If the estimated 10.5 million people living in Gauteng (2009 estimates) are equally allocated to the large regional shopping centres included in the study, one would expect the size of the population within each shopping centre’s catchment area to be around 617 000 people.

A review of the graph in Figure 1 shows that Maponya Mall stands out from the rest. It also shows that only five of the large shopping centres reach the benchmark population size of 617 000 people and these include Festival, Eastgate, East Rand, Wonderpark and Southgate. All five of these shopping centres reach their catchment population within 13-16 min.

The shopping centres of Menlyn Park and Sandton City reach just under 600 000 people within a travel time of 17-20 min. All the remaining large shopping centres struggle to reach a population of 200 000 people within a travel time of 5 min and above. This large variation in the number of the people within the catchment area of large shopping centres and travel times indicates that optimizing the location of large shopping centres in relation to where the demand is does not seem to have been a major criterion. Consequently, what one sees is that large shopping centres are over concentrated in the wealthier suburbs of Gauteng leaving the township areas without access to large shopping centres.

Gauteng not over shopped

This is contrary to an article in the Business Day in 2008 on the big shopping centres where it states that Gauteng is “over shopped.” Map 2 below shows the disparity between where the large shopping centres are located and where the largest concentrations of people are living.

A review of all other sized shopping centres in Gauteng shows that they are located in the wealthier suburbs and not necessarily where the largest demand or concentrations of people are located. A further analysis of where shopping centres are located in relation to where the concentrations of the working population are located is being considered. Furthermore, this disparity is exacerbated in Johannesburg where large shopping centres are located much closer to one another than those in Pretoria are.

On average, each large shopping centre is 8 minutes travel time away from its nearest competitor while their uncontested catchment areas have a radius of only 4 minutes travel time. Table 1 below shows the distance in travel time by car along the road network from each large shopping centre to its nearest competitor and what the radius of its uncontested catchment areas is in kilometres based on an average travel speed of 60 kph.

Travel time up to as much as 2 hours

The average travel time from anywhere in Gauteng to the nearest large shopping centre is almost 14 minutes by car or taxi. The worst case travel time is almost 2 hours while 99% of the population are in reach of the nearest large shopping centre within 41 minutes, 95% of the population is within 33 minutes and 90% of the population is within 27.5 minutes. Fifty percent of the population living in Gauteng is within 11.9 minutes of a large shopping centre. What this provides is some guidance on what large shopping centres should possibly aim in terms of a travel time when looking at their optimum location from a travel time and market share perspective.

Opportunity to develop township shopping

What can be concluded is that the wealthier suburbs of Gauteng are probably “over shopped” but not so for the whole of Gauteng. However, there is a real opportunity to locate large shopping centres in the township areas.

The mix of retailers, offices, entertainment and government services will be key to the success of these shopping centres. Many new developers are showing the way in making shopping centres successful in urban townships and rural communities throughout the country.

From the accessibility study and considering the present locations of large regional shopping centres, we believe that there are at least ten sites where new large regional shopping centres like Maponya Mall can be located.

Data sampling

AfricaScope has developed current estimates of the South African population at a local level. It has proprietary datasets on consumer spending patterns and income in further defining target markets. The company has also mapped the location of shopping centres and many retail chains in the country.

Using accessibility modelling methods, the team is able to identify the optimum location of new shopping centres of different sizes considering the size of the target market, where existing shopping centres are located, travel times using various modes of transport and the market share of shopping centres to make them financially viable.

Source: Bizcommunity.com

This brought growth for 2011 to 6.1% compared with 5.1% in 2010 when sales were boosted by foreign fans for the 2010 FIFA Soccer World Cup.

Growth in SA’s retail trade sales at constant (2008) prices for December was expected to ring in at 6.7% y/y, according to a survey of leading economists by I-Net Bridge.

In the February 2011 Budget, Treasury expected real household consumption expenditure (HCE), which feeds off retail sales growth, to slow to 4.2% in 2011 from an estimated 4.6% in 2010. In October 2011 the Treasury changed its forecast to 4.3% from a new estimate of 4.4% for 2010.

One of the problems Treasury may have is that they publish their estimate of GDP growth a week before Stats SA does. This has been a problem since the 1999 “temporary” shift of the Budget speech to February from the traditional March date.

Stats SA and the South African Reserve Bank (SARB) do their annual benchmark revisions to GDP data at the end of the year, so the revised estimate for HCE for 2010 is now 3.7%.

In the first three quarters of 2011, the SARB estimated that real household consumption expenditure grew by 5.2% y/y, while over the same period real retail sales increased by 5.3% y/y. This in turn resulted in real GDP growth of 4.3% y/y if measured from the expenditure side, which is how most economists, including Treasury, forecast GDP data.

In the fourth quarter 2011, real retail sales growth accelerated to 7.9% y/y, so if the previous relationship holds (HCE 0.1 percentage point less than retail and GDP 0.9 percentage points less), then real HCE should expand by around 7.8% y/y and GDP by around 7.0% y/y.

In February 2011 Treasury forecast 2011 GDP growth at 3.4% and then lowered it to 3.1% in October. It looks as if they may have to raise it again in February 2012 to match the actual evidence in the fourth quarter 2011, which was far better than expected in October 2011.

Source: Bizcommunity.com

The highest annual growth rate y/y in December 2011 was recorded for ‘retailers in textiles, clothing, footwear and leather goods’ (11.3%), followed by ‘all other retailers’ (10.9%) and ‘retailers in household furniture, appliances and equipment’ (9.7%).

The largest contributors to the 7.9% Q4 2011 increase were ‘retailers in textiles, clothing, footwear and leather goods’ (10.5% and contributing 2.4 percentage points), ‘general dealers’ (6.6% and contributing 2.4 percentage points) and ‘all other retailers’ (8.5% and contributing 1.0 percentage point).

In real terms, the seasonally adjusted retail trade sales m/m increase of 1.3% when compared with November 2011 follows m/m changes of -0.1% in November 2011 and 0.8% in October 2011.

Retail trade sales in real terms increased by 6.1% y/y in 2011. The highest annual growth rate for 2011 was recorded for ‘retailers in household furniture, appliances and equipment’ (10.4%), followed by ‘retailers in hardware, paint and glass’ (9.9%) and ‘all other retailers’ (8.1%).

Source: Bizcommunity.com

“The results for 2012 are expected to benefit from the acquisitions concluded in the second half of the previous financial year and the relative consumer buoyancy within the rest of the African continent,” the company said.

For the year to date, the weaker rand exchange rate also had a positive impact on the export businesses.

The acquisition of the Status brand became effective on 1 November 2011, and the group increased its shareholding in Langeberg and Ashton Foods to 100%.

“Despite the difficult trading conditions, headline earnings per share is expected to show satisfactory growth for the year ending 30 September 2012 as compared to the 2011 reported earnings,” it said.

Source: Bizcommunity.com

Erratic rains have delayed the planting of the crucial maize crop in Zambia, pushing inflation towards double digits, while bread basket South Africa is importing the staple despite abundant harvests because of worries it has exported too much.

With a high proportion of households in the region spending much of their limited income feeding themselves, rising food inflation is likely to further stoke union demands in wage negotiations.

It will also make it tougher for South Africa’s central bank to refrain from hiking interest rates as it grapples with sluggishness in the region’s dominant economy.

Bumper crops in recent years, including in Zambia and Malawi, have helped contain food inflation.

“In the case of southern Africa, it would appear that the success story of recent years is increasingly becoming more of a threat to the inflation picture,” said Razia Khan, head of Africa research at Standard Chartered.

“Zambia …had seen record grain harvests. While the new government will devote even more attention to boosting agriculture, it may not be sufficient to hold food prices – and inflation – down, if the rains are less favourable.”

Zambia’s big yields have been attributed to government subsidies to peasant farmers in the form of fertiliser and seeds but the crop ultimately depends on rain and the country’s agriculture minister told Reuters things had gotten off to a bad start because of erratic weather.

Zambian inflation slowed to 7.2% in December from 8.1% in November but the trend is seen reversing.

“If the rainfall pattern continues like this and we have a bad crop then we are definitely going back to double-digit inflation,” said Chibamba Kanyama, an analyst with the think-tank Economics Association of Zambia.

Warnings from East Africa

High oil and food inflation last year in east Africa demonstrated the potential knock-on effects on developing economies of a spike in prices of staple goods.

The region suffered from drought in late 2010 and the start of 2011, sending the prices of basic commodities like wheat, maize and sugar through the roof.

In Kenya last year, where inflation peaked at 19.7% in November, the shilling dipped sharply against the dollar, bank lending rates and debt servicing costs hovered close to 20% and the stock market fell 30% as many foreign investors pulled out.

Zambia, meanwhile, does still have around 600 000 tonnes of maize in reserve but a poor crop this growing season will fan price pressures.

“While non-food inflation has stubbornly remained in low-double digits, with the currency weakening there is certainly upside risk to non-food inflation and if the harvest disappoints food inflation will accelerate as well,” said Leon Myburgh, Citi’s Sub-Saharan Africa Strategist.

In Zimbabwe, late rains mean the total maize area planted is 35% less than it was at this stage last year, according to government figures.

“We’ll pay more and we are going to import inflation from the higher cost of food,” said John Robertson, an independent economist based in Zimbabwe.

South Africa: Exporter to Importer

South Africa has been harvesting bumper maize crops but because of export commitments, producer group Grain SA estimates it may have to import a combined 700 000 tonnes of white and yellow maize in the marketing year that ends on April 30.

Domestic maize prices are currently around record highs and double what they were a year ago and Grain SA says they are now at “import-parity” levels which means they are climbing to the global prices paid to buy overseas.

The March white maize contract is currently fetching around R2 680 a tonne while yellow maize is just over R2 600 a tonne.

This is worrying as inflation is slithering upward in the region’s biggest economy – and grain prices are already a big factor driving that trend.

November consumer inflation quickened to 6.1% year-on-year, from 6.0% in October, a breach of the central bank’s mandated target range of 3 to 6%. Food inflation led the way at 10.7%.

The typical South African blue-collar, unionised worker often has several dependents to feed, so food inflation rate is a better measure of his or her situation than the general rate.

Emerging food price pressures last year were seen behind wage settlements far above inflation in sectors such as mining and will drive negotiations again in 2012 when the annual “strike season” commences mid-year.

“It will be double-digits demands for pay increases. Food is a big chunk of the monthly basket of goods that unionised workers purchase,” George Glynos, managing director of financial consultancy ETM, said.

This will have implications for the region.

“Higher inflation in South Africa typically triggers some spillover into inflation in the rest of its regional trading partners,” said Standard Chartered’s Khan.

Source: Fastmoving.co.za

Ms Knight was in SA earlier this month.

The sugar industry directly employs about 137000 people, and indirectly another 110000 — making it SA’s biggest agricultural employer (11%), accounting for 1,3% of the total number of jobs in the country. But SA is a water-scarce country and, according to government statistics, back in 2005, 95% of SA’s freshwater resources had been allocated.

“We really have to look at how to grow more (sugar) with less (water) ; farmers can do a lot in terms of irrigation and broader natural resource management. Alien plants take up a lot of water,” says the World Wide Fund for Nature’s (WWF’s) Inge Kotze, co-ordinator of the nongovernmental organisation’s Biodiversity and Wine Initiative.

Coca-Cola, one of the world’s largest multinationals with a reported $11040m in net operating revenue for the three months ending December 31 last year, decided about three years ago that it needed to extend its focus on sustainability by looking to its supply chain. “The biggest part of our water footprint was water for actually growing sugar … without water there is no business,” Ms Knight said.

While the company may have been slightly ahead of the curve, a report published this month by the global climate change reporting system known as the Carbon Disclosure Project (CDP) and the global management consultancy Accenture shows that multinational companies, having cut their own direct greenhouse gas emissions, are increasingly turning their focus to their supply chains for further reduction.

Here in SA, KwaZulu-Natal’s Sustainable Sugarcane Farm Management System (SusFarMS) initiative had grown out of a partnership started in 2001 between the WWF, the Wildlife and Environment Society of SA, the Mondi Wetlands Programme and sugar cane farmers in the province’s Noordsberg area. It was one of the first comprehensive sustainability frameworks for sugar cane growers, not only in Africa, but globally.

Ms Knight came to the Noordsberg area in February 2009, and heard of the initiative’s programme working with small-scale sugar farmers to help them form co-operatives and get better returns for their work.

SusFarMS’ s 400-member commercial farmers work to a “metric” developed in SA that guides them on how to treat the environment, staff and yield.

“South African farming overall is one of the most productive in the world,” Ms Knight said.

She said the formula fitted neatly into Coca-Cola’s 2009 commitment to itself to change the way it did business.

Ms Knight said the turnaround was aimed at reducing the company’s overall carbon footprint of its business operations by 15% compared to a 2007 baseline; reducing packaging; maximising its use of renewable, reusable, and recyclable resources to recover the equivalent of 100% of its packaging; minimising water use so that the company had a water-neutral effect on local communities; and promoting customer information and its workforce’s cultural diversity.

Doing more with less is also good business, and sweetners, including sugar, are key to Coca-Cola’s business. The company sources all of its sugar for its South African operations in SA.

According to company statistics, the Cola-Cola bottlers in SA sell an average of 235 beverage servings to each person in the country every year — a rough total of 10-billion units.

This is not organic farming, it is large-scale commercial farming, but Ms Kotze says that it is precisely because of this that the WWF chose to work with SusFarMS. “We need to engage with the commercial sector because that’s where we will see the biggest impact. The biggest challenge is water. It limits everything,” she says.

Simply removing alien plants from wetlands helps enormously. One of the biggest pests found in SA’s cane fields is a moth genus called Eldana saccharina. Its common name says it all — African sugar-cane borer moth.

“Eldana occurs in wetland plants. If you remove wetlands it goes into cane. It’s astounding, €15m a year is lost to the sugar cane industry through Eldana,” says Ms Kotze.

It’s eight years since SusFarMS began, and the initiative is being broadened across SA’s cane-growing areas.

“Farmers, over time, have begun to recognise that this is best practice,” said Ms Knight. Over three or four years the programme tripled sugar yields. “If you maintain roads and the rest of the (farming) infrastructure, manage logistics, and buy in bulk, you start to see tremendous results.”

“There is a huge opportunity in SA. You have the infrastructure and the industry. Now the big challenge is how to get the small farmers up to the same standard (as large commercial farmers),” she said.

There are public and private projects under way to help small-scale farmers.

Source: Fastmoving.co.za

In considering the NPA’s tariff application and various submissions, comments of stakeholders and the regulatory framework, the ports regulator concluded that a 2.76% tariff increase was a reasonable increase and therefore appropriate for the 2012/2013 tariff year.

In his state of the nation address on February 9, President Jacob Zuma said that the government had also been looking at the necessity of reducing port charges, as part of decreasing the costs of doing business.

“The issue of high port charges was one of those raised sharply by the automotive sector in Port Elizabeth and Uitenhage during my performance monitoring visit to the sector last year.

“In this regard, I am pleased to announce that the port regulator and Transnet have agreed to an arrangement which will result in exporters of manufactured goods receiving a significant decrease in port charges during the coming year, equal to about R1bn in total,” he said.

Source: Fastmoving.co.za

That was part of the upbeat message by South African Breweries (SAB) chief executive Norman Adami at an investors’ presentation yesterday.

SAB management is bullish about near-term prospects to revise upwards its forecast for volume growth for the six months to March from between 1 percent and 3 percent to between 1 percent and 4 percent. Soft drink volumes were expected to rise by between 2 percent and 5 percent.

Adami said in the longer term the group was expecting positive economic growth and job creation.

A growing population, rising incomes and urbanisation were all trends to have a positive impact on beer demand, he said, while pointing out that SAB’s affordable pricing policy and South Africa’s “strong beer culture” would underpin strong demand for its brands.

However, he noted that “lower-end” consumers continued to be under considerable pressure from cost increases.

The positive outlook seems set to ensure that SAB remains a major contributor to SABMiller’s overall group profit. SAB accounts for 23.1 percent of SABMiller’s earnings.

Yesterday’s presentation highlighted the extent to which SAB’s aggressive marketing strategy has succeeded in reclaiming market share that had been lost to brandhouse.

Back in 2008, when Amstel was withdrawn from the SAB portfolio, Amstel had 9 percent of the total beer market and was the dominant brand in the premium market segment. For the next two years Amstel was only available in limited imported quantities.

In the two years since setting up brewing facilities in South Africa in March 2010, the brandhouse joint venture between Windhoek, Diageo and Heineken, which owns Amstel, has seen a sharp drop in Amstel market share to 4.5 percent.

Analysts attribute the loss to brandhouse’s decision to significantly reduce the price of Amstel from the premium level, at which it had been marketed by SAB, to mainstream level. SAB’s response was to launch an aggressive marketing campaign around Castle Lite and Carling Black Label.

At the same time SAB dedicated huge resources to beefing up its marketing strategy and capacity. Analysts questioned the efficacy of the brandhouse structure, which attempts to implement marketing and distribution strategies for three different drinks companies.

Adami referred to the encouraging results of an “independent” customer service survey commissioned by SAB, which measured all aspects of customer service, such as frequency and reliability of delivery, brand support and promotional activity. The survey revealed that in the past year SAB had significantly extended its lead, in terms of customer perceptions, over brandhouse.

Adami described brandhouse’s “momentum” as having been “interrupted” but noted that it was “regrouping”.

Business Report was unable to get comment from brandhouse yesterday.

Source: Fastmoving.co.za

Valentine’s Day on Tuesday will make sure that this week the focus is on the consumer, as online retailers are likely to say how well this year’s sales were compared with last year, while the official data will show how much consumers spent last year with the retail sales due on Wednesday, while the following day the Bureau of Market Research will release its fourth quarter 2011 Consumer Financial Vulnerability Index.

Standard Bank expects retail sales to have been robust as household spending was the main impetus of economic growth in 2011.

“Total credit extension to households picked up by 6.7% year on year (y/y) in December, from 5.4% y/y in November. Corporate credit extension was also buoyant, rising to 8.2% y/y in December, after easing to 6.8% y/y in November,” Standard Bank said.

Yumna Ebrahim from Econometrix noted that in comparison to retailers in the UK and US, South African retailers have proven to be resilient.

“The University of SA’s Bureau of Market Research (BMR)’s sentiment is that retail sales will hold ground going forward. In this regard, retailers showed upbeat confidence in late 2011. This could be attributable to an increase in impulse shopping during the Christmas season and the effect of favourable interest rates on consumer spending. On the downside however, one should be vigilant of the effect that slow employment growth, higher inflation rates and high electricity prices have on hampering margins in the retail sector,” Ebrahim said.

Manqoba Madinane from Econometrix expects December real wholesale trade sales, due for release on Thursday, to show a continued slowdown in the y/y increase due to higher inflation. Real wholesale trade sales growth declined significantly from 9.4% y/y in October 2011 to 5.8% y/y in November 2011.

“This surge in inflationary pressures has negative implications for the December wholesale trade sales growth figure. However, one anticipates that the Christmas spending boom may have supported wholesale trade in food, beverages and textiles which would have provided some support to overall wholesale trade sales growth for December,” Madinane said.

Civil cases for debt, also due on Thursday, should show a continued repair of household balance sheets.

“Civil cases for debt likely continued their descent with the y/y change likely to have closed out 2011 in negative territory, on the back of improving consumer creditworthiness. While these trends are encouraging, households have some way to go in shoring up their balance sheets. Household credit uptake saw an uptick in December; however, the overall trend in 2011 was subdued despite the presence of decades-low interest rates. This is likely a reflection of elevated existing debt, an uncertain economic outlook, and soft consumer confidence. These macroeconomic factors may serve to continue to rein in household credit uptake,” Standard Bank said.

Source: Fastmoving.co.za

Companies looking to trade within the Southern African Development Community (SADC) need deep pockets, plenty of patience and excellent organising skills to keep track of all the required paperwork.

So says a new report by the World Bank that highlights the various trade barriers, such as trade permits, export taxes, import licences and bans, which hamper commerce within SADC.

South Africa-based supermarket group Shoprite spends US$20,000 every week to secure import permits to distribute products such as meat and milk to its stores in Zambia alone.

When considering the entire SADC region, Shoprite applies for around 100 import permits every week, which can surge to 300 during peak periods. “As a result of these and other documentary requirements there can be up to 1,600 documents accompanying each truck Shoprite sends with a load that crosses a SADC border,” notes the report.

Shoprite currently has a presence in 13 of the SADC countries

Delays at border posts caused by inefficient customs and standards agencies also increase trade costs. It costs Shoprite $500 for each day one of its trucks is delayed at a border.

Despite these challenges, Shoprite is staying focused on the potential that Africa offers. “This is the place to be … with all its challenges. Let’s go and work hard. I know there are hurdles and [conditions in Africa] are not every day the way we would like it to be, but look through that [and] see the opportunities because they are ample,” says Johan van Deventer, managing director of Freshmark, a Shoprite subsidiary responsible for the retailer’s fruit and vegetable procurement and distribution. Van Deventer was speaking at a conference last year.

According to the World Bank, there is inadequate coordination across government ministries and regulatory authorities that cause delays in authorising trade for new products. One South African retailer battled for three years to get permission to export processed beef and pork from South Africa to Zambia.

Woolworths, another South African clothing and food retailer that has expanded into other African countries, does not even make use of preferential SADC tariffs, just because the process of administering the various required documents is too costly. Instead Woolworths simply pays the full tariffs.

The World Bank notes that export taxes are also stifling trade in the region. For example, in order to encourage the local slaughtering of livestock, the Namibian government imposed a levy on the export of small stock, effectively closing the border for the export of live sheep to South Africa. This restriction is impacting negatively on the small stock industry in both Namibia and South Africa.

“In [Namibia], farmers have switched to alternative activities like cattle and game farming. For those sheep farmers that remain, they have become almost entirely dependent on the four Namibian export abattoirs while they were previously able to sell more sheep to the South African market where they received higher prices,” says the report.

Jobs in South Africa are also at risk, especially at some abattoirs in the Northern and Western Cape, which rely on slaughtering Namibian sheep during the low season.

Source: fastmoving.co.za