SA’s grocery sector is in the midst of a dramatic transformation with the rise of online grocery delivery.
Spearheaded by Checkers Sixty60, it’s disrupting traditional shopping habits and forcing major retailers like Pick n Pay and Woolworths to rethink their strategies.
As consumers embrace the convenience of doorstep deliveries, supermarkets are racing to expand their digital offerings while grappling with the high costs of logistics.
But is this shift towards online grocery shopping a lasting change, or just a passing trend? And what does it mean for the future of supermarket retail in the country?
The emergence of Checkers Sixty60 in late 2019 marked a turning point for traditional supermarkets. The platform quickly established itself as the country’s leading on-demand grocery delivery service, growing to 601 locations and surpassing 5.2-million downloads in just five years.
Other retailers, such as Pick n Pay (via PnP asap!) and Woolworths (through Woolies Dash), have since joined the race, while Uber Eats, Spar’s Spar2U and new entrants like Amazon are adding to the competitive frenzy.
Though online grocery shopping initially gained traction among high-income consumers, it is now attracting middle to lower-income customers, thanks to competitive pricing, promotions and growing accessibility.
According to retail analyst Lwazi Nxumalo, SA’s online market has “huge potential” but remains in its early stages compared to global players.
“While SA retailers have taken advantage of introducing online shopping as part of their offerings, they still put majority of their efforts, resources and time on their traditional brick and mortar stores, while international markets are driving online shopping and investing more and more resources towards online.
“SA retailers need to invest more resources on their online platform for the future.”
Despite the bullish growth of online shopping, physical stores remain the backbone of the supermarket industry. Shoprite believes brick-and-mortar stores still play a critical role, particularly as micro-fulfilment centres for online deliveries. The group said omnichannel customers spend 2.5 times more than in-store shoppers alone.
SA retailers need to invest more resources on their online platform for the future.
— Lwazi Nxumalo,
retail analyst
But is online shopping driving new sales, or is it simply shifting purchases from physical stores to digital platforms?
For the 26 weeks to end-December 2024, Shoprite reported a 9.6% increase in group sales, reaching R128.6bn. Sixty60, increased sales by 47%.
SA supermarkets saw a 10.4% rise in sales. Within this segment, Shoprite and Usave supermarkets grew by 6.7%, while Shoprite LiquorShop recorded an 11% increase.
Checkers and Checkers Hyper supermarkets achieved a 13.5% growth, and Checkers LiquorShop saw the highest increase at 14.2%.
Pick n Pay’s latest results indicate that online sales surged by 42.5%, yet total group sales increased by only 3.6%. Similarly, Woolworths reported a 37.2% increase in online grocery sales, but total food sales grew by just 11.4%.
Chante Cain, a research analyst at Aeon Investment Management, believes that online shopping is becoming a mainstream behaviour rather than a niche trend. She has warned that retailers still have a long way to go in terms of infrastructure investment.
One of the biggest challenges facing online grocery platforms is profitability. The logistics of picking, packing and delivering groceries are costly, especially in a country where infrastructure and urban sprawl can make last-mile delivery complex.
Traditional supermarkets incur fixed costs such as rent and staff wages, but online platforms require their own significant investment in technology, warehouses and fleet management.
Greater transparency
Nxumalo said online grocery pricing is influenced by greater transparency, as customers can compare prices across platforms instantly.
Retailers are now experimenting with different models to offset these costs. Pickup points, already in use, allow customers to collect their orders from designated locations, reducing last-mile delivery expenses. However, SA supermarkets are still refining this approach, with varying levels of success.
Nxumalo said Checkers Sixty60 remains the dominant force, continuously expanding its footprint and improving its platform. Unlike some competitors, it allows customers to combine grocery and liquor orders into a single delivery, something Spar2U initially struggled with.
Meanwhile, Pick n Pay is undergoing a major restructuring, closing underperforming stores while investing heavily in digital growth through its PnP asap! service and its partnership with Mr D for grocery deliveries, the group said.
Cain predicts that “customer-centricity, reliability and efficiency will be key advantages for retailers in the next 5—10 years”.
Those who invest in logistics, technology, and seamless omnichannel experiences will be the winners.
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