Shoprite has reservations about the cash & carry wholesale business that it got into as a result of its acquisition of some Massmart stores four years ago, but it will stick with it for the time being and see if it shapes up.
“We didn’t plan to go into the business because it actually requires a completely different discipline and way of working than the standard or traditional retail,” group CEO Pieter Engelbrecht said in an interview after the year-to-June results presentation.
“But we inherited that with the Massmart transaction, so I couldn’t wish it away.
“I mean, we paid our school fees. Liquor started to do well quite quickly. Food was quite more difficult because the margins are very, very small, but we are starting to get this under the knee, and it’s very good volume business.”
Engelbrecht said the cash and carry business grew sales 24.8% for the year to June.
“We still haven’t got it completely where we think it is now an avenue for us to expand aggressively, but we certainly are not going to give up on these stores.”
Engelbrecht said he will be in a position to make a decision on the business by the end of financial 2026.
“You know, in Shoprite, we like to fail fast, but I’m going to give it a good chance, and then by June of next year, I’ll make a decision. Do we continue to invest behind this, or do we exit this business?”
He said as part of the sale conditions, Shoprite was required to invest in digitising the platform.
“These days, as much as 70% of our sales are done online and paid with Shoprite’s money market account, which doesn’t carry any transaction fees.”
Shoprite, which continues to extend its market share, plans to open 309 new stores, including three Checkers Hypermarkets, for a of 43.
But these would be the last new Hypermarkets for the foreseeable future.
I don’t see the opportunity for more because it is expensive. Convenience has taken preference for consumers. People are looking for more and more convenience; look at the growth of Sixty60
— Pieter Engelbrecht, Shoprite group CEO
“I don’t see the opportunity for more because it is expensive. Convenience has taken preference for consumers. People are looking for more and more convenience; look at the growth of Sixty60. But the benefit it gives us is that with the introduction of general merchandise on the e-commerce platform, and the omnichannel, people have started to take notice again of the hypers and the diverse ranges that they’ve got.
“Also, so many Game [stores] have closed, there is almost a new need for where to go for general merchandise like a good selection of toys, stationery and small appliances.”
Shoprite has added more general merchandise on Sixty60, which continues to shoot the lights out and generated sales of R18.9bn, up 47.7% from the previous year.
Engelbrecht said the company is adding more items, and over time Uniq apparel, pet products and medical items will also be on Sixty60.
In the year to June, Shoprite surpassed R252bn in sales, growth of R20.6bn year on year. Its adjacent businesses — PetShop, Uniq, Checkers Outdoor, Little Me and Medirite pharmacy — are gaining traction with sales of R1.1bn, up 39.1%.
“We will continue to expand as we expand our supermarkets. At a lot of strip malls, we have almost the entire tenant base because of the needs that each of the businesses fulfils,” said Engelbrecht.
Shoprite will spend R7.9bn in this financial year, mainly on opening new stores, refurbishments and maintenance, but also on technology-led projects. The company said it sold 7.8-billion products in the period under review, up 4.8%, at its 2,577 stores in South Africa and 268 outlets in the rest of Africa. Customer visits were up 4.6% to 1.2-billion.
Shoprite has revamped its financial services platform by adding features such as biometrics, and will introduce a number of products, including a banking account with full functions such as debit orders.
“We have replatformed the financial services to make it easy to add on new products and services, and to make it as seamless as possible, add biometrics on it and safety features,” Engelbrecht said.
“We just completed the rollout, and there will be a lot of action starting very soon. But in the next three years, you are going to see action on the financial services front and also what we call value-added services, betting, transfers and all that stuff.”
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