The Markets Jacques Magliolo
Unnoticed and ominous, a new trend is emerging in the market as a consequence of prolonged strike action in South Africa. While investors and store owners alike are becoming immune to violence-related labour unrest — most do not expect the immediate effect on Pick ‘n Pay’s financial results to be severe — latest statistics should “pull them out of their hibernation,” warn analysts.
Retail and Wholesale sector experts say that since 1986 wholesalers have been “taking away market share from retailers as the informal sector mushrooms and access to wholesale stores becomes easier.” They add that if this trend continues “we should live to see the ultimate demise of retailers as we know them today”.
Says an industry spokesman: “For the past eight years we have repeatedly warned retailers that they will lose market share if they do not keep a tighter check on their prices. These warnings have been ignored and prices have kept on rising, especially in foodstuffs.”
In addition to a rapidly changing business environment, retailers do not seem prepared to accept or take cognisance of the severe effects that economic, technical, political and social change could have on future growth. In fact, even physical evidence of the vast amount of hawkers selling foodstuffs on every street corner does not seem to register as important.
“What’s more,” says a dealer, “the public is tired of being threatened when they go shopping, so they will look and find an alternative.” In essence, the public will end up doing more shopping less often and wholesalers can provide this facility.
Analysis of latest financial statistics on local retail and wholesale market share highlights a possible reason for Pick ‘n Pay’s apparent lack of willingness to compromise during present wage negotiations. Since 1990 the company has actually increased its share of the retail market to 27 percent from 1990’s 26 percent, while OK Bazaars’ share fell to 23 percent from 28 percent and Shoprite remained unchanged at 23 percent.
As a percentage of the entire market, in 1986 retailers had a 76 percent share and wholesalers 24 percent. By the end of 1993, retailers’ portion had fallen to 73 percent and wholesalers had climbed to 27 percent. In a market worth R21,2 billion “the gain is not insignificant,” says the spokesman.
Says an industrial analyst: “The adage that retailers will succeed because people have to eat and clothe themselves no longer applies.” He adds that a host of retailers are finding this out the hard way.
However, Central Statistical Services’ April release of data tells another story. Compared to 1993’s April figures this year’s wholesale trade increased by 10,6 percent while retail trade rose by 14,7 percent.
Says a consumer analyst: “These statistics can be confusing if looked at over a single month and not compared to something else. The higher rise in retail sales during April was a result of the public’s fear of civil war during the elections.”
In contrast, the general trend is growing unemployment and high insolvencies which, in turn, result in a rise in wholesale trade.