SHOPRITE
SHOPRITE
The Price is
Right
PRODUCTION: Emily Ayson
The holiday season is the most important and potentially lucrative time for retailers all over the world. However, in South Africa, political turmoil, low economic growth and a lack of customer faith that merchants can provide value and variety has created an air of uncertainty. Despite these pressures, the country’s largest grocery retailer, Shoprite, is continuing to go from strength to strength. An astute business acumen, combined with a commitment to creating and maintaining symbiotic relationships with suppliers, communities and customers, has resulted in an increasingly pleasing performance within an unpredictable market. Enterprise Africa revisits Shoprite to take a look at some of the company’s most recent highlights.
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Shoprite currently operates more than 450 stores in South Africa and more than 2600 in 15 African countries and islands in the Indian Ocean. This makes it the largest retailer in the whole of Africa combined and one of the largest retailers in the world. As of this year, 144,000 employees work for the company and its network consists of over 22,000 suppliers from all around the globe. The grocer’s stock surged by 26% this year alone and the chain is currently worth an astonishing R120 billion. Since 2006, Shoprite has also heavily invested in a variety of social and community initiatives, donating around R18 million to almost 2000 charitable organisations such as soup kitchens and health clinics. As a self-proclaimed ‘business with a heart’, Shoprite also offers platforms for young people, disabled
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people and women to enter the retail sector, by providing skills development training, business opportunities and employment within an often competitive and exclusive environment. By forging such strong relationships with both individuals and enterprises alike, Shoprite has been able to bring together an impressive network of 16,211 South African suppliers and a further 7202 from wider Africa. Furthermore, their growers can be found as far afield as New Zealand and Turkey, with Shoprite’s suppliers ranging from small, local, independent operations to massive globally recognised brand names. As such, the R1.4 billion that has been used to fund the supply infrastructure appears to be money well spent. Not only is Shoprite able to offer its own customers a huge variety of
quality, affordable goods, but its allied organisations can also simultaneously find success in terms of market presence, reputation, capital and growth. At the 2017 Supplier of the Year awards, Shoprite was able to publicly laud and thank its most innovative and reliable suppliers. Many of these companies credited Shoprite for helping their own enterprises flourish and Shoprite has also received multiple awards itself, including South Africa’s number one supermarket. On the other side of the coin is Shoprite’s dedicated customer base which has had as much a role to play as suppliers for such prosperity. Patrons are viewed as people rather than statistics and are treated with respect and exceptional customer service. Similarly, the main mission has always been to deliver low prices to the everyday consumer,
an undertaking that Shoprite recently reinforced with the introduction of Black Friday to every single one of its South African stores. The post-Thanksgiving/pre-Christmas retail tradition for selling goods at extensively reduced prices has crossed the ocean from the United States, but there was some initial doubt as to whether the scheme would really be of benefit to the already fragile South African economy. As Daniel Isaacs, analyst at 36One Asset Management expressed, “the biggest issue with Black Friday last year was that sales sucked out December sales. Last year people spent their Christmas shopping budget on Black Friday and retailers sat with stock. I do not know how they will address the issue this year [as the retail sector] is not healthy”. Yet, such concerns seem to
have undeterred both shoppers and businesses, as Google search trends showed, ‘Black Friday’ has been one of the most searched terms in South Africa over the last 12 months. Similarly, Brent Curry, Chief Information Officer for retailers The Foschini Group noted that “TFG certainly expects a day of high excitement, great sales, long queues and many satisfied customers who go home with a bargain… we expect to at least double our trade during this shopping event.” Such widespread and burgeoning interest in the initiative thus provided enough impetus for Shoprite and subsidiary chain, Checkers, to join other retailers in attempts to boost spending over the festive period. A company spokesperson stated: “The decision to also introduce Black Friday to Shoprite’s 458 stores, in addition to the 202 Checkers stores,
guarantees the country’s biggest ever Black Friday.” Shoprite’s Marketing Director Neil Schreuder concurred, asserting that: “In the current difficult economic environment Shoprite understands the pressure ordinary South Africans are under and we will continue to look at ways to give them more affordable options. We listened to our customers and they can expect discounts of up to 50% on household products in all our stores.” He continued to outline some impressive projections: “We’re expecting to sell enough custard to make at least 2.6 million trifles, about five million kilograms of washing powder and enough nappies to keep almost 18,000 babies dry for a full year. Store opening hours will be extended to cater for the increased demand.”
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INDUSTRY FOCUS: FOOD & DRINK
Evidently, such initiatives are affording Shoprite great success, but the rise and fall of the retail market can often be a bittersweet affair. It is inevitable that while some companies thrive, others unfortunately succumb to the mounting and uncontrollable pressures put upon them. Following the bankruptcy of Nakumatt, Kenya’s largest supermarket chain, Shoprite recently announced intentions to acquire a number of newly vacated outlets. According to director Gerhard Fritz: “We are currently in talks with some of the property owners, but nothing has been signed.” According to Fritz, the group are hoping to acquire nine available premises in Kenya and a further two in Uganda. He goes on to say that Shoprite is already a registered company in Kenya, yet that the level of trade and export is rather infrequent. The potential purchase of empty Nakumatt properties would allow Shoprite to get a more solid foothold in the East African marketplace. Here, the company already faces fierce competition, with US giants Wal-Mart and France’s Carrefour already having a strong presence. However, Shoprite
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// THE DECISION TO ALSO INTRODUCE BLACK FRIDAY TO SHOPRITE’S 458 STORES, IN ADDITION TO THE 202 CHECKERS STORES, GUARANTEES THE COUNTRY’S BIGGEST EVER BLACK FRIDAY // seems unintimidated by these challenges, taking on the expansion project with enthusiasm and positivity. Not only will the move be fantastic for business, but it will also ensure that as many people as possible can benefit from access to Shoprite’s competitively priced goods and philanthropic endeavours. What all consumers fundamentally desire and deserve is a quality, affordable and accessible shopping experience. Shoprite goes above and beyond in ensuring that these demands are met without ever losing sight of; or taking for granted; its roots and contributors. The benefits brought to companies, communities and customers alike speaks volumes about the commitment to conducting ethical, progressive and reliable business. Shoprite has certainly come a very long way since its humble
beginnings in 1979, when it owned and operated just eight small holdings in the Western Cape. Who could have predicted that after some 40 years, Shoprite would bloom into an award-winning, nationally renowned household name. 22 million customers cannot be wrong; it’s more than clear that at Shoprite, the price is always right.
SHOPRITE 0800 01 07 09 @Shoprite_SA www.shoprite.co.za
AFRICA
THE BUSINESS MAGAZINE FOR AFRICA’S INDUSTRY LEADERS
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Issue No.65
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ALEXANDER FORBES
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Journey of a
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Exclusive interview with CEO Andrew Darfoor ALSO IN THIS ISSUE:
Buffalo Coal / Nautic Africa / Grindrod / SAOTA
AS FEAT UR ED IN
ENTERPRISE AFRICA
DECEMBER 2017