SA’s leading food retailer is trialling a subscription delivery service with a set monthly fee in a move that is likely to win customer loyalty and keep consumers from shopping at other stores.
The trial, among selected Sixty60 customers, will allow unlimited deliveries of Checkers groceries for R100 a month, provided the value of the purchase equals R350 or more.
If rolled out, the service, dubbed Xtra Savings Plus, will cost R149 a month and include a one-off in-store discount of 10% on purchases under R2,000 and extra personalised saving offers.
If the system works it would be a further blow to competitors by Spar’s business model that offers convenience by being placed in suburban locations near to where people live. Spar said in its recent half-year results it is losing market share to competitors. It is likely Checkers is stealing some of these customers.
Shoprite-owned Checkers was the first to roll out its on-demand service offering of delivery within an hour, which took off and rapidly expanded during the pandemic, with Pick n Pay, Woolworths and 10% of Spar stores following suit.
In a township consumer survey released this month, conducted by digital agency Rogerwilco and research firm Survey 54, 20% of the 1,000 respondents mentioned Sixty60 when asked about which delivery service was top of mind, with 10% mentioning Pick n Pay’s on-demand option.
Checkers does not disclose Sixty60’s earnings or revenue figures separately. But online globally, delivery is unprofitable or has low margins. Home, beauty and medicines retailer Clicks, for example, does not deliver everyday goods as it is too expensive. Online-only retailer Takealot has yet to turn a profit. Pick n Pay has reported that delivery is losing it money.
At the recent April World Retail Congress, the report “Digital-first retail: Turning profit destruction into customer and shareholder value” was released, showing globally as retailers spend more on digital penetration and e-commerce, their profitability declines.
However, Shoprite may be banking on increased loyalty. The group has a “fail fast” philosophy, which is trying new initiatives but walking away quickly if they do not succeed.
It has expanded into outdoor camping goods under its Outdoor brand, pet food and goods at its Petshop Science stores and babywear and large items such as prams.
It is the first retailer to offer a bank account that can take a maximum of R25,000, and aims to have social grants paid into these accounts. It opened its first clothing stores this year, but lags behind Pick n Pay with its more than 300 apparel outlets, which are doing well.
Healthy fast-food joint Kauai rolled out coffee and smoothie subscriptions for a limited period in 2022, offering daily coffees or five wraps a month for a set fee, but these offers have since fallen away.
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