Shoprite Checkers has been flighting a cheeky advertising campaign recently that suggests prices in its Checkers stores are significantly cheaper than those for similar items in stores in central London and Australia. Checkers doesn’t operate stores in either of these jurisdictions, so it’s a bit puzzling why they would flight such ads in the first place. Perhaps it’s to make those left behind in SA with load-shedding, rampant crime & violence have a smile on their faces as they continue to live a happy, laid-back (and relatively cheap?) lifestyle in sunny SA. In other words, it’s a play on the grass is always greener syndrome. However, it’s very superficial and is easy to blow apart.
The first comparison is with Moët & Chandon Champagne and steak. Getting the picture? Your average South African regularly dines out on the most expensive steaks, washed down with liberal quantities of Moët. No, of course he or she doesn’t! It’s a fatuous comparison. A better comparison would have been a modest Prosecco with a nice Cape bubbly. Admittedly, the steak comparison is probably reasonable, though UK meat is of inferior quality generally speaking, and kilo for kilo SA meat is far better value. And that is where these types of comparisons invariably come unstuck. When leaving SA to settle in another country, most emigrants have to vasbyt and realise that their lifestyles are going to change considerably; anyone attempting to replicate a SA lifestyle anywhere else apart from SA is going to be seriously disappointed.
The biggest single differentiator between SA and the UK in terms of grocery prices is the extent to which generic substitution-house brands or private label has crept into the UK. At a rough guess, it is probably 30% to 50% of the average shelf space in a UK supermarket these days, with a huge price advantage (around 50%) compared with prices of national branded products. So unless the comparison goes into the minutest of detail regarding generic substitution, the exercise is rendered less than useful.
SA hasn’t embraced generic substitution to any great extent, other than at Woolworths Foods, though to be fair, the percentage of house brands has increased in recent years. That said, the prices of these house brands are, generally speaking, still a long way off the discounted levels found in the UK.
Still, the timing of the Checkers campaign has been impeccable. For the first time in many decades, the rate of inflation in SA is significantly lower than it is in the UK, if for no other reason than there is no demand push inflation here. UK inflation is well over 10% and stubbornly refuses to come down by much every month. There is a real cost of living crisis, and a certain degree of price gouging by UK retailers appears to be taking place. And in many parts of the country, there are physical shortages of supermarket products; for example, eggs are being rationed in some instances.
But in my opinion, by being careful and keeping an eye out for bargains, one can fill a UK supermarket trolley at the current pound/rand exchange rate for around half what it costs in SA, especially if one sticks predominantly to generic products at the discounters such as Aldi or Lidl. This observation needs to be qualified with a few important caveats. Red meat is still much more expensive in the UK compared with SA and it is much poorer quality. Alcohol in supermarkets used to be a lot pricier in the UK than in SA but not any more. Private label Champagne can be bought for around £15 (about R315) a bottle. Beer is largely similarly priced in supermarkets. This isn’t a flippant claim; I have done the exercise on so many occasions, which is why I was so intrigued when I saw the Checkers advertisement.
And as Eskom’s load-shedding becomes progressively more inflationary as diesel and other costs are passed on to consumers, expect to see supermarket prices in SA rise more rapidly than they otherwise would.
• Gilmour is an investment analyst.
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