Retail news. August 2013 Zimbabwe internet mobile phone traffic tops sunday mail. Saturday, 21 July 2012 Business Editor
RETAIL NEWS. AUGUST 2013
Zimbabwe internet mobile phone traffic tops SUNDAY MAIL.Saturday, 21 July 2012
The country’s internet traffic conducted through mobile phone devices is the highest in the world at 58,1 percent, raising expectations that the local market could be prime for both m-commerce and e-commerce, an international tele-communications expert has said.
M-commerce is simply described as the buying and selling of goods using hand-held devices, while e-commerce is the buying and selling of goods on the internet or the worldwide web. Mobile telephones have provided a convenient platform for the trading of goods and services.Speaking at a recent workshop on brand strategy in the digital space, which was organised by Ryan Octave Lane, Mr Jonathan Hoehler, the chief technical officer of Starfish, a South African-based firm that specialises in wireless applications, noted that a study by Royal Kingdom had shown that mobile data now constitute about 10 percent of all data traffic globally across the internet.
He added that the growth in mobile phone internet traffic in Africa, particularly in Zimbabwe, is “phenomenal”. “Globally, now, mobile data constitute about 10 percent of all data traffic globally across the internet. And where does Africa sit? At 14,85 percent. So, of all our Internet traffic throughout the entire continent, 14,85 percent of it is mobile data, and the second highest in the world outside Asia, which has two huge markets in China and India.
“In 2010 that figure was about 5,81 percent. That’s impressive growth . . . “And what is so interesting for me is that Zimbabwe, according to the research done by Royal Kingdom, 58,06 percent of all Internet traffic is done by the mobile phone — it’s the highest in the world, which is really, really cool,” said Mr Hoehler.
Most interestingly, according to Mr Hoehler, there was also a study that was done by web browsing giant Opera Mini indicating the most visited sites in Zimbabwe and the commonly used handsets in accessing these sites. The top 10 visited sites included Facebook, Google, Wikipedia, Youtube, Yahoo, BBC, Opera Mini site, The Herald, Twitter, CNN. In addition, the commonly used mobile phones are the Nokia Xpress Music, Samsung E250, all Nokias and LG phones.
It is believed that this pattern provides interesting data for businesses who intend to leverage on the technological boom to market and sell their goods. The advent of the mobile phone has had far-reaching impact on communication on the continent as fixed telephone lines have remained insignificant. Currently, Africa is considered the second biggest mobile market in the world, but the fastest growing mobile market. Estimates indicate that 90 percent of all mobile phones in Africa are mobile phones, while there are 1,1 billion active mobile SIM cards.But most crucially, more than 96 percent of all subscribers on the continent are pre-paid.
Again, Zimbabwe is considered as the fastest-growing market for mobile data usage. Added Mr Hoehler: “In terms of mobile data usage, Zimbabwe is also, out of the countries that were analysed — about 10 countries — the fastest-growing market. That included South Africa, Kenya and Egypt. There is a lot for mobile data and mobile data traffic in Zimbabwe.”
Separately, Ryan Octave Lane executive chairman Dr Brian Sedze said the revolution brought by technology has created two distinct groups: the digital natives, which is made up of those under 20 and are much more conversant with technology and its platforms; and the digital immigrants made up of people usually above 25 who find it difficult to use the new platforms.
“Technology creates and destroys value. So, technology has got an impact on the firms, individuals and society. Today, organisations are just about creating value by collaborating with consumers and co-creating the product. Products are now being marketed by being inclusive with the customer. About 65 percent of Africans access internet over the phone, and a phone is no longer a platform for voice, it is now a platform for commerce.
“Everyone is accessing his internet via a mobile device. You also have to understand to market using social platforms. “However, most organisations do not know where their audiences are. If you are marketing; if your brand has to get good presence, it has got to be on the platform where people spend most of their time,” explained Dr Sedze.
Market watchers note that the local tele-communications boom, especially for mobile telephony, has been occasioned by massive investments by mobile telecommunications companies Econet Wireless Zimbabwe, Telecel Zimbabwe and NetOne. Econet has injected more than $600 million into expansion and plans are already advanced to pour additional resources.
Last week, information gathered suggested that Net*One was going to receive equipment worth $200 million from its Chinese technical partner Huawei Technologies. The laying of fibre-optic cables has also raised expectations that broadband capacity will be enhanced in the short to medium term.
Wal-Mart’s Family Firm
“The virtues and vices of the founder can shape the culture of the organisation”. Sam Walton knew the value of dollar and Wal-Mart knows the value of a dollar; they can squeeze a supplier but families flock to their stores for value, better value for their money than anywhere else.
The Walton family [the richest in America] still live in Bentonville, Arkansas a town of only 25 000. The first WM store is now a company museum formalising the stories that bind the organisation together. Eldest son Rob is now chairman – making the company a generation 2. They still own 39% of the firm named after their father. Grandchildren traditionally squander the inheritance-purposefully; or through ineptitude or neglect.
WM symbolises corporate power; its buying power is the strongest in the world. “If WM move into your country, or county, or town, do not compete on price. Find something else to compete on, or find a buyer for your business.”
However activists are alarmed by the effect this giant has on local stores even though consumers might like the convenience and great prices. There is however the effect on the broader social fabric. Stores within a 20 mile radius are adversely affected. And if WM decides that business is not so good they may move out leaving communities worse off. There is a perception that WM does not make for a good corporate citizen. Human rights activists say WM’s clothes are often produced in 3rd world countries under “sweatshop” conditions; environmentalists worry about edge-of-town shopping sprawl.
If WM was a country it would rank as the 30th largest economy just behind Saudi Arabia  with a 11% growth rate. It had successes in Canada, Mexico and UK but more difficulty in Brazil, continental Europe, and China and Japan due largely to cultural differences. Internationalisation involves the imposition of core WM values and practices with perhaps some localisation/customisation. They had union unrest in Brazil; faced restrictive opening hours in Germany; faced control in China. Wal-Mart’s Family Firm: Critics Critique, but big business rules: Vol22. No.2 2006 Strategic Direction
Walmart's local supplier programme pays off for Oceanfresh
26 Mar 2013
Walmart is having an impact on local suppliers by providing access to international markets, as seen with the recent success of Lonrho's Oceanfresh Seafoods, a local purveyor of fresh and frozen seafood, being listed in Sam's Club stores in the US. Gavin van der Burgh, Oceanfresh CEO says, "The company is delighted to have started supplying Sam's Club in the US with natural, wild caught, sustainably sourced Cape Hake fish fillets - a top quality, deep water, white fish. Lonrho owns an expanding portfolio of businesses in the seafood and fresh produce sectors that operate to the highest international standards and is increasingly supplying fresh and frozen produce from Africa to the world's foremost retailers." The product will be exported out of both South Africa and Namibia.
"Our members are very focused on high quality, sustainably sourced seafood of which the Cape Hake fillets have been a positive addition to the assortment," says Kendall Sallee, Sam's Club senior seafood buyer. "We've just launched the Ocean Fresh Cape Hake in 80 of our locations in the US and I anticipate increased sales and distribution as members become accustomed to the item and learn about the quality and versatility of the fish."
"The listing is just one example of how we've been able to connect local suppliers to a global market," reiterates Ramesh Subbiah, global sourcing executive, Massmart. "The opportunities are there and with Walmart's knowhow there are even more ways for us to help and develop some of our suppliers."
One of the ways the group measures its success is by the number of Massmart facilitated African supplier listings in other Walmart markets. "We've built a good partnership with Oceanfresh which will benefit both companies and our members," concludes Sallee.
Wal-Mart and the Game in Botswana[July 2012 download]
*PROFESSOR ROMAN GRYNBERG
Last week the South African Competition Tribunal authorised the acquisition by Wal-Mart of the 51 percent share in the South African retailer Massmart at a price of some P16.1 billion.
Massmart was already planning expansions of its network prior to the merger into countries like Nigeria, DRC and Angola. With a global giant like Wal-Mart now in the driver's seat the market expansion into Africa will only be held back by the pace of growth and incomes of the continent. In many ways the merger is, from a purely product and sales range, a near perfect fit as the range of products in Game shops are similar to the range that one finds in many Wal-Mart stores around the world.
It was by no means obvious for a very long time that the Wal-Mart/Massmart deal was going to proceed because it was feared by Wal-Mart that the South African Competition Authority would impose targets on using local suppliers. This was seen as a deal breaker by Wal-mart.
Instead what has happened was that Wal-Mart has agreed to establish in South Africa a R100 million fund to help develop local suppliers as well as some commitment to recognise the unions. The conditions imposed on Wal-Mart have been described by business analysts as 'meek and mild'. In all fairness to the Competition Authority in South Africa, which has a fearsome reputation for protecting South African consumers from unfair trade practices, it could not have imposed a local supply obligation on Wal-Mart and not on other wholesalers and retailers in the industry. Will the acquisition by Wal-Mart of Massmart be good for Botswana? The fear in South Africa, justified or not, was that because of Wal-Mart's size - it is said to be China's biggest buyer , and with its value chains local producers would simply be cut out of the market and that other retailers would, similarly be driven out of business.
The fear is that over time Wal-Mart will also drive out competitors who were reliant on these often more expensive local suppliers who will in turn go out of business. In Botswana we have few local suppliers of consumer goods except a narrow range of food products and therefore the fear of the impact of Wal-Mart on the country is not what you find in South Africa. Competitors on the other hand will have a much tougher life as a result of Wal-Mart but that will be good for the Botswana consumer, at least in the short to medium term.
But what is particularly interesting is the agreement to set up a R100 million fund to help develop suppliers in South Africa. If these suppliers will be successful then they will sell to Wal-Mart which will then export it to Game in Botswana and other countries and so South African producers will continue to maintain their control in the African market. This is all good for South Africa producers but what about us? The presumption is that Botswana and the other African countries would simply not notice what Wal-Mart had agreed to and it would just be business as usual. South African owned and based firms will continue to export across the border and as for the Botswana supplier, well, what Botswana suppliers?
In South Africa Wal-Mart has now created a precedent which has been noticed in other African countries and perhaps it is time that all the South African based retail operators recognise that they are operating in a different African reality, where all the countries in which they sell want to see domestic production and exports. Maybe it is time for Botswana to give consideration to asking that all the South African retailers and wholesalers copy Wal-Mart's 'generosity' and establish funds to help develop local entrepreneurs to supply their value chains. It is extremely difficult for small Botswana producers of any product to ever penetrate the retail supermarkets here in the country. Not only does the local producer have to demonstrate that they can produce a product consistently without supply disruption at a competitive price they also have to overcome the fact most supermarkets practice what is called 'single point of supply sourcing' and they simply don't want to buy from many sources.
Supermarkets order most of the products that you find on the shelf from one point and that is what makes them so profitable and their prices relatively low. It is also what destroyed the old small shops. They do not have to buy from scores of buyers which increases their overheads enormously. They also are able to buy in bulk. Kraft, for example, makes chewing gum in Botswana from raw materials that are imported from South Africa and beyond.
The final product is then returned to Guateng where it is distributed from one point to its entire marketing network throughout southern Africa with some of the product coming back to Botswana. It is an enormous challenge to get a small local producer in Botswana to import raw materials and intermediate goods, produce the product then export back it back to South Africa for distribution and then return it, at least in part to Botswana, and still make a profit. That is why it so rarely happens and only tends to happen with high value to weight items like chewing gum. The big South African-based retailers are probably very well placed to help local business, if they choose, but a little prodding, assistance and direction from government might make some of them a little more like Wal-Mart in their generosity towards the development of local business in Botswana.
*These are the views of Professor Roman Grynberg and not necessarily of the Botswana Institute for Development Policy Analysis where he is employed.
Tiger Brands boosts Zimbabwe unit
7 Sep 2012
An investment in Zimbabwe's National Foods by Tiger Brands has helped the Zimbabwean company boost capacity utilisation to 404,000 metric tons in the full year to the end of June. Tiger Brands last year raised its stake in National Foods after buying a further 11% of the company for $11.7m. It now owns 37% of the company while the majority of the remaining interest is held by Innscor Africa, which has interests in fast foods, retail and distribution sectors.
However, National Foods, a maize and flour milling, stock feeds processing and fast moving consumer goods company, is battling against imported processed foods. Its fast moving consumer goods unit's products, which include packaged rice, pastas, and tinned beans are struggling to beat foreign products.
Group chairman Todd Moyo said yesterday a turnaround strategy had been put in place to revive the ailing fast moving consumer goods unit. This includes "streamlining distribution costs, reducing the interest burden and developing category plans". It is expected that these moves will significantly raise volumes.
National Foods has pinned its hopes of further growth from continuing operations on likely demand for maize meal and flour owing to a possible shortage of food supplies both domestically and in the Southern African region.
However, with Zimbabwe's agricultural season in limbo - it is projected to record negative growth this year - the company could well be forced to rely on imports for its raw materials.
"The possible grain shortages reinforce the need for our local agriculture to be more productive so that we are not dependent on other countries for agricultural raw materials and related finished goods," said Moyo.
David Morgan, chairman of Innscor Africa - the other major shareholder in National Foods - said yesterday the company's results for the period under review were "pleasing".
Morgan attributed the results to "increased capacity utilisation" after the investment by Tiger Brands, and further investment "into core plant and equipment".
The world’s richest add more to their fortunEEes
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Sunday, 06 January 2013
The richest people on the planet got even richer in 2012, adding $241 billion to their collective net worth, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 100 wealthiest individuals.
The aggregate net worth of the world’s top moguls stood at $1,9 trillion at the market close on December 31, according to the index.
Retail and telecommunications fortunes surged about 20 percent on average during the year. Of the 100 people who appeared on the final ranking of 2012, only 16 registered a net loss for the 12-month period.
“Last year was a great one for the world’s billionaires,” said John Catsimatidis, the billionaire owner of Red Apple Group Inc, in an e-mail written poolside on his BlackBerry in the Bahamas. “In 2013, they will continue looking for investments around the world — and not necessarily in US — that will give them an advantage.” Amancio Ortega, the Spaniard who founded retailer Inditex SA, was the year’s biggest gainer. The 76-year-old tycoon’s fortune increased $22,2 billion to $57,5 billion, according to the index, as shares of Inditex, operator of the Zara clothing chain, rose 66,7 percent.
“It’s an amazing company that has done great and the gains are quite justified given its performance,” said Christodoulos Chaviaras, an analyst at Barclays plc in London who’s had an “equalweight” rating on Inditex for about a year. “Can they repeat that? It will be harder. A lot of the positive news is already reflected in the share price.”
Global stocks soared in 2012. The MSCI World Index gained 13,2 percent during the year to close at 1338,50 on December 31. The Standard and Poor’s 500 Index rose 13,4 percent to close at 1426,19.
European stocks surged in the second half of the year. The Stoxx Europe 600 is up 19,6 percent since June 4, advancing as the European Central Bank introduced bond-buying programmes, S&P upgraded Greece’s debt and German business confidence rose more than forecast. The benchmark gauge’s 14,4 percent advance for the year was the best annual return since 2009. Carlos Slim, the telecommunications magnate who controls Mexico’s America Movil SAB, maintained his title as the richest person on earth for the entire year.
The 72-year-old’s net worth rose $13,4 billion — or 21,6 percent — through December 31, making him the second-biggest gainer by dollars. Gains by Slim’s industrial conglomerate, Grupo Carso SAB, and Grupo Financiero Inbursa, his banking and insurance operation, more than offset the decline posted by America Movil, his biggest holding. The largest mobile phone operator in the Americas by subscribers fell 5,8 percent to close at 14,9 pesos at the end of the year.
“America Movil is no longer the growth story that it has been, given the increase in Latin American wireless penetration over the last five years,” said Chris King, an analyst at Stifel Nicolaus & Co in Baltimore, Maryland. “It continues to generate a very high amount of cash flow and has the best set of telecom assets across Latin America.”
According to King, one of Slim’s biggest challenges will be dealing with regulation in Mexico and Colombia designed to punish or even out the market share between America Movil and its competitors. Of the 14 analysts who cover the stock, 71 percent have a buy rating on the company, with an average target price of 19,15 pesos per share, according to data compiled by Bloomberg.
US software mogul Bill Gates (57) ranks second on the list, trailing Slim by $12,5 billion. The Microsoft co-founder added $7 billion to his net worth as shares of the Redmond, Washington-based company, rose 2,9 percent.
Microsoft stock accounts for less than 20 percent of the billionaire’s fortune.
Warren Buffett (82) lost his title as the world’s third- richest man to Ortega on August 6. The Berkshire Hathaway chairman gained $5,1 billion during the year, even after donating 22,3 million Berkshire Class B shares in July to charity.
The billionaire, who has pledged to give away most of his fortune, spent much of the year pressing for higher taxes on the wealthy. “On incomes of over $1 million, the excess $1 million should have a minimum tax of 30 percent. And then over $10 million, 35 percent,” Buffett said in an interview with Charlie Rose in November. “Tax law should be progressive. And I think that when people make $15 million or $20 million or $200 million and pay a 10 percent rate, something should be done about it.”
IKEA founder Ingvar Kamprad (86) is the world’s fifth-richest person with a $42,9 billion fortune. The complex ownership structure behind IKEA, the world’s largest furniture retailer, became more transparent in August after IKEA’s franchisor published its financial performance publicly for the first time. His net worth rose 16,6 percent in 2012.
Brazil’s Eike Batista (56) was the year’s biggest loser by dollars, falling $10,1 billion. The commodities maven, who vowed a year ago that he’d become the world’s wealthiest man by 2015, sold a 5,63 percent stake in his EBX Group Co in March to Abu Dhabi’s Mubadala Development Co.
As part of the deal, he pledged an unspecified additional stake in 2019 if he fails to meet a 5 percent annual return on the sovereign wealth fund’s $2 billion investment, according to a person with knowledge of the deal. Batista now ranks 75th in the world with a $12,4 billion net worth. On March 27, he was worth $34,5 billion and ranked 8th on the Bloomberg index. “Next year is going to be a lot of work for Eike,” said Lucas Brendler, who helps manage about 6 billion reais at Banco Geracao Futuro de Investimentos in Porto Alegre, Brazil. “It’s going to be a year for him to recover investors’ confidence, and to leave the realm of theory and start delivering results. The EBX companies have great growth potential.”
Batista’s former title as the richest Brazilian is now held by 73-year-old banker Jorge Paulo Lemann, who ranks 37th on the index with an $18,8 billion fortune. The country’s second-richest person is Dirce Camargo, the matriarch behind Camargo Correa SA, the Sao Paulo-based conglomerate that has interests in cement, electricity and Havaianas flip-flops. Her net worth is $13,4 billion, according to the Bloomberg ranking.
Camargo, who doesn’t appear on any other major international wealth ranking, is one of 54 billionaires the index uncovered during the year. Among the others: Hamdi Ulukaya, the 40-year-old Turkish immigrant owner of Chobani, the best-selling yoghurt brand in the US; South Africa’s Nathan “Natie” Kirsh (80) who amassed a $5,4 billion fortune in retail and real estate; and Elaine Marshall (70) whose 14,6 percent ownership of closely held Koch Industries makes her the fourth-richest woman in America. She is worth $14,1 billion. Koch Industries’ two other shareholders, the brothers Charles and David Koch, are each worth $40,9 billion, up 20,9 percent — $7,1 billion — for the year.
Oracle Corp founder Larry Ellison rose $6,4 billion in 2012 as shares of the world’s largest database company jumped 31,7 percent. Ellison (68), who has more than tripled the amount of Oracle stock he has pledged against lines of credit in the last year, agreed to buy 98 percent of Hawaii’s Lanai island. The 365-square-kilometer parcel with no traffic lights was purchased from billionaire David Murdock, the 89-year-old chairman of Dole Food Co, the world’s largest producer of fresh fruit and vegetables.
The bulk of Ellison’s fortune comes from his 23,5 percent stake in Oracle. He also has interests in software makers NetSuite Inc and LeapFrog Enterprises Inc, as well as property holdings, including estates in California and Newport, Rhode Island.
“Oracle continues to innovate,” said Yun Kim, an analyst at Janney Montgomery Scott in New York. “They’re well positioned in the near term with their core database offerings, their engineering systems, and cloud computing.”
Kim has a buy rating on the stock with a target price of $43 per share. Of the 43 analysts who cover Oracle, 29 have a buy rating and 14 have holds, according to data compiled by Bloomberg.
The 63-year-old controls 46,5 percent of LVMH’s share capital, according to the 2011 annual report of the Paris-based maker of Louis Vuitton handbags and Moet & Chandon champagne. That figure includes 5,6 percent of LVMH shares held by Arnault, and a 40,9 percent stake of the company owned by Christian Dior.
Arnault, who is applying for Belgian citizenship for “personal” reasons, owns 70,4 percent of Christian Dior, according to French regulatory filings. The remaining 29,6 percent of Dior is held by outside investors. While he controls all the voting power of Dior’s stake in LVMH, his economic interest is less than the figure reported in the LVMH annual report. His net worth is valued at $28,8 billion. Retail fortunes rose 19,5 percent on average, while non-retail fortunes increased 11,5 percent. Amazon.com Inc. chief executive Jeff Bezos (48) added $6,9 billion to his net worth as shares of the world’s largest online retailer rose 45 percent. The four heirs to the Wal-Mart Stores Inc fortune — Jim Walton, Christy Walton, Alice Walton and Rob Walton — gained a combined $13,5 billion.
Stefan Persson, the chairman of Swedish clothing retailer Hennes & Mauritz AB, added $2,7 billion.
Sheldon Adelson, gambling’s richest man, gained $2,8 billion. The 79-year-old chairman of Las Vegas Sands Corp, which operates casinos in Macau, Singapore and the US, received $1,2 billion in December when the company paid a special dividend of $2,75 per share.
Retailers still reliant on SA for supplies: OK
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Sunday, 16 June 2013 00:00 [Sunday Mail]
South Africa remains Zimbabwe’s biggest source of retail products, highlighting a severely constrained local manufacturing base and increased vulnerability of local prices to the exchange rate between the South African rand and the United States dollar, OK Zimbabwe Limited has said. However, the retailer emphasises that it continues to actively source products from the local market. Though the economy has recovered from a decade-old slump before 2009, the productive sectors of the economy continue to face huge challenges in sourcing funds to recapitalise.
“The Group continued to import most of its products sold in the stores as supplies from the local manufacturing base remained inadequate. South Africa subsists as the major source of imported products and prices of goods were generally stable with minimum movement to the rand/US$ exchange rate.
“While it was necessary to import goods, the Group recognises the need for and continues to support local industries’ revival and the consequent generation of employment,” said OK Zimbabwe in a statement accompanying its financials for the year ended March 31, 2013.
The Confederation of Zimbabwe Industries (CZI), which represents the country’s major businesses, says more than 60 percent of goods on local supermarket shelves are imported, the bulk of which are from neighbouring South Africa.
A negative current account is now presenting a real challenge for policymakers as the country’s imports continue to outstrip exports. First-quarter statistics from ZimStats show that the country’s trade deficit widened to US$846 million as exports at US$814 million were more than half the figure of imports at US$1,7 billion. Relying on imports did not, however, influence prices at the giant retailer. Goods and services were relatively stable in the review period.
Revenues climbed 16 percent to US$480 million from US$412 million a year ago, while profit for the year rose 20,1 percent to US$12,4 million despite shrinking disposable incomes and a largely illiquid market.
During the current financial year, OK Zimbabwe plans to continue refurbishing its existing branches and re-opening new ones. Two new branches are planned in Chitungwiza and Hwange, while Bon Marche Eastlea “will be moved to larger premises”. Also, refurbishment work is planned at OK Waterfalls, OK Houghton Park and OK Bindura.
But as the retailers continue to grow so, too, has its costs. Overheads in the period rose 19 percent to US$65 million owing to increased insurance costs and related operational expenses.
“Insurance costs also increased significantly due to growth in asset values and the insurance excess paid under the fire claim. Costs incurred in moving products to the branches increased products. The cost of borrowing increased to US$0,8 million from US$0,5 million in the prior year as the convertible loan from Investec Africa Frontier Private Equity Fund (IAFPEF) and other bank facilities were accessed during the year,” explained OK Zimbabwe.
South Africa’s Investec Africa Frontier Private Equity Fund acquired a 7 percent equity in OK Zimbabwe in 2010. The Fund, an arm of Investec Asset Management, snatched up 29,6 percent of OK’s US$15 million rights offer, which received a 70,4 percent shareholder support. IAFPEF also agreed to a US$5 million loan facility with option to convert it to ordinary shares at agreed dates.
Herald:OK revenues surge to US$89m.
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Friday, 29 July 2011
By Bright Madera
RETAIL giant OK Zimbabwe Limited's revenues for the first quarter of the year grew 56 percent to US$89 million, buoyed by a strong capital injection from South Africa's Investec.
Chief executive Mr Willard Zireva, giving a trading update at the group's Annual General Meeting in Harare yesterday, said the new OK Mart store contributed 8,3 percent to total revenues.
He said OK Mart was expected to make losses for the first three months but managed to recover in the third month. Mr Zireva said during the period, shrinkage as a percentage of sales had been brought down to below industry levels of about 1 percent. Gross profit margins for the period were recorded at 17,9 percent compared with 17,8 recorded during the same period last year.
During the same period, profit before tax grew 500 percent compared with the previous year.
Mr Zireva added that OK Mart was already breaking even and the group is expecting growth as they continue with their refurbishment exercise, being financed from previous fund-raising initiatives and internal resources.
The group plans to open a new branch in Westgate before the end of August.
For the full year ended March 2011, OK generated US$257,4 million compared with US$187,5 million in 2010. Capital expenditure for the 12 months was US$9,4 million compared with US$1,5 in the previous year.
This expenditure was in respect of refurbishment of branches, replacement of computer equipment, replacement of plant equipment, generators, and on overhauling the operations and distribution vehicle fleet. OK closed the year with 51 outlets comprising 37 OK stores, six Bon Marche stores, six OK Express stores and two OK Mart Stores, which were acquired when the group took over the assets of Makro Zimbabwe in the last quarter of the financial year.
OK has continued to import the bulk of its products from other countries as the local market still does not have the capacity to meet local demand.
SA retail giants coming to Zim
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Monday, 17 October 2011 00:00 HERALD
SEVERAL South Africa's retail giants could be headed for Zimbabwe to take up space at the multimillion-dollar emporium being constructed by Augur Investments and McCormick Property Development (SA). It had been expected that South African investors, due to their proximity, would set on the great trek up north after the country ended a decade of economic slide in 2009 to record its first growth in a decade.That did not happen as most of them took the same stance as their western counterparts who were hesitant to seize on opportunities presented by the economic stabilisation. Shoprite made a false move for OK, but pulled out at the eleventh hour.
But the decision taken by McCormick Property Development in partnership with Augur could be the signature mark that will draw big SA retail giants and see various other investors streaming to Zimbabwe.
Augur is an associate of West Group, which recently acquired Red Star. Augur and MPD have partnered in the 50-50 shareholding arrangement to set up the biggest mall in Africa (outside South Africa), which will be known as the Mall of Zimbabwe. The latter is well known for pioneering malls across Africa.Construction of the US$100 million emporium at the Millennium Park (Borrowdale) will start next year and is expected to last for about 16 months assuming all the things remain equal. MPD managing director Mr Jason McCormick said a number of South African retailers, among them Pick ‘n Pay and Spar supermarkets, had already taken up 53 percent of the space.
"About 53 percent of the floor space has already been taken up by South African retailers such as Pick ‘n Pay and Spar long before we have launched the project, we had been marketing the project back home," he said.
In the next six months the project partners will go on a spirited campaign to enlist local retailers interested in taking up space at the giant mall, as construction will start when all space is committed.
The South Africans pledged to comply with requirements of indigenisation saying they were familiar with its characteristics as it was similar to the BEE that occurred in South Africa over the last few years.
But they pointed out they initially were sceptical about coming to Zimbabwe due to distortion of facts by international media on the indigenisation process. Augur investments had to bring them here for a first hand account. Augur spokesperson Mr Ken Sharpe said the project was also a result of the vision and understanding of the City of Harare after Augur's proposal.
On inquiring for land it could develop, the firm was invited to assist in dualising the Harare International Airport road. "As we complete the airport road, more land will be unlocked for us to develop. "A parcel of land was given to us in return for the work we have done. The sum needed on the airport road is US$68 million," he said. The project is expected to create more than 1 000 jobs on completion.
Vice President Joice Mujuru launched the project last week. Local Government Minister Ignatius Chombo, City of Harare Mayor Muchadei Masunda and Information and Publicity Minister Webster Shamu attended the groundbreaking event graced by hundreds of stakeholders.