consumer choice is facing a downward trend.

    With the repo rate likely to be increased before it comes down, the consumer is surely looking for the cheapest retailer. While some retailers bet on their customers’ loyalty, consumers are spending more time reading store catalogues and comparing prices before filling that basket.

    Annabel Bishop, an economist at Investec, said yesterday that retail inflation rose to 4.2 percent in February from 3.8 percent in January as some firms continued to push up prices to alleviate margin compression that occurred last year.

    Most retailers and food companies said they were pushing up prices because of increasing operational costs.

    However, consumers are also battling with fuel, electricity and rate hikes. Further eating into their wallets are debt repayments and other financial commitments such as school fees and mortgages.

    For retailers the study will lay out a map of what customers need these days.

    See Business Report on Sunday for details of the study.

    Tharisa Minerals

    As the strike across the platinum belt enters its 13th week today, life continues in Mmaditlhokwe, a community in Rustenburg that has been waiting for Tharisa Minerals to compensate them after they were relocated from their ancestral land to make way for a new mine.

    Cosatu is putting pressure on Tharisa Minerals, a newly listed company, to provide basic services, including water and electricity, to the 800 affected families. It marched to Tharisa’s offices on Tuesday, where the union federation’s members handed over a memorandum and demanded a response within seven days.

    It is not clear what the company promised initially, but judging by the list of demands from Cosatu, there is a lot of unhappiness on the ground.

    Asked why the march was only taking place now when the community had been relocated in 2011, Solly Phetoe, the Cosatu secretary for the North West, said Tharisa had not fulfilled its obligations to the community. Should the demands not be met, the federation has threatened legal action.

    The residents informed Cosatu of the issue during a voting campaign in the area.

    The national general elections are around the corner and campaigning is in overdrive, but Phetoe disagreed that Cosatu was electioneering. He said Tharisa was a perfect example of how mining houses exploited communities.

    He said Cosatu also wanted Tharisa to stop relocating graves immediately and to perform the correct rituals for the deceased. Proper homes should also be built. He said the residents were moved to tin houses, which shook during blasting.

    The Cyprus-based company, which denied the allegations, is chaired by mining businessman Loucas Pouroulis, who established Petra Diamonds, Keaton Energy and Eland Platinum.

    It boggles the mind that such an experienced businessman could have overlooked crucial obligations set out in the mining charter, which compels mining houses to improve the lives of the people in communities where they operate. page 19

    Edited by Peter DeIonno. With contributions from Nompumelelo Magwaza and Dineo Faku.

  • New virtual media marketplace to make waves

    A new online social and mobile video marketplace is due to be launched soon in South Africa and across the globe. The plan for PublicVine was unveiled yesterday in an intimate media briefing in Johannesburg.

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    A new online social and mobile video marketplace is due to be launched soon in South Africa and across the globe. The plan for PublicVine was unveiled yesterday in an intimate media briefing in Johannesburg.

    The model is one that could threaten the future of content distribution businesses in their current form such as MultiChoice, which is owned by JSE-listed Naspers, whose main activity is the distribution of content for commercial gain.

    PublicVine is expected to execute a soft launch on June 6 and takes the form of a virtual shopping mall where video vendors can launch online and in mobile video stores to rent, allowing them to sell their video content, such as music videos, documentaries and films, to consumers globally.

    Unlike its nearest competitors iTunes and Netflix, the distinguishing factor was the opportunity for both vendors and consumers to get paid on PublicVine, its founder, Nam Mokwunye, said yesterday.

    A video vendor is any producer, owner or distributor of commercially viable music, videos, documentaries, game shows and reality shows.

    But the threshold is that the vendor has to prove a captive audience of 10 000 people who are willing to watch video content online or on a mobile device. When these same consumers invite someone to view the video online they earn a commission.

    On paper the venture appears to be an attractive offer, which is backed by entrepreneur Joel R Andersen of Andersen Media fame, which controls 40 percent of the distribution of CDs and DVDs in the US. Andersen in his personal capacity contributed between $5 million (R53m) and $10m investment towards the business.

    Mokwunye is an experienced entrepreneur who was raised in Florence, Alabama, where the company is headquartered, and considers himself an African American with a “strong compass about the African continent”. He has previously worked and lived in Africa.

    Pick n Pay

    Pick n Pay’s chief executive, Richard Brasher, shied away yesterday from the word “happy” when sharing his feelings about his supermarket chain’s improving results yesterday.

    He also steered away from the notion that Pick n Pay was gaining market share. But he agreed to utter words such as “pleased” and “satisfied”. Maybe he was playing it safe.

    It does seem as though Pick n Pay has got back on its feet and in doing so has made itself visible again. The retailer opened 111 stores in the year, bringing the total store number to 1 076 stores. It plans to open about 100 stores this year.

    Brasher shared some of the highlights of Pick n Pay’s year. These included the group’s R1.2 billion in capital expenditure on expansion and improving the shopping experience.

    Pick n Pay improved the quality of its fresh and perishable products and pre-packaged convenience ranges.

    Its online business has grown by 27 percent, with 2 000 customers being served a week.

    Tough decisions were made during this time and Brasher believes it is still a long road ahead. “Encouraging as these results are, I am not satisfied. We have much more to deliver across the business as we seek to win more customers.”

    The biggest deliverable for Pick n Pay was to complete its centralisation of buying, which retail analysts have criticised over the years. This process, Pick n Pay said, necessitated tough decisions during the year and resulted in the retrenchment of some head office support staff.

    It said this was a difficult time for the business, but the rigorous review of all support structures and processes had enabled Pick n Pay to create a more streamlined and effective support office.

    Brasher insisted that the retailer’s strategy going forward would be to “follow the customer”.

    He said Pick n Pay was learning to understand its customers, how they lived and what constituted their needs. “Winning more customers and achieving more turnover remains at the heart of our strategy,” he said. page 19

    Edited by Peter DeIonno. With contributions from Asha Speckman and Nompumelelo Magwaza.

  • State playing dangerous game with farmworkers

    If there was policy consistency in South Africa, policies aimed at strengthening the rights of workers in the various sectors of the economy would be much the same, if not identical, unless there was a good reason for any exception to the rule.

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    If there was policy consistency in South Africa, policies aimed at strengthening the rights of workers in the various sectors of the economy would be much the same, if not identical, unless there was a good reason for any exception to the rule.

    If this was so in the media sector, for instance, the owners of Independent Newspapers – and other media groups – would be required to hand over 50 percent of the company to its workers. An employee who had laboured for the company for 20 years could get a 20 percent share of half of the business, an employee with 30 years’ service, 30 percent, and so on.

    The Sekunjalo Independent Media Consortium, the new owner of the group, which paid R2 billion to acquire it from the former Irish owners would, of course, be highly peeved by this obviously absurd proposal.

    However, this is what is being suggested for the commercial agricultural sector by the Department of Rural Development and Land Reform in its final policy proposals on “Strengthening the Relative Rights of People Working the Land”.

    Commercial farm owners would retain half their farms and the state would pay for the 50 percent expropriated for the workers. However, this would not be paid to the farm owners but into a trust to be jointly owned by the “new owners” and used to invest in and develop the farm.

    Two main sources of financing the worker equity are listed in the proposal as through the land reform programme and the worker’s own historical contribution.

    South Africa has some serious financial challenges in financing its planned infrastructure expenditure programme and in meeting, even partially, other enormous demands being made on the fiscus. If implemented in its current form, this planned agricultural policy will increase the pressure on government finances, possibly resulting in ratings agencies downgrading the country’s credit rating, with dire consequences for the cost of debt.

    Comments made about the proposals have consistently described them as unworkable, unconstitutional and a threat to South Africa’s food security. The policy sounds like a recipe for disaster and it is to be hoped it is merely an election ploy. If it is, the government is playing a dangerous game because it will have raised the hopes of farmworkers while at the same time increasing the concerns of investors and potential investors in the country.

    Nashua Mobile

    It is a shame that Nashua Mobile will be closing its doors after being in operation for 14 years. The ripple effect of the decision, which was announced yesterday, is likely to be felt across many layers, especially its staff, who face uncertainty over the future of employment at a time when the credit market is depressed and jobs are scarce.

    There is not much of the strategy that the company can disclose until the return of the subscriber businesses to Vodacom and MTN has been approved by the Competition Commission, according to chief executive Dave Rawlinson.

    One of the factors that influenced the decision to close the business is the regulatory intervention on call prices.

    Last month, the Independent Communications Authority of SA won the right to force the big network operators to lower the rates they charge to connect calls to each other, with the expectation that the operators will lower prices for consumers.

    This strategy may already be bearing fruit. Yesterday, MTN South Africa dropped its tariff for prepaid customers to a flat rate of 79c a minute for calls made to any network.

    “Our new 79c flat promotional rate is designed to stimulate the industry to provide even more affordable services to consumers, understanding their need for connectivity,” Brian Gouldie, the chief marketing officer for MTN SA, said.

    This promotional activity benefits consumers but it poses a head-on challenge to companies such as Nashua Mobile and Altech Autopage.

    Rawlinson said many clients had begun to approach the operators directly and had cancelled their contracts.

    The decision by Nashua’s holding company, Reunert, will not result in new customers for the networks but the management of contracts will be transferred.

    Edited by Peter DeIonno. With contributions from Roy Cokayne and Asha Speckman.

  • Times Media old-timers take the bull by its horns

    Andrew Bonamour, the daring and decisive chief of Time Media Group, may have bitten off a lot more than he can chew by getting his business into a row with a bunch of feisty old-timers.

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    Andrew Bonamour, the daring and decisive chief of Time Media Group, may have bitten off a lot more than he can chew by getting his business into a row with a bunch of feisty old-timers.

    Imagine several hundred bucket-list types drawn from the old days of the Sunday Times when it was a proper rough and tumble Sunday paper, back when it really was required reading, being told by some Johnny-come-to-Joburg that the medical aid subsidy deal they thought was cast in stone was now worth not very much.

    Now these same pensioners, led by the doughty Jim Mould, a former managing director of the Sunday Times, are taking Bonamour to task for his temerity.

    They say that Times Media Group, endlessly busy with cost-cutting and retrenchments, has also taken the knife to their prized pension packages, going so far as to deny the old toppies any increase last year in their post-retirement medical aid subsidy, just because the company couldn’t afford to pay the current staff any raise.

    The deal, cut back in 2001, promised the pensioners annual increases in the medical aid subsidy equivalent to the rise the staff got in their pay packets.

    Mould, and another of the pensioners, said they had previously unsuccessfully requested contact details for the pensioners to ascertain the true number of subsidy holders and to form a class action against the company.

    Mould said the firm told him in a letter last November that the subsidy would not increase because it had become increasingly unsustainable, having risen from R67 million in 2000 to R274m currently.

    Bonamour had offered to buy pensioners out of the subsidies, he claimed. One pensioner, born in 1933, was offered R198 420.36.

    “I’m in my seventies. This amount you could blow on one hospital operation,” Mould said, adding that they suspected Bonamour was trying to reduce liabilities on the company balance sheet.

    Their suspicions may be backed up by Bonamour’s initial reaction yesterday when asked about the pensioners’ plight: “Don’t you have better things to write about?” Well, no.

    Food market

    There has been buzzing activity on the South African restaurant franchise front in the past few weeks. The buzz has been around acquisitions, expansions and master licence agreements.

    This proves that there is a growing and robust competition in this multibillion-rand market.

    While South Africans are being lured into more American taste brands with the opening of Burger King and now the entrance of Domino’s Pizza through Taste Holdings, South Africa’s Famous Brands has been spreading its wings to the Middle East and north Africa.

    The announcement late on Wednesday that Taste Holdings was signing a master licence agreement with Domino’s Pizza will definitely heat things up in the pizza category.

    But as South Africans get used to the American food craze and super-sized portions, maybe Domino’s Pizza will find a market in waiting.

    The American brand already carries a lot of weight, as it apparently delivers more than 1 million pizzas daily worldwide and generated over $8 billion (R83.3bn) of retail sales last year.

    While all of this is happening, Famous Brands’s chains such as Steers, Wimpy and Debonairs, have crossed borders to the Arabic-speaking world. The company served up interesting facts about this market, saying that between 20 percent and 30 percent of the population is aged between 15 and 29 years and has grown up eating processed foods and dining in Western-style fast-food restaurants and coffee shops. It adds that women in these regions are now better positioned to build careers and financial independence than previous generations.

    Similar sentiments are being expressed about South Africa’s middle classes, which apparently are starting to like pizza, though chicken still rules the roost.

    Edited by Peter DeIonno. With contributions from Peter DeIonno and Nompumelelo Magwaza.

  • Gauteng premier sings praises of China’s Zendai

    Shanghai Zendai Property, which plans to build a new city in Modderfontein, Johannesburg, has learnt its lesson after its luxury apartment complex in Luanda, Angola went wrong.

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    Shanghai Zendai Property, which plans to build a new city in Modderfontein, Johannesburg, has learnt its lesson after its luxury apartment complex in Luanda, Angola went wrong. The upmarket flats are standing empty because locals cannot afford them.

    Zendai will build homes for the middle class, a retirement village and a complex for international residents as part of its R84 billion development in north-eastern Johannesburg over the next 15 years. This follows thorough research of the South African market.

    Zendai purchased the Modderfontein property from chemical and explosives company AECI for R1bn in November. AECI tested its explosives on the 1 600 hectare property until the advancement of explosives technology made it redundant.

    At the stakeholders’ briefing on the development yesterday in Modderfontein, it was interesting to see how Gauteng Premier Nomvula Mokonyane and MEC for Economic Development Mxolisi Xayiya sang the praises of Zendai.

    Mokonyane said the government was rallying behind Zendai simply because the project would eventually improve the lives of children from the neighbouring Alexandra and Tembisa townships, who were living in poverty.

    She has called for locals to give Zendai a break from the negative misconceptions of Chinese investors.

    However, all stakeholders would still have a responsibility to keep Zendai or any foreign investors in check.

    “We are excited about the project. It is not all about job creation, but extending ownership of property and business to black people who were previously marginalised,” Mokonyane said.

    Mokonyane will consult with Alexandra residents and is expected to speak to them on Friday. She said since the sale, no jobs had been lost on the property.

    The company has committed to creating 50 000 jobs in the next 15 years. This is a significant number and will certainly help to ease the high unemployment rate in South Africa.

    Transnet

    From now on Transnet will be able to hire its own graduates from the schools under the Transnet Academy.

    Three new trained pilots from Transnet’s Maritime School of Excellence displayed their skills in front of hundreds of guests who attended their graduation ceremony in Durban yesterday.

    The celebratory mood amplified as the helicopters flew closer and closer to the crowd – it was indeed a good sight for the parents and relatives of the new graduates.

    Minister of Public Enterprises Malusi Gigaba, who congratulated the 83 trainees in various maritime-related disciplines, said a long road lay ahead of the these young people. He tasked them with becoming the future leaders of Africa’s biggest port, rail and pipeline operator.

    Some of the trainees will be absorbed by Transnet and some by the maritime industry. Along with the 17 helicopter pilots trained, there were also 20 marine pilots, 38 cargo operators and seven engineers.

    Gigaba said Transnet would spend about R7.7bn on training in the next seven years as part of its market demand strategy, which intends to ensure an integrated approach to training. So far, the company has spent R2.5bn on training over the past two years at the academy.

    Chief executive Brian Molefe said the maritime school was among a number of training facilities run by Transnet. He said the company oversaw schools of rail, engineering, security and also pipelines.

    Chairman Mafika Mkwanazi congratulated Transnet for transforming not only the maritime division, but also the train and ports divisions.

    He said these training facilities were the fruits of democracy and should be celebrated.

    The maritime school first opened last year and has campuses in the port cities of Cape Town, Port Elizabeth, Durban and Richards Bay.

    Edited by Peter DeIonno. With contributions from Dineo Faku and Nompumelelo Magwaza.

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