SA’s biggest grocer, Shoprite, could emerge as the biggest competitor to US e-commerce giant Amazon and Temu in SA, rather than the much spoken-about Naspers-owned Takealot.
While the media focus is on Takealot being a direct competitor to Amazon, which launched earlier this month in SA, dark horse Shoprite seems well prepared to defend its market share.
Why Shoprite? Shoprite’s core business is in food retailing, complemented by furniture, pharmaceuticals, hospitality, ticketing and digital commerce, as well as financial and cellular services. This diverse portfolio positions Shoprite as a direct competitor to Amazon, Temu, and Takealot.
In 2022, Shoprite expanded its e-commerce presence by taking its Petshop Science brand online.
Shoprite runs Sixty60, a successful, profitable on-demand grocery service for its Checkers brand. The company recently announced that it was piloting a new version of the app, which allows customers to shop for more than 10,000 larger products from its Checkers Hyper division.
This expansion beyond groceries to a broader range of products, combined with the promise of same-day delivery within a 60-minute time slot, signifies Shoprite’s ambition to disrupt the on-demand space once again.
Its product offering now includes camping and outdoor gear, small appliances, baby products, toys, kitchen and home electronics, as well as gardening and pool equipment at supermarket prices.
Like the initial launch of Sixty60 in 2019, the national rollout will follow a phased approach after beta testing to ensure a seamless customer experience.
“We’re confident that the next iteration of Sixty60 will again disrupt online retail in SA,” said Neil Schreuder, chief of strategy and innovation for Shoprite. “Our precision delivery promise means no more waiting at home all day for your general merchandise order to arrive.
“Customers can now choose the 60-minute time slot in which they’d like their Hyper delivery to arrive, with the same to-the-minute driver tracking they’ve become accustomed to on their grocery orders.”
Compete aggressively
Shoprite is clearly prepared to defend its market share in all retail areas and is relying on Sixty60 to do so.
Shoprite has managed to aggressively compete with Walmart — the world’s largest retailer, which bought Massmart, owner of Makro, Builders and Game.
In a March conference call with investors, Shoprite CEO Pieter Engelbrecht said he was unfazed by Amazon’s arrival in the country.
He acknowledged Amazon as a formidable competitor with fantastic systems, but stated: “It [Amazon] is just another competitor ... It’s a hard-fought market.
“There’s not a single competitor that you can focus on. We are all competing very fiercely.”
Shoprite was thus continuously upgrading Sixty60. “We’re rewriting the platform.”
Engelbrecht emphasised the unique advantage Shoprite has with its large footprint of stores serving as micro-fulfilment centres, unlike the expensive centralised distribution model used by competitors.
“Sixty60 is very profitable,” he said.
Takealot has been struggling with profitability, and online customers are not entirely happy with Temu, with some complaining it sometimes delivers different products from those actually ordered online.
Shoprite appears to have the right ingredients to spice up competition against its online competitors.
Shoprite first promised to bring the lowest prices in quality food and essential home goods to its customers more than 40 years ago. In that regard, it has done very well and seems poised to do the same with e-commerce.
Valuable insights
Regular upgrades to Sixty60 highlight Shoprite’s strategy to defend and expand its market share against local and global giants while also attracting new customers.
Shoprite serves more than 1-billion customers annually, selling more than 7-billion products and boasting more than 29-million members of its loyalty programme Xtra Savings. The company has the continent’s richest and deepest customer data set, providing valuable insights that fuel precision retailing and customer centricity.
The arrival of Amazon presents Shoprite with perfect competition, challenging it to deliver on its promise of being a customer-centric retailer. The data scientists at Shoprite X must now prove to the market that they can innovate beyond Sixty60.
Ultimately, competition benefits consumers, and we can only hope that Takealot will also introduce new, creative offerings. Amazon must do the same and ensure that the local online store offers similar discounts to those on the US one, because if not, local customers will continue to import items.
The arrival of Amazon in SA promises an exciting year for local e-commerce customers.
As the erudite ones say: “Success in retail is not just about making a sale; it’s about making a connection. May the best retailer be the one who wins not just the customer’s wallet, but their heart.”
• Lourie is founder and editor of TechFinancials.
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