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This month… Retail

By Nicholas Norbrook
Posted on Friday, 2 April 2010 09:50

Each month we focus the spotlight on the latest sector or banking region, accompanied by an interactive list of

Africa’s top players drawn from our two annual rankings, the Top 500 Companies and Top 200 Banks in Africa. We’re also highlighting related articles from our free Archive.

This

month we are focusing on the retail sector, where the South Africans are leading the charge.

Like their cousins in the telecoms and banking industries, South African

retailers have been among the sharpest scouters of the emerging African middle class. There were disappointing sales over the Christmas period at

home, capping off a difficult year but nearly all of the major groups

have plans to expand their African presence.

The recession and subsequent

layoffs in the manufacturing and mining sectors have put customers off

high-end purchases like electronic equipment. Massmart’s Dion Wired and

Game stores have suffered accordingly, dropping 3.7% in like-for-like sales

in the first 21 weeks of their financial year.

A pickup in the economy in

the third quarter of 2009 means that earnings for South African retailers

will most likely stagnate rather than decline radically. No doubt the World Cup finals will be a welcome boost, as the tens of thousands of extra tourists stream through their stores in June and July 2010.

As the inflationary

pressures of food and fuel spikes begin to decline, consumers disposable

income will rise, which should boost the sector overall. The 5.5% reduction

in interest rates will also help. The announcement that the US giant

Walmart, the world s largest retailer, is looking to enter the South

African market signals the maturity and profitability of the sector.

One

company that appears not to have been feeling the strain is market leader

Pick ‘n Pay, whose turnover for the six months to 31 August 2009 was up

12.3%. Its new strategy appears to be paying off: creating franchise stores

to penetrate lower-income segments of the market, in which Shoprite

traditionally has done better. Where Pick ‘n Pay had 190 of these franchise

branches in South Africa in 2007, by 2009 it had 250.

Present in 13 other

countries on the continent and making almost 10% of sales from its Africa

stores, Massmart has announced the expansion of its store networks in Angola

and the Democratic Republic of Congo – where it will face competition from

big brother Shoprite, present in Luanda since 2003 and in 16 African

countries all together.

The Kenyan market has seen the emergence of its own

strong retail chains, with similar expansionary ideas. Having extended its

branches across the country, Nakumatt has opened a store in Rwanda – open

24 hours a day – and also has a presence in Uganda. It has provoked a

restructuring in agribusiness in both countries, as reliable supply chains

for meat, eggs and other products are created to service the demand.

This knock-on effect – including stimulating fertiliser production and

refocusing small-farm logistics – has been seen in all countries where

large retailers have put down roots, a welcome side-effect for a continent

where agriculture has been neglected. However, in many markets, small

farmers cannot meet the quality-control requirements set by the

supermarkets. This is an area where government intervention has been

successful in other parts of the world.

In North Africa, the sector is

being transformed by high demand, with hypermarkets and big box outlets

being opened at a rapid rate. Global brands are beginning to find a serious

toehold in the region. Morocco’s Groupe ONA, which owns the supermarket

chain Marjane, has followed the government’s policy of investment in

previously neglected areas like the Rif Valley, with some success.

Governments across the Maghreb and Egypt are busy trying to prop up sectors

that are dependent on consumers in the EU as the recession spreads across

the Mediterranean. Nevertheless, jobs in textiles, manufacturing and tourism

are being shed. The knock-on impact is similar to that seen in South Africa,

but given the high correlation between North African economies and Europe,

retailers are likely to feel the pain for some time.

RETAIL RANKING

A list of Africa’as biggest retails, taken from our interactive annual list of Africa’s Top 500 companies, published in the February-March 2010 edition of The Africa Report.

Rank 09

Rank 08

Company name

Country

Sector

Turnover (Thds $)

Turnover change

Net profits

4

4

THE BIDVEST GROUP

SOUTH AFRICA

RETAIL

11697512.43

-17.57%

352328.91

14

10

PICK’N PAY STORES HOLDINGS

SOUTH AFRICA

RETAIL

5296847.27

-24.63%

110752.9

17

16

SHOPRITE HOLDINGS

SOUTH AFRICA

RETAIL

5034386.05

-12.70%

165897.12

22

18

MASSMART HOLDINGS

SOUTH AFRICA

RETAIL

4220168.12

-18.47%

143483.27

40

35

SPAR GROUP

SOUTH AFRICA

RETAIL

2825313.43

-12.87%

72011.04

43

39

EDGARS CONSOLIDATED STORES

SOUTH AFRICA

RETAIL

2661851.75

-14.18%

-73426.75

59

47

WOOLWORTHS HOLDINGS

SOUTH AFRICA

RETAIL

2119856.69

-23.19%

99638.52

65

46

MC CARTHY RETAIL

SOUTH AFRICA

AUTO DEALER

1954525

-29.36%

78497.95

85

MASSCASH

SOUTH AFRICA

RETAIL

1437938.76

46021.14

89

63

JD GROUP

SOUTH AFRICA

RETAIL

1332246.5

-30.28%

54304.1

97

73

NEW CLICKS HOLDINGS

SOUTH AFRICA

RETAIL

1191854.13

-23.55%

46716.42

106

MASSDISCOUNTERS

SOUTH AFRICA

RETAIL

1099446.73

82734.52

108

MASSWAREHOUSE

SOUTH AFRICA

RETAIL

1067466.47

77209.02

109

85

FOSCHINI

SOUTH AFRICA

RETAIL

1055327.29

-22.97%

127973.85

123

128

MARJANE HOLDING

MOROCCO

RETAIL

939457.78

5.86%

28391.78

124

107

MR PRICE GROUP

SOUTH AFRICA

RETAIL

935766.24

-14.83%

65051.13

159

167

HOLDING POULINA

TUNISIA

RETAIL

702180.78

3.07%

51316.72

173

179

GROUPE OPTORG

MOROCCO

RETAIL

653985.09

4.03%

40318.98

192

146

TRUWORTHS INTERNATIONAL

SOUTH AFRICA

RETAIL

597028.15

-24.28%

134915.05

245

224

DIST. & WAREHOUSING NETWORK

SOUTH AFRICA

RETAIL

415812.2

-6.46%

28230.1

253

204

LEWIS GROUP

SOUTH AFRICA

RETAIL

402220.12

-24.46%

59903.55

321

328

CECAGADIS

GABON

RETAIL

297149.04

6.93%

16247.43

385

409

SNMVT – MONOPRIX

TUNISIA

RETAIL

234727.62

19.62%

10412.45

388

378

GROUPE ACIMA

MOROCCO

RETAIL

232453.82

2.15%

-5406.77

389

375

CIC HOLDINGS

NAMIBIA

RETAIL

232290.6

1.42%

5029.72

398

396

SOC. IV. DE PROM. DE SUPERMARCHÉS

CÔTE D’IVOIRE

RETAIL

226280.73

10.20%

1610.14

429

397

SEFALANA CASH AND CARRY

BOTSWANA

RETAIL

202106.5

-1.43%

5661

2008 RESULTS IN THOUSANDS OF DOLLARS – *IN ITALICS 2007 RESULTS – ND: NO DATA

This article was originally published in the February-March 2010 edition of The Africa Report.

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