Camera Roll: finweek Money Matters

A collection of clips, scripted for the finweek: Money Matters show which airs on CNBC Africa (DStv channel 410).

Construction – Finding value in debris

Is it time to invest offshore?

Is the jump in Harmony’s share price sustainable?

Digital advertising in Africa

A new era for financial services?

Surviving the global market storm

Can Vodacom handle the heat?

Supercars for the super-rich

Outlook for Coronation Fund Managers

Where to invest year-end savings

Cape Town’s transition into a tourist hotspot

Telematics a win-win for insurers and drivers

R26bn lost by state-owned enterprises

Outlook for Mondi

The minimum wage debate

Challenges facing SA’s youth

Stikeez: Nuisance or genius

Cash-proofing investment portfolios

No room for error in e-commerce

Outlook for AECI

SUVs becoming SA’s favorite

WooCommerce and Resilient Property outlook

The state of SA’s economy

The future of retail loyalty and the PPC outlook

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Keeping score: Business journalism

A collection of work featured in finweek magazine and online for finweek.com

Ten things you need to know about Starbucks

Is it the end of credit card payments?

Seven lessons to guide your investment plan

How tax havens are widening the inequality gap

What do employees want? 

Policy reforms can’t come soon enough

Smart things to do with your money in your 20s

Saving is a matter of discipline

Can Africa still rise?

What lies ahead for SA?

Fostering good partnerships between government and business

Africa rising despite the headwinds

Is SA following Brazil to junk status?

SA to struggle with low growth going forward

Digital – The new business tsunami

Young, black and and angry – Can SA’s economy transform?

Fancy yourself a 3D illusionist?

What SA businesses can learn from Starbucks

Lessons for businesses to embrace digital change

Beading for social change

Lessons for success from Silicon Valley

The future of advertising: Reaching consumers where they are

Nando’s: Three ingredients for global success

Family flooring business set for a solid future

How to pick a winner: Investment tips from PSG

Online retail: Performance is everything

There is no such thing as “brand loyalty” in the online retail space. If applications and websites offer subpar performance or a poor customer experience, consumers will “drop the shopping basket” and opt for a different store or brand.

CREATING VALUE: Karl Campbell, regional vice-president of Riverbed, UK and South Africa says that online retailers often underestimate the value of creating good customer experience. Photo: Provided

CREATING VALUE: Karl Campbell, regional vice-president of Riverbed, UK and South Africa says that online retailers often underestimate the value of creating good customer experience. Photo: Provided

It is necessary for an enterprise to ensure its applications run optimally, and to simplify operations as these factors contribute to a customer’s experience. Application performance company, Riverbed Technology offers these solutions. The company was founded in the US in 2002. It now has a 50% international market share in the optimisation space. It offers solutions to large retailers, financial services and government to improve services delivered by these entities, says Karl Campbell, regional vice-president of Riverbed, UK and South Africa.

Riverbed evaluates the retailer’s existing applications, or e-commerce and banking sites, to determine if they make a difference to the service delivered to the consumer. Problems that may arise during the transaction are detected by Riverbed. These could be related to slow speed and limited data availability that may contribute to a poor customer experience, explains Campbell.

Most retailers underestimate the importance of customer experience.

Most retailers underestimate the importance of customer experience. Consumers often choose online shopping for the convenience, they switch between retailers easily. One of Riverbed’s clients in Europe, loses up to €30m daily if applications run slow, says Campbell. When websites fall over because of increased traffic or demand, which often happens with online ticket sales, people become “frustrated”, he says. Physically, retailers can control the traffic through a door, but they need to make sure their e-commerce site can scale up to perform irrespective of the volume of business.

Retailers should also ensure they have a good returns policy to drive growth. If consumers can return goods they are unhappy with within seven days, it drives a “tremendous” amount of traffic to the website, says Campbell. More consumers are choosing online shopping because of the convenience of delivery. “But [retailers] need to have the whole supply chain to deliver [goods] quickly and be prepared to take it back if the client is not happy, for online to work.”

Regarding the adoption of e-commerce in Africa, Campbell says there is a fair amount of online retail in South Africa, but less than it is in Europe. In Africa there is often no infrastructure to get the goods to the individual, postal services are not reliable and they often can’t return goods. People browse goods online but still choose to process the transaction at a point of sale. The resistance is not with the consumer, but rather the lack of infrastructure. Where infrastructure is in place, people consume online because it is much easier, he says.

This article was featured in Finweek magazine.

Mixed feelings about the Retail Distribution Review

The Retail Distribution Review (RDR) is designed to benefit customers, financial advisers and the greater financial services industry. It offers a new approach to market conduct regulation that is pre-emptive and proactive, avoiding the reactionary approach of past regulation. It addresses the cause of complaints and poor outcomes at the source, says Jonathan Dixon, deputy executive officer of insurance at the Financial Services Board (FSB).

Unlike regular “tick-box” compliance, RDR focuses on the delivery of outcomes. It instils a Treat Customers Fairly (TFC) culture in financial services businesses, says Dixon. Existing arrangements have failed to deliver fair outcomes to customers. Customers are unaware of or don’t understand the services they can expect from their financial advisers, he says.

“We want customers to be better able to understand and compare the nature, value, and cost of the device and other services they receive,” says Dixon. Quality, professional, financial advice is critical to deliver on the TCF outcomes. RDR supports sustainable business models and financial advice, says Dixon.

Many of the wholesale market reforms are being addressed. Changes are being made because the current, complex distribution landscape is “fundamentally flawed”, says Dixon. It creates risks, not only to the delivery of fair customer outcomes and effective supervision, but also to the sustainability of financial advisers, he explains.

The current intermediated business model is equally bad for consumers and financial advisers, which is why a new model was necessary, says Dixon. The value of financial services advisers is not properly recognised and they are remunerated poorly, he explains.

The regulatory burden is stunting small- and medium-sized businesses.

With RDR, three-sector performance is required. This means it should address the types of services provided by intermediaries, product supplier and intermediary relationships and remuneration, says Dixon. Many financial advisers will have to take the opportunity to review their business models and consider the extent to which the business models align within the interest of customers. The core value proposition of financial advisers is the delivery of professional advice and service. The proposed reforms of the RDR provide the framework and opportunities to build a sustainable financial advice business, he says.

Feedback on RDR indicates general support for the objectives of the review. However industry commentators differed on the best way to achieve these objectives, says Dixon.

Strategist and economist at Investec Asset Management, Nazmeera Moola, says that South Africa is at a “critical juncture” and overregulation should be dealt with. “The regulatory burden is stunting small- and medium-sized businesses,” she states.

Considering the period of 1 March 2013 to 31 July 2014, government published 2 985 notices. Of these notices, 1 120 applied to Transnet. “How do you run a business wen 1120 notices affect your business on a monthly basis?” asks Moola. The FSB was behind 200 notices, Sars supplied 138 notices and the department of trade and industry produced 456 notices. “The idea of regulating your way to a good business is ridiculous,” she says.

There are good intentions behind the proposals, however the execution is poor because there are skills shortages at local government level that make it difficult to enforce these regulations.

The amount of regulation and compliance has reached fever proportions, says Glenn Silverman, chief investment officer at Investment Solutions. Regulations have had a huge impact on company finances as more compliance staff are required. “The regulatory environment is very tense,” says Silverman. “How is much more regulation going to help anyone though?” More resources will have to be diverted away from hiring staff to comply with regulation. This is impacting on the country’s economic growth and the growth of businesses. “There is a need for regulation, there is no dispute about that. But there needs to be a balance or growth and employment opportunities,” adds Silverman.

This article was featured on Finweek.com.

How business is coping with load-shedding

Written by Buhle Ndweni and Lameez Omarjee

Johannesburg City Power

The entity has started installing smart meters at households as part of its strategy to save costs and manage energy usage, especially during peak hours.

A smart meter enables the exchange of data between the utility or municipality and the customer. One advantage is remote meter reading, which means the utility or municipality does not have to incur the cost of sending someone to a property to do a reading or to turn off the power. The utility can also turn off power remotely, says energy expert Chris Yelland.

From a load-shedding perspective, smart meters allow the utility to inform a consumer to reduce their electricity consumption. This could be through warnings to turn off a geyser or swimming pool motor, says Yelland. “Smart meters are just simply a more modern metering device that can also communicate in two directions, from the utility to the meter and vice versa.”

Customers benefit in that they can manage their electricity consumption better. The smart meter allows customers to keep track of their usage and budget for it. “With a normal credit meter, you get a bill at the end of the month. You have no idea what it’s going to cost you until you get the bill,” explains Yelland.

Although smart meters are more expensive than credit and prepaid meters, the cost is covered by the utility. Currently only customers living within the designated roll-out areas qualify for smart meters.

Gautrain

The Gautrain is still able to operate normally during load shedding, with the exception of a few systems like escalators on the stations above ground which are not operational, says Jenny Roodt, Marketing Manager.

The three main components of the Gautrain system affected by load shedding is the traction power of the trains, station operations and control systems, explains Roodt. The traction power to the trains have two independent feeds directly from Eskom. The feeds are normally not affected by load shedding, says Roodt.

Underground station operations are powered by two independent feeds, via a ring feed, explains Roodt. If one of these feeds are affected by load shedding, the other kicks in automatically. In the unlikely event that both feeds are affected by load shedding at the same time, back-up generators operate most sub-systems for a limited duration. Generators power lighting, ventilation, lifts and escalators, she says.

Stations above ground have an independent feed. This feed has been affected by load shedding before. However, generators are on standby to operate most sub-systems, including lifts but not escalators, explains Roodt.

In the event of load shedding, there will be a short lag, while the alternative power source kicks in which may cause certain systems to stop for a few seconds, says Roodt. Regardless of location, all critical sub-systems like signalling and controls are connected to generators.

Ster-Kinekor

Operations executive of Ster-Kinekor Theatres, Irshaad Mahomed, says their theatres, like many businesses in SA, are also being impacted by the ongoing load-shedding.

He says where possible they check the load-shedding schedules and cancel screenings that could be affected by the power outages before customers can book their tickets.

“If a screening is underway when the power goes off, Ster-Kinekor will issue re-admission tickets to the affected customers to enable them to return to the cinema to watch the same movie, or another film, on another day,” explains Mahomed.

He adds that the decision to install a generator at a particular Ster-Kinekor site is bound by the agreement with the shopping mall in question.

“If a mall is fitted with a generator, in some instances that generator does not generate enough electricity to power the cinema complex. It is an extremely costly exercise to install generators that can generate the amount of power required to run the projectors, cinemas, air con, catering, etc,” he states.

“Ster-Kinekor is currently assessing its sites but obviously the installation of generators at all 56 of its commercial sites across South Africa is an extremely costly exercise,” he says.

Currently three Ster-Kinekor cinemas are fitted with an uninterruptible power supply (UPS), while eight other sites have generators.

Netcare

Private hospital group Netcare plans to spend R150m over the next two years to install generators, stockpile diesel and implement other measures to ensure uninterrupted service delivery within its facilities.

Currently, 54 of Netcare’s local hospitals have UPS back-up generators that kick in within half a second of an electricity outage. Of these, 28 have a second back-up generator and 21 facilities have ‘full island capacity’, meaning they could run independent of the grid for a sustained period.

In the near future, 40 hospitals will have a second back-up generator and up to 28 facilities full island capacity. In the event of a national blackout, critically ill patients and emergency patients will be moved to 11 specially equipped Netcare facilities around the country.

Taste Holdings

Taste Holdings has a national footprint of restaurant chains in the form of both franchises and outlets that the group directly owns. It is the owner of food chains Fish & Chips Co., Zebro’s, Maxi’s and Domino’s Pizza.

CEO of Taste Holdings’ Food Division Jay Currie says load-shedding has had a negative impact on sales at their over 500 franchise stores because less than 20% of these have back-up generators.

Taste Holdings’ franchise stores have a low setup cost, says Currie, and installing a generator relative to the setup cost of the stores is high. He says all Taste can do is discuss the importance of having a generator with the franchisee and inform them about finance options available for this. But in the end, it is up to the franchisees.

Currie says 80% of restaurants Taste owns directly have back-up generators that switch on automatically when the electricity switches off. He says since their restaurants tend to be in smaller shopping malls or complexes they are able to negotiate with landlords to enable them as tenants to install their own back-up generators.

This article was featured in Finweek magazine.

Risk breeds success in Silicon Valley

Inspired by Silicon Valley entrepreneurs like Robert Noyce, the founder of Intel, Arun Kumar, Director General of the US, says he always had a dream to end up in the Valley. “It was just a dream and I wasn’t sure how to get there,” he says. After meeting a computer scientist the two decided to go into a partnership, turning ideas into reality using Kumar’s business skill.

Kumar, an accomplished Silicon Valley entrepreneur, is the founding CEO and CFO of three technology ventures and has extensive experience in executive levels of business. He completed his MBA at the Sloan School of Management at the Massachusetts Institute of Technology (MIT). He advised aspiring entrepreneurs on key lessons at a forum held at the Gordon Institute of Business Science (Gibs) last week.

Key lessons from the Valley

As an entrepreneur, Kumar says his biggest challenge was convincing the market of what he was selling and then finding his first customer. He advises entrepreneurs to take risks and seize opportunities. Entrepreneurs should also consider the worst-case scenario.

Kumar says the Valley seduced him out of his comfort zone. “There is an audaciousness in Silicon Valley. A sense of risk and adventure is seductive.”

Entrepreneurs are given the chance to dream big because it is a place that “tolerates” failure, he says. Failure is not a badge of shame, but rather a badge of “tried”, indicating that the entrepreneur tried to do something no one else did. Trying adds value in that entrepreneurs learn and gain experience, he says. This contrasts with ideologies in other parts of the world where success is linked to stability.

Being open to opportunities is important, says Kumar. One does not know where the opportunity will come from, or what will come from it, but be ready to serve the moment, he advises. Failure is inevitable – one in three businesses succeeds and those that fail must learn how to recover.

There is an audaciousness in Silicon Valley. A sense of risk and adventure is seductive.

A rule of law should be implemented to protect entrepreneurs, says Kumar. In the US there is an insolvency regime, which means when businesses fail the loss is not felt in the entrepreneur’s personal capacity. “This prevents the business from losing value,” he says. Risk-taking should be encouraged like it is in the Valley, where “there is a whole ecosystem that supports risk-taking”.

Most entrepreneurship doesn’t involve as much innovation to the extent of that in Silicon Valley. Not all ideas are purely innovative, some are adapted, says Kumar. “To be successful you need to be differentiated and innovation allows you to differentiate,” he says.

A spirit of entrepreneurship is not necessarily something you are born with, he adds. He states that it is something that can be learnt, but not taught, adding that entrepreneurs like Steve Jobs and Bill Gates, for example, didn’t have parents who were entrepreneurs.

Partnerships are also valuable to entrepreneurs, says Kumar. There is a greater chance of success because each party brings different skills, attitudes and perspectives that complement each other in solving problems to the business. “Two heads are better than one.” However, he adds that partners should trust each other – many companies in Silicon Valley have failed due to teams being conflicted with “egos”.

Mentorship is “extremely” valuable. Kumar advises entrepreneurs to seek advice from leaders because their feedback is valuable and they may be willing to invest in ideas.

This article was featured in Finweek magazine.

The future of retail loyalty

NO MORE CARDS: Directors at paradigm Group, Nolan Daniel (left) and Shadab Rahil (right) say that future loyalty programmes will be mobile-based applications.

NO MORE CARDS: Directors at paradigm Group, Nolan Daniel (left) and Shadab Rahil (right) say that future loyalty programmes will be mobile-based applications. Photo: Provided

Say goodbye to loyalty cards because mobile applications are set to replace traditional loyalty programmes.

Businesses can set up loyalty programmes on mobile applications in the same way as cards, offering cash rewards, coupons or discounts. This offers convenience to consumers who won’t have to carry cards anymore, says Nolan Daniel, director at Paradigm Group.

Consumers get more benefits in that customised marketing and relevant information is sent to them through notifications and messages from organisations. This also benefits businesses in building customer relations with real-time consumer engagement, says Daniel. Card loyalty programmes often send promotional materials to consumers’ addresses, which end in the dustbin, adds Shadab Rahil, director at Paradigm Group. Additionally mobile applications save businesses the cost of producing and distributing cards and promotional material, says Rahil.

There is also a more secure component to mobile applications in that points earned are linked to the consumer’s number. Your phone might get stolen, but no one can steal your cellphone number which means points won’t be lost, says Rahil. Consumers can also block loyalty programmes online and respond in real time, says Daniel.

Businesses can also collect data on consumers, like their buying patterns. “You [businesses] can really decide how much data you want to use… You can get specific information on individuals or you can get information on the user base as a whole,” says Daniel.

Depending on the capabilities of the business’s IT systems, it is possible to use geo-tracking to engage with consumers in real time. This way, consumers can be notified of discounts and other special offers at nearby stores. Consumers’ movements in stores can also be tracked to identify areas where they spend a lot of time and deduce what they like, explains Daniel.

It could take three to four years to have a big penetration of mobile loyalty and payment solutions in South Africa as smartphones become more available.

Two types of tracking technology can be used. Geo-fencing can track consumers within 20km of a store. Bluetooth low energy is used in stores, tracking consumers from 50cm to 50m, says Daniel. Consumers are informed of tracking technology in the terms and conditions of mobile applications. They have a choice to opt out and simply use their phones to earn reward points, he says.

If communication tools are not used correctly, consumers could become irritated with spam messages and notifications and opt out, warns Rahil. Marketing intelligence is needed to tap into the use of mobile loyalty programmes. “You need to be relevant and offer them useful information that will save them extra money and be beneficial to them,” he advises.

A lot of businesses have been finalising and testing these mobile applications. It is not likely that cards will disappear in the near future. South African markets are “heavily banked” and consumers use cards. Getting consumers to migrate to mobile-based solutions could be slower, says Rahil. It could take three to four years to have a big penetration of mobile loyalty and payment solutions in South Africa as smartphones become more available. The opposite is true for the rest of Africa, where mobile solutions are prevalent, he says.

This article was featured in Finweek magazine.