Newspaper Article Analysis - Management Assignment Help

Assignment Task

Task: Newspaper Article Analysis

INSTRUCTIONS
1.Please Read and Analyse the TWO ARTICLES below and answer the following questions.

ARTICLE 1:
Shopping price war 2021: Woolworths vs PnP vs Checkers vs Spar
Staff Writer11 April 2021

As South Africans face rising food prices despite low levels of headline inflation, the latest BusinessTech shopping price comparison among the biggest retailers in the country shows that their price-containment measures appear to be working.
Several research groups have conducted shopping basket comparisons, highlighting how food prices in particular have increased over the last year.
This includes baskets like the PMBEJD, which found that foods most selected by low-income households have increased by almost 5% in the last seven months, and the National Agricultural Marketing Council’s Food Price Monitor, which found that inflation on a basic urban food basket is at 9.8%.
The BusinessTech food basket – which we have been tracking over the last six years – tells a different story, however, revealing a drop in prices from last year.
The basket is a simpler selection of ‘everyday’ items that middle class families would buy, and isn’t necessarily used to track inflation on a wide scale, but rather to assess the price differences between major retailers, and the impact their ‘house brands’ can make to the total bill.
The 2020 basket price also saw some sharp increases due to lockdown, following the outbreak of the Covid-19 pandemic, something which was also seen in the other basket research. We last tracked food prices in September 2020 – after the worst of lockdown – hoping to catch prices in a more settled state.
Prices in April 2021 are around 3.6% lower from seven months ago (around R12 cheaper), with all retailers measured in the price war showing a drop.

This result would be in line with stated goals from the likes of Checkers, Woolworths and Pick n Pay to try and contain increases, and invest in keeping prices as low as possible to assist struggling consumers.
This does not mean that food prices are not increasing, however, as many items not tracked in our basket have seen hikes, including meat products, beans, soups, spreads and other fruits.
Retailers compared
Among South Africa’s major retailers, Woolworths Food still remains the most costly option for shoppers – however, it doesn’t carry the highest prices across the board.
Pick n Pay, which is competing in a dual market (both premium and cost-saving) came in with the second highest-priced basket, largely due to the price of house brand rice and tea relative to its competitors.

Following feedback from Pick n Pay in 2019, our price war now includes a second measure for the group, substituting PnP branded items with the group’s more affordable No Name Brand items, where applicable.
Pick n Pay is the only retailer to have two ‘house’ brands, with the group saying that its PnP brand offers a more premium alternative to No Name Brand, which targets affordability.
While No Name Brand makes available a host of cheaper products, only two items are applicable for substitutes in the BusinessTech basket – rice and tea. Substituting these for No Name brands makes the basket almost 10% cheaper than the PnP premium basket, overall.

These substitutions also make the No Name basket compare far more favourably with the Checkers basket, which is only R1.10 cheaper. The Checkers basket remains the most affordable, overall.
Spar, as in previous years, sits in the middle of the competition. Of note is that Spar is franchised, and prices and items can vary from store to store. For example, a 2kg bag of house brand parboiled rice ranges between R26.99 and R31.99 in price, depending on the store. Our local store had it at R28.99.
Woolworths remains the most expensive basket, but added a new one-cup black tea product at R26.99. This has replaced the extra-strong black tea (R49.99) in our basket, bringing the overall price down.

Comparing basket prices from 2020 to 2021, all the stores have seen a drop in the overall basket price, with Woolworths seeing the biggest drop overall, due to the new tea product.
Woolworths: -6.0%
Spar: -4.5%
PnP No Name: -3.3%
Pick n Pay: -2.2%
Checkers: -1.4%

Overall, you would pay 42% more for the average BusinessTech basket, compared to six years ago.

Methodology
The BusinessTech basket comprises 12 common food items that would be found in a middle class family shopping basket. It does not include items where prices are sold on a per kg basis (like meat, or cheese), to draw as fair a comparison as possible.
Prices were sourced in-store from stores around Centurion and cross-checked online, where applicable.
In all cases, house brands were used where applicable. In the case where no house brand is available, the cheapest alternative is sources. House brands were selected for bread, maize (except Checkers), milk, rice, sugar and tea.
Promotional prices, where marked, were not taken into account. Woolworths’ self-raising flour price was determined on a per kg basis. In-store prices are subject to change depending on individual regions and promotions.

ARTICLE 2:
Food prices in South Africa are up in recent months – here’s what you are paying more for Staff Writer31 March 2021

The latest Household Affordability Index by the Pietermaritzburg Economic Justice & Dignity group (PMBEJD) paints a bleak financial picture for South African households, where rising food, petrol and electricity prices threaten to leave millions destitute.
According to the group, millions of households in South Africa face an “intolerably difficult” time ahead, as the cost of living keeps rising, and prices in key categories rise far above headline inflation.
This is especially noticeable in food prices, which makes up the biggest expense in most household budgets.
The PMBEJD noted that even when looking at food prices broadly, costs are rising far above headline inflation – 2.9% in March – and this only gets worse when looking at key food items for specific groups, like the poorest households.
For South Africa in general – Statistics South Africa’s Consumer Price Index in February 2021 shows that inflation on Food & Non-alcoholic beverages is 5.2%
In urban areas – the National Agricultural Marketing Council’s Food Price Monitor shows that inflation on their basic urban food basket is 9.8%
For poor households – PMBEJD data off from Pietermaritzburg Household Affordability Index, annualised for March 2021, shows that inflation on Household Food Basket is 12.6%
All households will also be hit by a 15%-plus increase in electricity prices, and as much as R1.00 per litre in fuel prices – from April.
While these costs are rising far above inflation, growth in wages and government grants are much lower, by comparison.
Child grant – annual increase which will come into effect in April is 2.2% or R10 per month;
Pensioners will get a 1.6% increase or R30 per month;
National Minimum Wage was increased by 4.5% – or 93 cents per hour;
Take home pay in South Africa has increased by 1.4% in nominal terms (0.1% in real terms);
“This has meant that families are not able to afford this year, what they were able to afford last year because increases on wages and grants are lower than the increases on basic goods and services,” the PMBEJD said.
With the maximum minimum wage in March 2021 at just over R3,800, none of the prioritised food baskets tracked by the group in major areas across the country are affordable.

The group said that South Africans are now worse off than they were before March 2020, while the majority will be poorer in 2021 than they were last year, a time when the country was in the middle of the Covid-19 pandemic.
“Jobs continue to be lost. People have less savings, and less money. Food is being taken out of children’s mouths. The prices of essential goods and services continue to rise…It is unlikely that this status quo will change and so we expect that the affordability crisis in households will deteriorate further,” it said.
“When all our money is going to electricity, transport, and food; we must expect our economy to decline further.”


What can be doneThe PMBEJD said that the Reserve Bank needs to intervene on food pricing, and fulfil its mandate to keep inflation within the 3% to 6%.
Headline inflation dipped below the range, to 2.9% in March, but this was driven by big purchases – like appliances and the like – which are not typical repeat expenses. This gives the impression that inflation is low across the board, but in reality core purchases like food are rising rapidly.
Headline inflation is used by many companies and bargaining councils as the starting point in wage negotiations.
“This mandate appears to kick in sharply when wage levels are being negotiated. In these instances, the Reserve Bank calls out ‘unreasonable’ wage demands. The Reserve Bank however seems not to display this level of passion and consistency in intervening to keep the level of inflation on essential goods and services for low-income households down,” it said.
For example, the group said that there appears to be no intervention from the Reserve Bank when Eskom decides to increase electricity tariffs by 15.63%, or when food prices rocket to above 10%, or when public transport taxi fares increase by 7% or even the 25% seen in Gauteng last year.
It said that if core goods and services are rising far above inflation, while low headline inflation is used an excuse by employers to keep wage increases low, it’s local workers who carry the burden and end up subsidising higher income earners and employers.
Failure to rectify the situation could lead to civil unrest, the group said.
“The triggers, we have long predicted – where material conditions just become too intolerable and where one person, two people, three people start to say, ‘we cannot and will not continue to live under such conditions’ – will start multiplying.
“The public mood seems to us to be shifting rapidly. It seems to us that much of our future rests in the decisions that will be taken by hungry men and women,” it said.
2.Highlight the main facts in each of the Articles.

3.Using the main ideas highlighted:
Write your own comments about each of the articles that you read.
Note: In your own comments, you need to refer to the IMPACT each of the issues in the article will have on the specific General Retailer business in general and its stakeholders.

4.Conclude the task by making future predictions/recommendations to a specific General Retail business in general about how to handle the issues identified and potentially preventing the impacts in the future.

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