Shoprite recently highlighted its recent success in the premium retail market, a segment typically dominated by companies such as Woolworths.
A new report from Business Tech shows that the group saw an 8.1% increase in sales for the 53 weeks to 4 July 2021. It is reported that Shoprite’s group trading profit increased by 24.9% to R10.3 billion due to strong sales growth and gross margin expansion. The group’s trading margin ultimately improved from 5.3% to 6.1%.
While they consider the full-year performance as a ‘strong performance’ even in an ongoing pandemic, one performance that the group is particularly proud of is the premium market.
The group said that its strategy in South Africa of focusing on establishing a ‘fresh food theatre’ for its customer base continues to improve year on year.
“The success of the launch of the Xtra Savings Rewards Programme during the previous financial year in the Checkers chain has gained traction, and the 7.6 million Xtra Savings Rewards Programme customers as of 4 July 2021 contributed to the achievement of the record market share for the brands.”
Checkers, inclusive of Checkers Hyper, now operates from 268 stores in South Africa. Another key to their push into the premium food retail segment is the new Checkers FreshX store format.
Unlike traditional Checkers stores, the FreshX concept stores feature more upmarket furniture and signage, including benches and tables for customers to test samples.
Over the past year, Shoprite said the number of stores in the Checkers FreshX format has increased to 41 from 28 stores in the prior year. The group is targeting 80 of these stores.
But, Sasfin Bank senior equity analyst Alec Abraham said this will not be easy. He said that the group will have a hard time penetrating the premium food retail market because of Woolworths’ undeniable dominance in the sector.
“As far as I’m concerned, none of the retailers in South Africa, not Checkers, not Spar, not Pick n Pay can hold a candle to Woolworths in term of one, their quality and reputation quality; two, their shopping experience, three, their food innovation in the business and increasingly so, Woolworths’ price perception in the market,” Abrahams told Moneyweb.