VW group spies good buys in poor economy

Headed by entrepreneur Götz von Westernhagen, the VW Group bought the Lighthouse KwikSpar earlier this month from the Kat Leisure Group and it has at least one new store in the pipeline.

Asked how the group was affected by the current economic downturn, Von Westernhagen said that although the business environment was “tough”, he still saw new growth opportunities.

“I see an opportunity in acquiring new businesses because I see value. Companies change hands based on a price that is dependent on their earnings, and when the earnings are lower - like when the economy is not rolling businesses can't charge the price they did even 18 months ago,” he said.

One year ago, the VW Group had six grocery stores and five liquor stores in its stable. Today, it has 11 food retailers and nine liquor stores situated in East London and Mthatha.

Von Westernhagen's plans for the Lighthouse KwikSpar is to pump R1.5 million into the store to upgrade it from a KwikSpar to a Spar, and to add more cashiers, refrigeration, bakery and take-away equipment, with the aim of growing its customer base 10% to 15% in one year.

Looking at the Christmas season and the new year, Von Westernhagen was positive that food retail sales would start picking up again.

“Food inflation is declining as we speak; it probably peaked already. I believe we will see single digit inflation by February. It all goes with volumes and if the volumes are down, then discounts come in. Especially in the sector we are in, if price comes down then you will see sales increase,” he said.

The VW Group has been affected by the economic crunch and it has undergone some strategic changes to counter the negative effects of cash-strapped consumers.

“We put more stock in the stores. If you give a feeling of a lack of confidence, the customer will abandon you,” Von Westernhagen said.

The group has also implemented ways to keep expenses low, like using better cleaning materials that last longer; saving water by using waterless soap to wash hands; and by cutting back on electricity consumption.

“We run the water main past the refrigerator compressors and use the heat generated by the compressors to warm water.”

This saves the group R4000 per month on electricity bills in a SuperSpar-sized store. The electricity saving pays for the installation cost within two years.

“If we had the ability to put up solar and wind power towers next to the stores without offending our neighbours, we would do it.”

Source: Daily Dispatch

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