FMCG growth presents big opportunities

Despite the miserly growth in retail sales in the shortterm past, there is massive opportunity in SA for logistical and transport companies dealing with fast moving consumer goods (FMCG). According to Nicholas de Canha, CEO of Imperial Fleet Management, the transportation of FMCG has experienced a significant growth of late in both SA and overborder into Africa. When FTW checked the latest retail industry sales stats for August, however, we found that retail sales had grown just 2.1% year on year that month. This, said Nick Paul, director of retail researchers Trade Intelligence, “reflected the litany of woes that has become the new norm for followers of the business press: weak consumer confidence, higher electricity prices, slow economic growth, elevated household debt, etcetera.” He also pointed out that, monthon- month, the picture was scarcely better. It was 0.6% after an increase of 1.2% in July and a decline of 0.8% in June. “The big, if that’s the word, winners in retail sales were general dealers and retailers of hardware, paint and glass,” Paul added, “as punters are more inclined in these hard times to mend than to spend. “Our own great sector, classified as “Food, beverages and tobacco in specialised stores” by the hoary sages of Stats SA, declined to the tune of 1.9% year-on-year, which I’m pretty sure is not what you were hoping to hear.” But other factors tend to justify De Canha’s claims of growth. “Recently, there have been pretty tough times,” he said. “But we conducted a multiyear market study in coming up with our conclusions.” And, over the longer-term, that growth has been there. Also, smaller operators, and some of the major chains, are tending to move more and more to outsourcing their stock distribution as fleet-owning and operating becomes a costly pursuit. This is a trend that is common overseas, for retailers to tend to stick to their retail knitting and contract out any non-retail functions. “As the market becomes more sophisticated,” said De Canha, “outsourcing grows – but slowly, slowly.” Another justification can also be detected in what Darren Folkes, junior retail analyst at Trade Intelligence specialising in the SA FMCG environment, had to tell FTW. “The actual retail sales are certainly not too good,” he said, “but each retailer’s annual reports display significant new store openings – both in SA and overborder. “In recent times the growth in the market (that De Canha highlighted) could come from that rather than actual sales growth. “There is also a big push into Africa because there is not a great deal of logistics in the continent.” INSERT & CAPTION Actual retail sales are not good but there are significant new store openings in SA and overboder. – Darren Folkes