The Shoprite Group has successfully completed its largest-ever point-of-sale (POS) system implementation in a record time of under five months, with all 29,191 till points across its trading brands in South Africa now live. The new system enables seamless, integrated shopping across digital and in-store channels, highlighting the Group’s relentless drive to become Africa’s most profitable omnichannel retailer. The system (from GK Software) enables quicker adoption of new technologies and integrates all store processes into a unified, efficient platform, improving customer service and the in-store experience. The effort took 58,382 hours, with the conversion of 43 stores in a single day and the upgrade of 631 checkout lanes in a single night at its peak, setting things up nicely for Black Friday, with a cash-up process that’s 60% faster. “The implementation of the new system is a game-changer for us, it not only enhances our operational efficiency but also significantly improves the shopping experience for our customers,” notes CTO Chris Shortt.

Comment: Innovation, scale, efficiency. How Shoprite does things these days.

South Africa’s 22 million pets consume as much as R8bn in food, treats, bedding and accessories annually (presumably not all of them consume their bedding.) Shoprite, with an eye for the main chance and a slice of this lucrative market, opened its first clunkily-named Petshop Science store in April 2021 – the first of the big retailers to get into standalone Pet – and hasn’t looked back since, with 100 now trading after the addition of a spanking new one in Glen Marais, Kempton Park. Petshop Science now has a presence in all nine provinces, and offers premium pet food, treats, toys, and veterinary-approved essentials from renowned local and international brands such as Hills, Montego, Dog’s Life, Eukanuba, Ultra Dog, Royal Canin, Rogz, Nandoe and Small Batches. “Petshop Science’s rapid expansion accentuates the increased demand for specialised pet care, complemented by expert advice from knowledgeable employees,” observes Shoprite’s Chief Operating Officer Willem Hunlun.

Comment: An obvious move, executed at scale and with characteristic efficiency.

The average price of bread in 2024 is anywhere between R15 and R20 a loaf. How, then – and more to the point, why – does Shoprite sell half a million 600g loaves of brown bread every week at R5 each? In part, it’s to fulfil Shoprite’s R5 promise covering bread, deli meals and sanitary pads. But underpinning it is a 45-year-old commitment to provide shoppers with access to essential goods and services at the lowest prices, even in the most challenging economic times. “While it certainly has not always been easy to stick to our low-price promise over the years, it remains the foundation of our business,” notes Ilze Bylos, chief marketing officer for the Shoprite Group. This is why more than 15,000 products are surveyed every week to ensure customers pay the lowest prices and that promotions remain relevant. This steely-eyed focus on what the business stands for extends to other areas like corporate social responsibility, with Shoprite Mobile Soup Kitchens serving over 150,000 free meals every week, and 250 Shoprite-supported community food gardens helping combat food insecurity amongst the most vulnerable.

Comment: A simple, compelling and widely understood proposition.

Another cracker set of results from the apparently unstoppable Shoprite, with turnover up +12% to R240.7bn, and trading profit up +12.4% to R13.4bn. 81% of turnover came from the South African supermarket business, which grew +12.3%. The Group attributes its success to strong fundamentals over the past year, with a +3.7% increase in customer visits, an +8.4% increase in basket size, and 201 net new stores. And CEO Pieter Engelbrecht sees even better times ahead. “Amongst the business community, there is a positive outlook on SA at the moment … The capital inflow is three times that of last year, already,” he notes. “This bodes well for the future… We have invested accordingly … any green shoots that will come out of the economy, or for the consumer, we are ready to receive the rewards.” Among the areas of opportunity for the business is the lower end of the market: Engelbrecht sees an opportunity to grow the current haul of 463 Usave stores to 1,000 in the next five years.

Comment: A spell of growth for Shoprite that should be studied in business schools for years to come. <a href="https://www.tradeintelligence.co.za/App/Uploads/File/0/0/195738/240904_Shoprite%20FY2024%20Results%20Summary.pdf" target="_blank"><strong>More on those results in this excellent summary from our analysts </strong></a>here.

Taking things to the next level this week is, as usual, Shoprite, with the launch of (checks notes) an entirely new route to market for the business. Bulk-buying customers of its Shoprite Cash & Carry stores can now browse and purchase a wide range of goods at highly competitive prices through a fully automated online shopping system, with free delivery within a 50km radius – or to put it another way, e-commerce for spazas. “The new digital platform provides customers with reliable and visible stock access and delivery services that eliminate the need to store excess inventory, frees up much needed cash flow, and gives business owners more time on the shop floor to focus on their customers and business growth,” explains head of B2B eCommerce Mark Cotton. The new system also streamlines the purchasing and fulfilment process for in-store traders, allowing them to log in, access customer and product information, build and fulfil orders more efficiently. They also benefit from instant cash savings and special offers through the Xtra Savings Club loyalty programme.

Comment: Shoprite claiming a growing slice of SA’s still-thriving informal and independent trade.

“Shoprite has been the standout performer among the food retailers as the Group continues to flawlessly execute on its clearly defined strategy and gain market share.” This from none other than Nedbank, which has commended the Big Red One on its early investment in growing market share in SA’s township economy, estimated at a very cool R700bn. Nedbank speaks approvingly of Shoprite’s rigid and disciplined brand-segmentation strategy and is particularly complementary of the Usave eKasi container-store format. The approach is paying off, as anyone with half an interest in retail could tell you: the Group opened 197 stores across its retail brands in the six months through December 2023 and has gained market share for a grinding and seemingly unstoppable 58 months. “In our house view equity model, we hold our retail exposure via Mr. Price and Shoprite, where we are overweight relative to our benchmark,” says Nedbank, using English words.

Comment: What they’re saying is, Shoprite is a large, firm mattress under which they are happy to store their cash. And yes, the township strategy, launched so many years ago, seems so obvious in hindsight.

Upping its delivery game this week is Checkers, which is beta testing its evolved Sixty60 app in and around Cape Town, extending the same-day delivery service to a 10,000-strong range of larger general merchandise items, from camping and outdoor gear to small appliances, baby products, toys, kitchen and home electronics, gardening and pool equipment. “We’re confident that the next iteration of Sixty60 will again disrupt online retail in South Africa,” says Group Chief of Strategy and Innovation Neil Schreuder. The Sixty60 service saw a +63.1% increase in sales in the latter half of 2023 and rollout of the new app to the rest of the country will follow a phased approach. In other Sixty60 news, the business is planning on rolling out the delivery service to its Shoprite customers, starting with a trial in Shoprite Jabulani Mall, Soweto. The idea is to serve customers in areas that Checkers Sixty60 currently does not reach.

Comment: Shrewd on the GM front. Shoprite has no apparent interest in taking on Amazon and Takealot directly. But will not allow either of them to chip away at its GM sales either.

News straight out of left field this week is that Shoprite has teamed up with four other retailers globally – viz. Ahold Delhaize (US, Europe, Indonesia), Tesco (UK, ROI, Europe), Woolworths Group (Australia, New Zealand), Empire Company Limited/Sobeys Inc. (Canada) – not to form a retail supergroup, like the Travelling Wilbury’s of the grocery industry, as you’d expect, but to establish a venture capital fund. W23, as it’s excitingly if enigmatically called, will invest in innovative start-ups and scale-ups that deploy technology to enhance customer experiences, transform the grocery value chain and address the sector’s sustainability challenges. “At a time when innovation is reshaping retail and value chains across the economy, we aim to offer our investors incomparable access to transformative innovation in grocery and sustainability across the globe,” says CEO and Chief Investment Officer Ingrid Maes.

Comment: : Fascinating. A way of non-competitively sharing the cost of innovation while ensuring ROI by enabling startups to take their products to scale across the retailers involved and elsewhere? Or are we overthinking this?

And the winner of the unseemly fracas between Pick n Pay and East Rand franchisee John A Baladakis turns out to be …. Shoprite! Baladakis, you will remember, was being sued by PnP for R224m in monies owed; for his part, he argued that debt stemmed from changes in the discounting model Pick n Pay introduced in 2018, which favoured sales volumes over margins. Two courts sided with the retailer, then PnP sued for his liquidation to recover the cash – the first time the business had ever acted against a franchisee this way, and a source of discomfort to CEO Sean Summers, who had known the Baladakis family for some time. In this week’s twist, it turns out that Shoprite has leased all eight retail properties owned by Baladakis and is busily converting them to stores – a Shoprite which has already opened in Birchleigh, and seven Checkerses soon to come.

Comment: One of those David vs Goliath stories, where David defeats Goliath armed only with, erm, another Goliath.

A debate has long raged about the merits of sustainable business practices. Some argue that they are a nice-to-have and soon abandoned should they pose any threat to the bottom line. Others aver that decarbonising and de-polluting supply chains actually improve profitability. Settling the debate this week is the pragmatic and profitable Shoprite, which has just been awarded ‘A’ scores for both environmental leadership and best practice in strategy and action by the global NGO Carbon Disclosure Project (CDP). Last year, the business increased its renewable energy usage by +91%, reducing its emissions by 106,141 tons of CO2e, while reducing its energy usage by 161 million kWh through the LED lamp replacement project. It also reduced its water use intensity (i.e. water usage divided by total square meterage) by -6.6%, which equates to R18.3m over the 2023 financial year, with monitoring systems that identify leaks, validate usage accuracy, and manage consumption effectively. “Through strategic investments in clever systems, the Group has improved efficiencies, expanded customer choice, minimised food waste, and uplifted the communities in which we operate,” says Head of Sustainability and CSI Sanjeev Raghubir.

Comment: Any supplier able to assist Shoprite in this critical endeavour is likely to be similarly rewarded.

The eagerly awaited Shoprite interims are out this week, and, well, what can we say. Sales up +13.9% to R121bn for the six months through December, 8.3% of this is attributable to new store openings and acquisitions, with like-store sales up a more modest +6.3% in a, shall we say, challenging economy. But hey: trading profit up +10.7% to R6.7bn, with a healthy margin of 5.5%. During the period, the Group added 197 new stores for a total of 3,543, creating 2,617 jobs. And as predicted, Sixty60 continued to whack it out of the park, growing +63.1% and delivering out of a nation-spanning 505 stores. “Whilst the operating context in South Africa remains challenging and costly, especially taking into consideration the ongoing cost of diesel generators during load shedding, we are most pleased to report an increase in profits and dividends for the period,” noted a visibly happy Pieter Engelbrecht, CEO.

Comment: Innovation, yes. Sticking like glue to the basics, certainly. But Shoprite have also achieved a critical mass that in this market is going to be hard to take on. <a href="https://www.tradeintelligence.co.za/App/Uploads/File/0/0/194611/240305_Shoprite%20HY2024%20Results%20Summary.pdf" target="_blank"><strong>For more on those results, click here</strong></a>.

The trading updates are coming in thick and fast these days, some of them a little sheepish and shamefaced, to be honest. Not so with the one this week from Shoprite, which is still on a seemingly unstoppable tear. Total merchandise sales rose +14% to R121bn YoY for the six months through December, with like-store sales up a more muted +6.3% in a blistering inflationary environment. And the Group has extended its rise in market share, that shy elusive beastie, to 58 uninterrupted months. Digging into the weeds a bit, Shoprite and Usave grew sales by +13% during the period in question, with Checkers and Checkers Hyper climbing +13.7% on the back of a +63.1% surge in Sixty60 sales, and LiquorShop sales up +25.2%. And let’s not forget points foreign, where the Big Red One managed absolutely storming growth of +20% on a currency-neutral basis.

Comment: Shoprite: behemoth or juggernaut? The jury’s out.

At the Tatler, we do not typically cover minor variations in the weather. Nor do we report much on the crime rate. This is a mistake: crime and its causes are not an environmental variable about which we cannot do much. Nor do we have to accept it, indefinitely, in our businesses and our lives. So, the news that Shoprite over the last three years has successfully secured through the courts over 1,700 years of prison time – including 24 life sentences – for criminals who have impacted its operations is welcome, if unfortunate. In 2018, Shoprite established a command centre from which a team of investigators, data and crime analysts and law experts use technology, artificial intelligence and an intelligence network to monitor the Group’s large range of business assets, including stores, trucks, and trailers. The centre shares info with the SAPS and NPA to secure prosecutions and ensure that bail is also successfully opposed. Shoprite also employs an expert criminal lawyer to help with the prosecution of criminals, while data and crime analysts testify during sentencing.

Comment: It’s a shame that retailers are forced to deploy substantial teams to keep crime in check, when such resources and efforts could be used to the benefit of other business areas.

What exactly, you ask, is Shoprite doing to integrate the latest tech into its operations? That’s a tall ask for 175-odd words, but we’ll try. First up, it’s using smart tags and advanced RFID in its UNIQ clothing stores so that punters can easily scan and pay for items. This also enables the business to maintain accurate stock levels, reduce overstocking or understocking, and enhance supply chain efficiency. Next, in its supermarkets, it’s deployed a powerful end-to-end supply chain software solution that uses machine learning and AI to ensure highly accurate orders, considering a number of external factors when ordering ultra-fresh products and using historical data to predict buying patterns of certain products. Moving on, it’s also using machine learning to define optimal delivery regions, overlaying a map with the spatial-temporal view of orders and using order data to determine the optimal delivery area for each store. Finally, it’s using tech to integrate the front-end Sixty60 experience with the back-end operations of actual supermarkets.

Comment: Question is, what is your business doing to keep up?

An absolute stormer of a year for Shoprite, whose results we have in hand. Sales were up +16.9% to R215bn – the first time any retailer in South Africa has breached the R200bn mark – with trading profit up a markedly more modest +5.7% to R11.9bn. This as expenses grew +18.6% to R44.6bn, including R1.3bn in running costs for generators. Market share was up for the 52nd month in a row, by +1.4%, with a +13.2% increase in footfall, +3.9% growth in basket size, and 340 new stores. Sales through Checkers Sixty60 grew by an absolutely blistering +81.5%, while the 27,8 million members of the Xtra Savings Card rewards programme generated 2,478 swipes per minute. As you’d expect in times like these, private brand sales grew +19.2% in its South African supermarkets, while sales in the LiquorShop division grew +30.8% to R13.9bn. “We are not known for making knee-jerk reactions. We started on the strategy 6-7 years ago and we are still pretty much exactly on the journey. […] We want to win in the long run and it's the combination of this that is delivering the results that we see today,” said CEO Pieter Engelbrecht to the assembled analysts and other luminaries.

Comment: A remarkable year for a great business – that is nevertheless struggling like everyone else to keep costs in hand. For more on these fine results, click <a href="https://www.tradeintelligence.co.za/App/Uploads/File/0/0/183374/230905_Shoprite%20FY2023%20Results%20Summary.pdf" target="_blank"><strong>here</strong></a>.

The boys (and indeed girls) from Brackenfell have opened their first OK urban convenience retail store in Sonstraal, Durbanville, and this is not your tannie’s Fouriesberg OK Foods or MiniMark we’re talking about here. Rather, it’s a minimalist Woolies-challenging c-store with a strong fresh offering (including convenience foods, sushi and coffee) and the lean and agile range of groceries that you would expect to see in the neighbourhood Checkers Foods format. You’ll also find a healthy sampling of Checkers’ premium private brands including Forage and Feast, Oh My Goodness!, and Simple Truth ranges. Also: OK urban is cashless, although not cashierless like Shoprite’s UNIQ clothing stores. Is it a franchise, like the rest of the OK stores? Not yet: they’re apparently trialling the format before putting it out on the open market – putting it in competition not only with Woolies (which no longer has a franchise operation) but also Pick n Pay and SPAR (who do).

Comment: The speed with which Shoprite innovates is a marvel to behold. Suppliers take note and keep up.

Something they’re calling an “operational update” from Shoprite, for the 52 weeks to 2 July, in which the Group reported that merchandise sales grew +16% to R215bn, while LiquorShop sales increased by +30.8%. Percentage wise, the core business, Supermarkets RSA, achieved sales growth of +17.8%, with like-store sales up +10.3%, and contributing 80.8% to Group sales. Checkers and Checkers Hyper were up +18.0%, while Shoprite and Usave up +15.6%. In rand terms, Non-SA sales increased by +16.4%, contributing 9.1% to Group sales. The Group added an impressive 340 net stores during the period for a total of 3,324 in all geographies. Like all retailers – all businesses, really – Shoprite is taking a hammering on energy-related costs. But it’s doing its level best not to pass these on to punters. “As such, the Group’s full-year gross margin will be lower than that reported last year,” it said.

Comment: Difficult to fault Shoprite, really, on the near-flawless execution of a sound growth strategy at scale.

A victory of sorts for Shoprite in the now decades-long fight over exclusive lease agreements in South Africa’s malls. In 2019, you will recall, the Competition Commission’s Grocery Retail Market Inquiry (GRMI) released a report stating that exclusivity lease agreements were prevalent, anti-competitive, and harmful to shoppers and smaller retailers. Shoprite was the first of SA’s big retailers to voluntarily consent to exiting such agreements, subject to certain conditions. The business was given until December 2024 to come into compliance, rival Pick n Pay was allowed until 2026 because it does not enjoy Shoprite’s footprint. Moreover, Pick n Pay was given free rein to expand into non-urban areas which were then dominated by Shoprite, while Shoprite was curbed from expanding in urban locales. While most of Shoprite’s conditions have been dismissed by the Competition Tribunal, that august body has ruled that the Big Red One be given the same amount of time as Pick n Pay to observe the initial ruling.

Comment: In these days of load shedding and disrupted supply chains, this fight seems almost quaint now.

Let’s take a peek at what it might mean to be a small supplier to a big retailer. Agrikool – just to pick a name at random – is a small agricultural business, founded in 2018 and based in Pietermaritzburg, which develops small to medium-scale local farmers, and connects buyers, growers, producers, and transporters of agricultural products, working with 22 farms in the KZN Midlands. It’s also developed an e-marketplace to connect these growers with consumers. Looking for customers, they took a cheeky swing at Shoprite, and hit pay dirt, as it were, landing their first order in late 2021. “The Group understands the key role we can play in the success of small suppliers like Agrikool through access to our large consumer market to grow their businesses and create much-needed jobs,” explains Maude Modise, General Manager: Enterprise & Supplier Development. “We launched Shoprite Next Capital specifically to assist small suppliers with compliance, working capital and training to ensure their businesses are commercially viable and sustainable in this tough economic climate.” Agrikool delivered fresh produce worth over R3m to Shoprite stores in just over a year.

Comment: A brilliant model for the development of South Africa’s hardworking and innovative SMMEs.

James Wellwood “Whitey” Basson no longer speaks for Shoprite, more’s the pity. We miss his pith and his wit at the results presentations. But here, from a recent interview, and reviving a once-popular Tatler feature, some pearls of his inimitable wisdom:
On the current management of Shoprite: “They’re fantastic guys.”
On the biggest threat to Shoprite: “The boards in South Africa, the non-executive boards, really are not related to their business... and that can be the downfall of Shoprite over a period of time.”
On how to get by in retail: “It involves a hell of a lot of humdrum work, long hours of hard work... actually every day you lose a bit of your brainpower, so you have to pump it up with reading.”
On his old nemesis: “Raymond (Ackerman) was a wealthy guy. That story that he started with 20c in his pocket is not factually correct. He didn’t tell you what he had in the boot of his car.”
On his old business partner: “Christo (Wiese) is an ordinary bloke. Sometimes he’s quite common. He comes from Upington.”

Comment: The philosopher king of our sector, his spark undimmed by retirement.

It seems that when Choppies South Africa closed shop, as it were, back in 2020, that wasn’t the end of the story. The failing business was sold to Kind Investments, controlled by one unnamed previously disadvantaged owner, for the sum of one ront, on the understanding that Kind would inject a further R100m into the business. Subsequently, the new ownership was approached by SPAR, Pick n Pay, and Shoprite, but only Shoprite, it seems has the appetite for a turnaround. While the Big Red One is keeping silent on the possibility of a merger or acquisition, it is apparently close to closing a deal – although whether it’s for the full 93 stores or a reported 38 is not completely clear right now.

Comment: Shoprite is always on the lookout for room to grow in South Africa. Competition Commission considerations aside, this is one way to do it.

South Africans spend around R8bn a year on pet food and accessories, and you know that Shoprite is going to have some of that. The business has opened 30 Petshop Science stores over the last 12 months and is on track to have 50 trading by June, supported by a comprehensive digital offering which obviates the need to schlep ten kilo sacks of crumbles through the store on a Saturday morning. And while Shoprite is – as is so often the case these days – the first supermarket brand to market in this category, it is by no means alone. Woolies, which has been known to sell Wagyu steaks and rotisserie chickens to the owners of discerning pets, is also upping its offering in the sector, while Pick n Pay has expanded from the bare bones offering of the past to a range that includes more premium and raw food options, and dietary supplements from small local suppliers. It also has the free-to-join Smart Shopper Pet Club, an extension of its popular loyalty programme.

Comment: A robust, growing, and increasingly competitive category.

Let’s bask for a while, shall we, in the warm red glow of Shoprite’s interim results for the 26 weeks through 1 January. Turnover up +16.8% to R106.4bn, with R15.3bn in additional sales, trading profit up +8.6% to R6.0bn, depressed somewhat by expenses – particularly related to load shedding – up +17.8% to R21.5bn. Within this, Shoprite and Usave were up +15.1%, Checkers +16.9% and liquor absolutely storming through at +35.6%, albeit off a lowish base. How’d they do that? CEO Pieter Engelbrecht: “Sales growth of this magnitude can only be achieved with expert planning, exceptional teamwork and seamless execution on all fronts.” And with a third and counting of the highly consolidated South African grocery market sewn up, where will the Big Red One go for further growth? They will accelerate the rollout of their new formats, including the standalone outdoor, pet and baby stores, with an apparel offering to launch in April, watch out Mr Price. And what you ask of the shareholders? Where are they to find their meagre crust? DHEPS up +10.2% with a dividend +6.4%, that’s where.

Comment: For more insights on these numbers, have a look at our analysts’<a href="https://www.tradeintelligence.co.za/App/Uploads/File/0/0/171967/230307_Shoprite%20HY2023%20Results%20Summary.pdf" target="_blank"><strong> excellent results summary over here</strong></a>. If we have a suggestion, Shoprite might want to up its Usave game to take on PnP’s stellar Boxer brand.

Welcome to a new Shoprite Initiative which is not a think tank or a dream lab, nor yet a solar power plant, a fully-fledged bank or a hedge fund. For a change. No, it’s a humble range of private label products. Particularly humble, as it turns out: ‘Homegrown’ will source its products entirely from local small, medium and micro enterprises (SMMEs) giving them access to Shoprite’s 534 supermarkets nationwide. The initiative comes on the back of last year’s launch of Shoprite Next Capital, a business division dedicated to giving small suppliers access to its customer market. Some of the suppliers to this affordable range of quality products are Wonder Snacks, a family-owned and operated business that makes popcorn; Khayelitsha Cookies, a woman-owned and staffed baking business with 87 employees; Exotic Taste which makes mango and vegetable atchars; Le Bon Bon, snack foods and confectionery manufacturer; and Gordon Sweets, a family-run confectionary. All products in the range are MSG-, Tartrazine- and Azo Dye-free and made with sustainable palm oil, and together this motley crew of scrappy misfits employ hundreds of South Africans.

Comment: Smart, meaningful, and yes, homegrown. All the hallmarks of a Shoprite project.

A Shoprite trading update, which sort of snuck up on us while we were reading our Aussie newspaper ads. Sales were up +16.8% across the Group to north of 106 billions of ront, with SA supermarkets, contributing around 80% of that, up an even-more-impressive +17.5%, or +11% on a like-store basis. How did The Big Red One manage this? By absolutely shooting the lights out, if you’ll pardon the expression, on Black Friday and over the festive season. Breaking it down further, Checkers and Checkers Hyper recorded sales growth of +16.9%, with Shoprite and Usave coming in at +15.1%. Sales in the rest of Africa, which makes up 9.4% of the total business, rose +17.5% for the period. And will Sir be having any downsides with that? Sadly yes: the business has forked out over R560m on diesel so far this FY and looks good to break a billion by the end of it. And a +56% increase in fuel prices in the supply chain was also difficult to swallow. While selling inflation roared through at +9.4%, Shoprite reckons savvy punters made a lot of that back if they joined the Xtra Savings programme.

Comment: A giant of retail, trading effectively in difficult times for businesses and shoppers alike.

The week before Christmas, Shoprite CEO Pieter Engelbrecht sold R20m in the company’s shares, apparently as part of the “annual rebalancing of his investment portfolio”. And presumably to free up some cash for last-minute stocking stuffers. Shoprite shares went up 13% last year, as did Pick n Pay’s (13%), but the two were well behind Woolies (29%). In the same week, but otherwise unrelated, Pick n Pay trialled a new pick-up counter for Takealot customers in its Table Bay Mall store, reaching collection capacity within two days, strongly suggesting the potential of the concept in a country where home delivery isn’t what it might be for some punters. Woolies is also stepping up its online game, announcing a partnership with logistics outfit Pargo, enabling punters to pick up their fashion, beauty and homeware orders at nearby Pargo click-and-collect pickup points. Finally, Nielsen reveals that Checkers enjoys some 47.1% of SA’s vegan and plant-based market with 49.9% of all frozen, plant-based and vegan sales and 44% of ambient.

Comment: Some interesting initiatives from our major retailers as we enter this brave new year.

In the hurly-burly of the holiday season, we somehow neglected to tell you that Shoprite is seeking parity with Pick n Pay in the eyes of the Competition Commission, in the matter of exclusive lease agreements. In 2019, you will recall, the commission released a report to the effect that exclusivity lease agreements were prevalent, anti-competitive, and harmful to consumers and smaller retailers. Shoprite has to remove exclusivity in its lease agreements by 17 December 2024; Pick n Pay has until 31 December 2026. The reason for the disparity, says the Commission, is that Pick n Pay is smaller and less profitable than Shoprite, which has to sting if your name starts with “Ack” and ends in “erman.” Disputing the disparity, Shoprite advocate Margaretha Engelbrecht said the ruling was aimed at enabling smaller retailers and historically disadvantaged stores to open in the same shopping centres, not to protect Pick n Pay from Checkers. The commission for its part has pushed back, pointing out that Pick n Pay is located more in urban areas whereas Shoprite’s has greater rural footprint.

Comment: The relevance of this last point escapes us. And we suspect that Shoprite will not let this one go until it’s had another day in court.

Shoprite’s R1.36bn offer made earlier this year to purchase various Massmart assets, including 56 Cambridge and Rhino stores and 43 adjacent liquor stores, 10 wholesale cash and carries, two wholesale liquor stores, and the Massfresh and Fruitspot divisions, has received highly qualified approval from the Competition Tribunal. The Tribunal (who we cannot help but visualise as three men in togas) identified ten “highly problematic” stores, mainly under the Cambridge brand, recommending that these stores be divested by Massmart to suitable purchasers not related to Shoprite, which must be small or medium enterprises or historically disadvantaged individuals, as well as being financially able and technically qualified to run them. Shoprite must also, thundered the Tribunes, ensure that no jobs are lost due to the merger, and establish an employee share scheme. Some of the Cambridges have already been rebranded, and renovations are underway.

Comment: One of the bigger retail mergers for some time. It’s no wonder the competition authorities got so involved.

So, Shoprite will be entering the clothing space in March next year – late enough for all its competitors to have tested the market and made the mistakes, early enough to make a buck. It will be starting small, with 10 to 12 stores for which premises have already been secured and will walk away if it doesn’t work out. Which is also a Shoprite strength. The Group is otherwise tight lipped about where the brand will be pitched – although Checkers’ (and by extension Pick n Pay’s) more middle-and-upper income market is a safe bet, as the Group wouldn’t want to go up against its second cousin once removed, Pep. In other brand extension news from the Big Red One, its Petshop Science stores have done well apparently, and 50 are expected to be up and running by June next year. Checkers Outdoor, with two stores, is a longer play. The Xtra Savings rewards programme, launched in 2020, has picked up 9.3 million members at Checkers and signed up 15.5 million at Shoprite.

Comment: A veritable hive of innovation.

A slow news week, so what better time than to check in on Shoprite’s results for the first quarter of this FY we are pleased to call ’23. In the three months through September, sales in South African supermarkets, including LiquorShop, delivered growth of +19.9%, on selling price inflation of +8.2%. This particular period does however come off a low base, as it takes into account last year’s outbreak of civil unrest and the effect of lockdown on liquor sales. And Shoprite are far from sanguine about future growth in this difficult ambit; pointing to the impact of a fuel increase this year of 56%, and the R100m per month that load shedding has added to the diesel bill. That said, the rest of Africa looks good, up +18.8%. And back home they’ve added 46 new stores for the period, including 7 Checkerses, a Checkers Hyper, 2 Shoprites, 10 Usaves, 18 LiquorShops, 4 Petshop Sciences, 3 Checkers Little Me’s and one Checkers Outdoor.

Comment: Which in itself is a pretty good summary of the Shoprite bricks and mortar strategy.

In its inevitable drive to become a power utility in addition to all the other things it does, Shoprite has installed the equivalent of 20 soccer fields of solar at 62 sites around the Beloved Country. In the last year alone, it has increased its installed capacity of solar photovoltaic (PV) systems by +82% to 26,606 kWp – enough to power 3,700 households for a year. Not that this is what that power will be doing; rather, it will be used to keep the lights on in stores and DCs and take a little pressure off our tottering national grid. The Big Red One has also installed LED lighting at all sites, and now has a fleet of 1,041 solar-powered trailers on the road. Semi-unrelated, they will also be adding another 200,000m2 of distribution capacity over the next three years – much of which will presumably be covered in solar panels.

Comment: A grim necessity in our megawatt-starved economy, but also a burgeoning opportunity, in which Shoprite is, characteristically, leading the charge.

Store openings this week from Checkers, the first a high-end FreshX supermarket in Gqeberha’s Boardwalk Mall, offering the better-heeled punter a sushi bar, fresh oysters, high-end confectioneries, stone-baked pizzas, a Foreign Ground coffee shop, and luxury cakes. Interestingly, the mall’s other attractions include one of the Shoprite Group’s standalone Little Me baby store, and its pet format, Petshop Science. Fresh X has been going for absolutely yonks, with the first going live in 2017, and with 68 on the ground they show no sign of letting up. Speaking of Little Mes, Checkers has opened its second Cape Town outlet, in Sunningdale’s Table Bay mall, with the usual offer of an extensive range of baby and toddler products from the best local and international brands (including Stokke) at supermarket prices, and with specialist in-store employees on standby to assist customers. This as competitors like Game and Mr Price enter the arms race with their own blends of standard baby brands and cheaper fare.

Comment: Some years ago, we were often heard to wonder where on earth SA’s large, consolidated retail groups could possibly grow. Now we’re beginning to know.

A quick check in on Shoprite. In the piecemeal reporting of retail news, we sometimes lose sight of the bigger trends, and the big trend with Shoprite right now is one of untrammelled growth and unchallenged supremacy in the retail universe. Did you know, for example, that it’s got into camping? And not as a down-home corporate retreat, but as a profit centre. Following the success of its Outdoor store in Hermanus, it’s going to be opening more around the country. It’s already got 47 Petshop Science locations up and running, and a couple of Little Me baby stores in play too. Last week we noted that it was going big into banking with its Money Market account, offering Capitec a run for its money (see what we did there) and for some time now has been offering insurance products in partnership with OUTsurance. Geographically, too, it’s covering bases: while our own market is pretty consolidated, Shoprite is still operating in other African countries, despite the strategic retreats it’s beaten from Kenya, Nigeria and Madagascar.

Comment: A textbook case of diversifying while retaining your focus and protecting the integrity of your core brands.

Back in the day, it was said of retailers who demanded immediate payment from their shoppers while keeping their suppliers on the leash for three months and more, that they were no better than common banks, living off the interest of the cash they were sitting on. Shoprite, said the wise, was in fact a property developer too, but that’s a story for another day. Now, as it happens, some of the retailers actually are banks, and, it turns out, quite good ones. Take Shoprite for example, whose Money Market Account has recently become South Africa’s lowest-cost bank account, with a R5 flat fee for cash withdrawals, and every other transaction totally free, and with no monthly charges – an offer unmatched by any other South African bank. And the account is, make no mistake, a fully-fledged, transactional bank account, allowing salaries and wages to be paid into it and with almost two million banked and otherwise unbanked customers signed up since it launched in 2020.

Comment: Vertical integration of the financial supply chain? Or just giving the shoppers what they want?

Since its launch in late 2019, the Checkers Sixty60 one-hour delivery service has grown exponentially and is now available in 300 locations across the country, offering 23,000 products at in-store prices, and with sales up +150% for the FY just concluded. One of the downsides of this growth is the proliferation of delivery staff in stores, which act as mini-DCs for the service. Hence the appearance – if that’s the word – of Checkers’ first ‘dark store’ on Cape Town’s otherwise mostly sunny Bree Street. It’s essentially a mini-DC, used exclusively for the fulfilment of online orders. During the FY, Shoprite also acquired RTT’s delivery business, cheekily renaming it Pingo Delivery, and giving the business critical last-mile capacity. And speaking of store openings, Shoprite is targeting a record 275 store openings in 2023 across the Group. Of these, the Supermarkets RSA segment plans to open 220 stores, of which 95 stores will serve the mid to lower LSMs. They’ll also break ground on an 85,000m² Johannesburg campus, expected to open towards the end of FY2024.

Comment: We are in the midst of a great leap forward in retail evolution, with some formats being reenvisioned, and others emergent but far from their final forms.

Your Shoprite results, then, for the 52 weeks through June, and they’re spectacular, under the circs: Group turnover +9.6% to R184.1bn, with SA supers leading the charge, +10.1% to R147.4bn, and non-SA supers recovering nicely, growing +10.4% to R17.1bn. The Shoprite brand saw more muted growth, having been badly affected by last year’s civil unrest, and growing sales just +6.7%. Checkers – the object of scrutiny as it takes on Woolies and Pick n Pay in the still-healthy upper-LSMs – grew sales +9.1% to R58.7bn. Trading profit was up a more modest +6.8% to R11bn, with expenses growing 10.7% to R37.7bn. Private brands were a big seller for the period, contributing +18.8% to the overall mix. In its “multi-year transformational journey”, say Shoprite, it has shifted to a phase of amplification, in which it will unlock the value in the ecosystem it has created. Not that its resting on its laurels – the intention, it says, is to continue to provide value to punters, while growing the overall business, and even doing some good in the world.

Comment: Another great year from this unstoppable juggernaut of our sector. For more on those results, <a href="https://www.tradeintelligence.co.za/App/Uploads/File/0/0/170447/220906_Shoprite%20FY2022%20Results%20Summary.pdf" target="_blank"><strong>have a look over here</strong></a>.

A couple of items from the Big Red One this week, not unrelated to the subject of kudos. First up, Shoprite has recently ranked first in the retail sector for data transparency in Environmental Social and Governance/Sustainability in the 2022 IRAS Sustainability Data Transparency Index (SDTI). IRAS recognises those companies who provide stakeholders with performance information on key sustainability matters including energy use, carbon emissions, water consumption, health and safety, human resource development, corporate social investment and more. Secondly, Checkers’ gourmet private brand Forage and Feast range is fast approaching its second anniversary and is South Africa’s only private brand range endorsed by a Michelin star chef. The flagship range now boasts 216 products across 34 categories, with another 100 to be added over the next year.

Comment: Performance in sustainability – no longer a “nice to have” – is of increasing concern to all stakeholders, particularly those who make their crust off the Johannesburg Securities Exchange (JSE).

We have no doubt that Shoprite, ‘embarrassed’ by its recent tangle with ransomware hackers, has speedily and ruthlessly put stringent measures in place to ensure that it never happens again. But this should not prevent the rest of us from extracting what lessons we can from The Big Red One’s misfortune. After all, this is far from the first time this has happened: last year, the personal records about 4million of South Africans were exposed when Dis-Chem was attacked. Interpol estimates that businesses in Africa – which seem to take a more laissez-faire attitude to cybersecurity than elsewhere in the world – lose at least $4.12bn annually to these attacks, which are carried out using such arcane technologies as AI, bots, DDoS and polymorphic systems. And South Africa is a particular target – businesses here recorded 230million threat detections in 2020 – 2021, with Morocco and Kenya following very far behind at just over 70million each.

Comment: What can be done to prevent such losses? For starters – encrypt all data, don’t keep it in plain text like Shoprite did. And invest in cutting edge, cloud optimised cyber defence and vulnerability protection systems.

Shoprite: is it a grocer? A bank? A would-be supplier of clean energy to the national grid? A property behemoth? All of the above, of course, and much more, but to this haul can now be added an angel investor. To grow commercially viable SMMEs and give small suppliers greater access to its market, Shoprite has launched a new division, Shoprite Next Capital, which will operate as a one-stop shop for SMME partners by providing marketing opportunities, working capital assistance, packaging and labelling support, data sharing, product range and geographic expansion, as well as possible private label partnerships. “This new division will provide SMMEs with easier entry into the Group’s retail market with direct access to buyers that understand their needs combined with personalised growth plans that will assist suppliers to scale up gradually,” says GM for enterprise and supplier development Maude Modise. “The Group has always partnered with small suppliers, but now we are giving them additional focus and allocating dedicated buyers, essentially creating a separate value chain to the bigger supply chain system.”

Comment: Supplier development is essential for businesses looking to build resilience into their supply chains, especially in light of the very necessary move towards localisation to mitigate supply chain disruptions resulting from international geopolitical events.

Last week we mentioned in passing that Shoprite had fallen victim to a data breach, compromising the names and ID numbers – but not the financial information or bank account numbers – of millions of customers in eSwatini, Namibia and Zambia. It turns out that the breach was the result of a hack by a ransomware outfit named RansomHouse, which claims that it has obtained 600 gigabytes of data “in plain text/raw photos packed in archived files, completely unprotected.” The gang, which posted a sample of the stolen data, also says that it has been in touch with Shoprite management with a view to negotiating a deal, which if it fails could see the sale or release of some of the data in question. Shoprite says it has amended its authentication processes and implemented fraud prevention and detection strategies to protect customer data. It’s also locked down access to affected areas of the network.

Comment: What have we learned, people? To stay ahead of the game, we suppose, and to ensure the secure storage of any customer data you may need to trade effectively. But you knew that already.

In another example of its fiercely pragmatic marketing savvy, Shoprite has launched a campaign that highlights its sources of affordable, nutritious, and protein-rich food available across its formats. According to the Household Affordability Index, households prioritised core foods like maize meal, rice, flour, and sugar in March 2022 over nutritionally and protein-rich foods, like meat, eggs and dairy. This campaign – a mix of public-service information and promotions – is aimed at changing that. Some of the items showcased include Tin Stuf’s tinned chicken feet and necks at R19.99, Value Ground Beef Mince, which retails for up to R10 per kilogram less than the usual fare, Ritebrand’s private-label tinned sardines, and the various tinned or dried pulses on offer.

Comment: A good promotion identifies a real consumer need and meets it in a meaningful and relevant way that is affordable to the target audience. This initiative seems to tick all these boxes.

Shoprite has built its success, in part, on its reputation for providing value to South Africans across the economic spectrum. And it’s built this reputation by providing that value, then communicating it in novel and compelling ways. Take, for instance, its ongoing R5 campaign, which highlights the value the business provides by communicating what can be purchased in its stores for the increasingly embattled denomination. Like, in 2016, its subsidized 600g loaf of brown bread, still available at that price. And the R5 deli meals, launched in 2017 to provide nutritious, affordable, hot food, and of which over 228,000 were sold last year. The R5 packs of sanitary pads, launched in 2020, and since purchased by millions of South African women and girls. And – extending the offer to financial services – the flat R5 fee for Money Market withdrawals while everything else on the account is free. Putting all of this in context, it’s estimated that 2.5 million South Africans experience hunger every day.

Comment: The power of a R5 coin, and the power of a good idea, communicated consistently. Good work, The Big Red One. Our sincere hope is that the conflict in Ukraine will not severely jeopardise this noble initiative.

Another set of interims, this time from Shoprite, which demonstrates once again that it is possible to grow a business in our difficult social and economic climate. Turnover was +10.0% to R91.1bn for the six months through December across the Group, with trading profit +14.5% to R5.4bn and margin a solid 6%, up from 5.7% last year. Digging in a little, of the supermarket brands in the stable – and Checkers’ high profile notwithstanding – it was Usave which recorded the highest growth, at +12.1%, with Shoprite itself coming through at a still solid +6.8%. LiquorShop of course shot the lights out, coming off the very low base of lockdown prohibitions, and growing 49.8%. Said CEO Pieter Engelbrecht addressing the punters, “Delivering a 25.5% HEPS growth from continuing operations in such a difficult environment is a result of world-class execution of a clear plan, underscored by our daily obsession with affordability for our customers.”

Comment: Our advice to anyone flailing in the world of retail right now would be: do whatever Shoprite is doing. Although you’ll have some catching up to do.

One of Shoprite’s unsung initiatives is its support for sustainable food security in under-resourced and vulnerable communities across the Beloved Country in the form of food gardens. The Big Red One supports more than 150 food gardens and over 2,500 home gardens, benefiting almost 17,000 South Africans, has trained more than 570 community members in sustainable food gardening in the past year alone, and has distributed seedlings, fertiliser, gardening tools and more to help community members start and grow their gardens. The retailer is expanding its support of KwaZulu-Natal communities after last year’s unrest by investing in an additional 30 food gardens in the province in communities like Inanda, KwaMashu and Newlands West. “Communities are struggling due to the impacts of the COVID-19 pandemic and climate change, and this programme will provide much needed relief,” says Shoprite Sustainability Manager Sanjeev Raghubir.

Comment: Critical work from a visionary business.

In these days of little phones and big data, retailers have increasing volumes of the latter on which to base their business decisions and better serve their customers. And also, it turns out, to parlay into hard, hard cash. Witness this week the case of Shoprite, which recently launched Rainmaker Media, a specialised agency which helps suppliers target their audience online and in store, and optimise their ad spend with measured sales, accessing The Big Red One’s wealth of consumer data. “By working closely with brands, we will marry campaign objectives with the right audience and use previous campaign data to create the perfect omnichannel solution that delivers optimal and measurable results,” says the Group. One spinoff from the business, which was hatched in the ShopriteX incubator, is major savings in marketing costs and waste as Shoprite and its suppliers use Rainmaker Media as a precision advertising stream.

Comment: Good for the business, and doubtless others will follow. But it is to be hoped that there is room for existing media and advertising outfits in this new ecosystem.

Having launched the LiquorShop online in November, Shoprite has found it to be a very tidy little earner indeed. Don’t take it from us though: “Our average basket value on our LiquorShop online is plus minus eight times more than it is in our bricks and mortar retail stores,” says Ops Manager Jean Marais. This growth has obviously been pushed along by the pandemic: during these last challenging two years, online retail in South Africa has doubled growth to almost R30bn; by the end of the current financial year Shoprite believes that it will be a R40bn industry or around 4% of all retail in South Africa. In other Shoprite news, the business has begun the new year as it will no doubt continue, responding to some of the natural disasters that have already wracked poor communities across the Beloved Country. After last week’s flash flooding in the Eastern Cape, for example, the business deployed a Shoprite Mobile Soup Kitchen, which will feed people in the affected area for as long as necessary.

Comment: A remarkable business, with a profound sense of what ordinary South Africans need.

More proof, if any were needed, that Shoprite regard home delivery as more than a flash in the pan: the Big Red One announced this week that it would be entering into a JV with long time logistics providers RTT Group to protect the learnings, technology and intellectual property created by its Sixty60 on-demand delivery service, while facilitating future innovation and development of the Group’s last mile logistics. Sixty60, like other home delivery services, has been something of a victim of its own success, with the business scrabbling to meet demand. Other businesses have rushed to make acquisitions to boost their delivery capacity – Massmart, which bought a controlling stake in OneCart in October, is a case in point. “This RTT on-demand joint venture will allow the group the opportunity to continue enhancing our order fulfilment and last-mile delivery capabilities,” says CEO Pieter Engelbrecht.

Comment: A shrewd move by Shoprite, keeping its friends close while not having to buy them outright.

A bold move from the Big Red One this week with the launch of Shoprite’s standalone MediRite Plus, which in addition to the usual pharmacy offering will provide wellness products, beauty and personal care products and baby brands, likely to include Shoprite’s own Little Me range. Specialised healthcare items like wheelchairs, walkers and crutches are also on offer, as are services like the newly launched PrepMyScript, which enables pre-ordering of chronic medication, supported by the MediRite Courier Pharmacy Service for free door-to-door delivery, with all major medical aids onboard. And in line with the aggressive expansion of the loyalty programme, Xtra Savings rewards naturally apply. The sceptics among you (you know who you are) will doubtless point out that Shoprite’s footprint of 145 in-store and standalone pharmacies lags the leaders in market share, with Clicks at 621 pharmacies nationwide and Dis-Chem at 199. To which Shoprite would doubtless say, hold my beer (or in this case my nourishing superfood drink).

Comment: And we ourselves would point to the Xtra Savings programme, last of the loyalty programmes to launch but now by no means the smallest. Look for growth both organically and acquisitively in the months to come.

An operational update from Shoprite …. What’s that? Ah yes. Kind of like a trading update, but for quarterlies. We had to look it up ourselves. Anyway, the Group let it be known that it increased sales by +9.3% for the first quarter through September, with South African Supermarkets, excluding LiquorShop, coming in at +9.9%. Add the booze, and you’re looking at +11.6%. The quarter was much impacted by rebuilding efforts after July’s civil unrest; this notwithstanding, the Group managed to open 29 new stores: two Checkers, one Shoprite, eight Usave, 17 LiquorShops and one Petshop Science. In addition, it expects to conclude the purchase and the integration and rebranding of 111 Masscash Cash & Carry and Cambridge Food stores (including the adjacent liquor stores) by the end of the financial year. Dim spots are rarely found in the Shoprite universe, but one such is this great continent we call home: despite a solid performance in Zambia, sales outside of South Africa grew only +1.9%.

Comment: Shoprite believes it is well stocked for the holiday season, and on track to provide punters with the service they’ve come to expect from the Big Red one. As well they might be.

The key metric for Shoprite, it seems, has always been market share – defending it fiercely when it needs to, talking it up when it can, proudly sitting it atop the shoulders of both sales and profit when it comes to results time. Thus, the claim in its latest investment presentation that the Group has enjoyed a +R4.5bn gain in profitable market share in the 53 weeks through July. Shoprite also noted that NielsenIQ has estimated that its supermarket brands, including Checkers and Usave, had registered 28 months of uninterrupted market share gains. The excitingly punctuated research outfit found, moreover, that Shoprite had made a gain in market share of +0.94% for the trading period in question. Shoprite’s South African supermarkets – the heart of the business – increased trading profit by +17% to R9.4bn for the period, on an impressive trading margin of 7%. A sizeable chunk of this success is due to investments in technology in recent years. “In addition to transforming how we operate, our IT re-platforming has facilitated and fast-tracked our transformation as part of our digital and data-led future strategy,” notes CEO Pieter Engelbrecht.

Comment: A South African retail icon, going from strength to strength in the toughest of times.

A couple of weeks ago we reported on Shoprite’s trading update for the year through June; here are the actual results: turnover up +8.1% to R168.0bn in the toughest conditions anyone can remember, with trading profit climbing +24.9% to R10.3bn, and margin growing to 6.1% from 5.3%. This performance, they say, resulted from a shift in the sales mix, pleasing growth at Checkers as it increases its foothold at the upper end of the market, system-supported collaboration across the corporate teams that drove improved buying, more effective promos due to the reach achieved and data harvested through the Xtra Savings programme, and ongoing improvements in supply chain efficiency. “We are very optimistic about our opportunities in digital as well as our customer momentum while we have the focus to become Africa’s number one retailer in terms of accessibility, affordability and innovation,” says CEO Pieter Engelbrecht.

Comment: With the growing impact of the Shoprite X lab on the business, more of the same can be expected. And for more on these results, please click <a href="https://www.tradeintelligence.co.za/App/Uploads/File/0/0/157464/210907_Shoprite%20FY2021%20Results%20Summary_Final.pdf" target="_blank">here</a>.

A trading update from Shoprite for the 53 weeks through July 4, with sales up +8.1% to R168bn, and the core Supermarkets business back here in the Beloved C., accounting for more than three-quarters of continuing revenue, growing +9.3%. Reflecting the enthusiastically if chaotically applied prohibition, sales form the stand-alone LiquorShops were up just +4.4%, with a -21.8% decline in first half sales, and growth of +53.6% in the second, with a total of 144 days of closures for the year. Furniture was a big winner for the Group, although it was disproportionately hit in the looting – sales at OK Furniture and House & Home were up almost +25% for the period, to R6.8bn. And in what this year is sadly likely to become a standard of results reporting, 119 stores of Shoprite’s total of 1,189 supermarkets trading under the Shoprite, Usave, Checkers and Checkers Hyper banners, were severely affected by looting and fire damage, as were 35 furniture stores, and 54 LiquorShops. The really big news, though, is that Shoprite will be buying lock, stock and barrel all of Massmart’s non-core food businesses – see the Massmart story down below.

Comment: Very solid results in what we can all agree has been one heck of a year.

Are supermarket staff frontline workers? According to Shoprite – and it appears, quite reasonably so – yes, they are. Last week, The Big Red One called on the government to allow its 140,000 staff to receive vaccinations, on the grounds that a large number of them are directly serving over 25 million people a month. This as the President announced that mining, manufacturing and the taxi industry would be prioritised for the fourth round of imijovo. “We strongly believe that (our people) should be prioritised and we are ready to roll out vaccinations on behalf of government to our employees who continue to go the extra mile in challenging conditions to keep serving customers,” argues Shoprite CEO Pieter Engelbrecht. The business also stands ready to assist in the broader rollout. “We can help if we can secure and administer vaccines, while absorbing all the costs ourselves,” says Mnr E.

Comment: It’s no secret that the South African state needs all the support it can get in serving the South African population. It would do well to take Shoprite up on the offer.

The Big Red One, having beat a strategic withdrawal from Nigeria, has shown this week that its ambitions for this great continent are by no means exhausted, with the opening of its 40th store in Zambia at the Jacaranda Mall in Ndola. It’s interesting to note that Pick n Pay, which once claimed Zambia as its African bridgehead, has 24 stores in the country. One of the reasons for Shoprite’s success in Zambia has been its ‘buy local’ policy, with 90% of goods and services purchased in-country. Another is employment: the business has hired 7,800 people directly and another 1,550 indirectly, 80% of these between the ages of 25 and 35. In other Shoprite news, not unrelated, the retailer has spent R700m over the past five years on retail skills and training programmes, training over 24,000 people in its retail readiness programme, providing 1,027 bursaries, and training 5,765 young people in the past three years in the Youth Employment Service (YES) programme.

Comment: Commendable stuff from Shoprite, creating jobs for the generation that most needs them.

Shoprite has seen a -16% YoY decline in violent and serious crime, including armed robberies and burglaries, from July 2020 to May 2021. And when we say “has seen” what we mean is “has successfully achieved,” because this reduction has, in large part, been due to the efforts of The Big Red One’s in-house team, which operating from a centralised command centre is involved in the entire process from identifying suspects to their arrest, to opposing bail in court, to working with police to ensure the accuracy and validity of the docket, to cooperating with the National Prosecuting Authority and providing evidence in court, to ensure that criminals are pursued to the furthest ends of the Law. The command centre makes extensive use of technology and software systems including electronic dockets, suspect photo albums and evidence files. A team of data and crime analysts do predictive analysis, identify suspects, and link suspects to each other and to the crime scene. This technology, including video footage and a chain of evidence, has been critical in court proceedings. The investigation team made 752 court appearances in the period in question, securing +64% more guilty findings.

Comment: This is how it’s done – with significant investment and endless grinding work to ensure that the business and the public it serves are kept safe, and future criminals deterred.

Word from the Stock Exchange News Service (SENS) is that Shoprite is adding some muscle to its board in the form of Linda de Beer and Nonkululeko Gobodo as independent non-executive directors. De Beer comes via the boards of such illustrious businesses as Aspen, Momentum, and Tongaat Hulett, with a background in governance, accounting and reporting, and is the Chair of the Public Interest Oversight Board, which oversees and monitors the standards set for audit and accountant ethics. “Well governed companies are the success stories that give confidence in our country and its markets, which is very important for foreign investment,” she avers. Gobodo has served on the boards of Clicks and Mercedes Benz SA, and has sat on various ethical and oversight committees too numerous to list here. She is, she says, eager to work with a group that “is committed to … feeding the nations of Africa and catering for all people, including poorer communities, with affordable products such as bread below R5 and affordable sanitary pads”.

Comment: Hawk-like oversight and nation building. A powerful combo.

When Shoprite does it, you know we all probably should be. It’s not that it doesn’t innovate, more that it does so at the right time, and with a view to minimising risk and having all its ducks in a row when it does. So everybody, get busy on those “utility-scale wind and solar plants”, because that’s what the Big Red One is doing. Currently the business has installed 480,000 square feet of solar panels on top of 21 distribution centres and stores in South Africa and Namibia – but this, while impressive, accounts for less than 1% of the Group’s energy requirements. Now it’s gunning for 25%, working with an unnamed company (coughNotEskomcough) to build and commission utility-scale wind and solar plants, which will generate electricity that’s then transported via the national grid. In the meantime, it’s making inroads by committing to procuring 434,000 MWh of renewable energy per year for the next seven years, and will continue to roll out rooftop solar, here and further north. Its energy bill is currently in the order of R2.5bn annually.

Comment: Those are some big commitments, as Shoprite gets the jump on the green energy revolution that is barrelling down upon us.

No flies on Shoprite, and if there were, they’d find a way to sell them affordably, and for a tidy profit. Where were we? Ah yes. Barely has the ink dried on reports that The Big Red One will be exiting Nigeria, and we have a buyer for their local assets, the dramatically named Nigerian property outfit Persianas. While no price tag has been revealed for the deal, Shoprite’s Nigerian business is worth around $73m all in, so it’s got to be there or thereabouts. As you know, Shoprite has been in Nigeria for 15 years, and will be passing the slippery and dangerous baton to Pick n Pay, which is trying a small local super approach in that challenging geography. In other Shoprite news, they are adding a free monthly funeral benefit to their Xtra Savings loyalty programme, giving predefined beneficiaries access to a R4,500 Shoprite grocery voucher when the time comes, as an incentive for basic monthly card swipe requirements.

Comment: Genius. True and relevant value, in exchange for measurable loyalty.

Last week we touched on Shoprite’s Xtra Savings loyalty programme, let’s dig into those numbers a little. Since launching in October 2019, they’ve garnered 17 million members, who collectively saved R2.1bn in the six months through December in a total of around 9,000 grocery deals every month. We also mentioned that the business was preparing to launch its own mobile virtual network operator (MVNO) – more deets on that too. K’nect mobile, to be launched in April, will offer punters 100MB free data for three months, and flat call and data rates, with apps and data zero-rated in the Shoprite Group’s eco-system. Customers will be rewarded with free data and airtime. Finally, CEO Pieter Engelbrecht has let it be known in no uncertain terms that he would be interested in buying Massmart’s Cambridge Foods and Rhino retail when they go under the hammer. “It would be right up our alley,” he says.

Comment: A business on fire, in the best possible way.

Those Shoprite results then, after a results season that has seemed to last the entire year. Sales were up a solid +4.7% to R83.4bn for the year through December, and trading profit an impressive +18.3% to R4.7bn. Here in the Beloved Country, sales increased +5.6%, with Checkers, the star performer, growing sales +11.1%. This points to a growth in market share on the part of the Group’s posher outfit that must surely be putting the wind up competitors Pick n Pay and Woolworths – particularly in the light of Checkers’ very successful Sixty60 delivery offering. Checkers added a further ten FreshX concept stores during the period, for a total of 38. Another highlight of the year was the continued growth of the bare bones Xtra Savings rewards programme, launched just over a year ago, and now boasting 17 million members. What’s the deal with that? “The success of Xtra Savings is its simplicity and transparency,” says Group strategy and innovation chief Neil Schreuder. “No points and no levels, it’s all about straight-forward instant savings on things you actually need.”

Comment: A great South African business, going from strength to strength.

A brief look at Shoprite’s interims to end December then, which we will unpack in greater detail next week after we’ve had a chance to slice and dice. Same old, same old really, and we mean that in the best kind of way – Group turnover +4.7%, Shoprite and Usave +5.6% and Checkers doing, well, “Better and Better” (No, just no. Ed) at +11.1%. But for more of the deets, take a look at our snappy summary here. In other news, Shoprite and Checkers will be supporting local wine farmers (while also, no doubt, making a buck) by buying up 1.5 million litres of the good stuff that those sons (and daughters) of the soil have failed to offload during our lockdowns. The wine is to be bottled under the same ‘lucky dip’ principle that governs its Oddbins selection and will be marketed under the new ‘Elephant’s Cousin’ brand, which makes affectionate reference to the common hyrax, or dassie, and will be available only as long as stocks last. Cultivars will include a sauvignon blanc, a merlot and shiraz, characterised by quaffability, and will be available in both supermarkets and LiquorShops. And (after this we’re done, promise) Checkers Sixty60 has launched a paper bag recycling initiative, in line with Shoprite’s zero waste-to-landfill goal, allowing punters to send their used bags back with the driver.

Comment: Some outstanding results and initiatives from the Big Red One, which seems to have viewed this last difficult year as an opportunity to innovate the heck out of every challenge it encounters. And that’s how it’s done.

Still adding services hand over fist this week to its already brimming basket is Shoprite which has announced that punters will be able to deposit cash directly onto their bank cards at till points in any Shoprite, Checkers or Usave store. What’s the thinking? “Cash deposits at till point offer a new level of convenience and safety for our customers, many of whom earn their wages in cash, and live in rural or remote areas without easy access to ATMs,” says Jean Olivier, General Manager: Financial Services. “Together with a range of in-store Money Market services, this new functionality means we’re now able to process an even greater number of financial transactions, making our supermarkets a real one-stop shop.” Customers will be able to make deposits of up to R3,000 into their accounts at most major banks, in addition to the cash withdrawals, money transfers, and bill payments that Shoprite already offers in what is now pretty much a full basket of banking services. They will naturally be inclined to spend some of that cash in store.

Comment: Shoprite may not have been the first retailer to get into financial services, but typically, it has expanded its efforts in this area more comprehensively than most, with a sharp eye for the offering most relevant to its shoppers.

Hot on the heels of SPAR’s trading update last week comes one from Shoprite, for the six months through to 27 December 2020. Sales for the period were up +4.7% to approximately R83.4bn, dragged thither by a decline in sales of -21.8% in the LiquorShop division. Excluding these latter numbers, South African supermarkets, which contributed 78% to Group sales, grew turnover +7.8%. Checkers, fast becoming the jewel in the Shoprite crown, absolutely shot the lights out at +11.1%, with Shoprite and Usave growing +5.6%, reflecting the difficulties for lower to middle income South Africans. The rest of the local business, including OK Franchise, Transpharm, MediRite Pharmacies, Checkers Food Services and Computicket, grew sales +10.0%, and 45 South African supermarkets were added for the period.

Comment: A good set of numbers, all things considered.

Shoprite has concluded the terms of the sale of its Nigerian subsidiary, after 15 years in-country, joining an illustrious line of South African businesses which have tried and failed there, including Sun International, Tiger Brands, Truworths, Woolies and Mr Price. What’s up with that? A bunch of factors. The high degree of informality in the market makes it difficult for businesses with more conventional cost structures to compete profitability, particularly since there is a bustling black market in real and fake branded goods sold into that market. The government is quick to fine foreign businesses that overstep its sometime poorly defined boundaries. The oil-driven economy is in the midst of a five-to-seven-year bear market. “Just because something is risky does not necessarily mean it is sufficiently rewarding,” said Keith McLachlan, analyst of AlphaWealth.

Comment: Shoprite’s march into the rest of Africa was once the stuff of legend. Now that it has left the bulwarks of Kenya in the East and Nigeria in the West, we should look to more consolidation and a bigger market share play here at home.

Aaaand Shoprite back on deck, because it’s a heck of a slow news week, and also because Shoprite is doing some fantastic stuff with renewable energy. Like putting up enough solar panels at its Brackenfell plant to cover a football field. Meeting a part of the energy needs of 18 stores around SA and Namibia with photovoltaic generation. Putting 650 panels on the roofs of its refrigerated trucks, providing enough power to run over 1,000 fridges for a year, and allowing drivers to switch off their vehicles during drop-offs, reducing noise and emissions. It has also signed an agreement which will see the Group procure 434,000 MWh of renewable energy per year for the next seven years. “We recognise that climate change poses direct and indirect risks to our business and the communities we serve,” says Sanjeev Raghubir, Group sustainability manager. “Therefore, we are taking measures to tread more lightly on our planet.”

Comment: We are at the beginning of a remarkable transformation. It’s great that companies like Shoprite are taking their place in the vanguard.

Since the beginning pf the pandemic, Shoprite has given away a hefty R100m in food – the equivalent of about 27 million meals – to organisations around the country. Food security has long been a preoccupation for the Big Red One, a pragmatist in all things including charity. As the government’s R350 COVID grants start to dry up, this mission has become more urgent than ever, particularly for the most vulnerable South Africans. Accordingly, Shoprite provided almost 800,000 meals to 109 Early Childhood Development (ECD) centres during their COVID-19 closures last year and has served 4 million meals via its mobile soup kitchens. The Group has donated thousands of COVID-19 care packages to hospitals in the Eastern Cape, Gauteng, Free State, KwaZulu-Natal and the Western Cape. Another aspect of Shoprite’s efforts is its ongoing role as South African’s second largest employer after the government: 141,000 South Africans are employed as frontline workers by the Group, which has grown its employment numbers by opening stores even through the pandemic.

Comment: We know as you do that all of our retailers are doing their bit during this incredibly difficult time. Shoprite’s programs do provide a useful window into the scale of their collective efforts though.

Per the annual 2020 Star Readers’ Choice Awards, Checkers is South Africa’s best grocery store and supermarket brand. Among the reasons for this, according to Checkers themselves, are the world class retail experience it provides, as embodied in the new Fresh X stores, the super-popular Sixty60 delivery service, its Xtra Savings rewards offering and the growing private label ranges under Simple Truth and Oh My Goodness! In other less welcome Shoprite news, the business is being impeded in its timely and well-advised exit from Kenya by an outstanding legal claim from a man who accidentally pulled a pile of plastic box lids onto his own head. A Kenyan court has ordered that Shoprite pay compensation in addition to the medical bills it has already covered, or it can’t leave the country, where it lost somewhere north of R400m last year. The judge in the case did mention that the order would be difficult to enforce.

Comment: This seems both obstructive and extreme. We’re pretty sure that The Big Red One is good for a reasonable number of Kenyan shillings, acceptable to both parties, without having to leave the bakkie behind as a deposit.

Shoprite – to no-one’s real surprise – was voted the Best Convenience and Grocery Store of the Decade in the 22nd annual Sunday Times Top Brands survey. The business has been riding high these last weeks with news of the success of its Xtra Savings rewards programme, and the new Money Market Account which makes basic banking functionalities more accessible. And perhaps more to the point, while its competitors have seen their ups and downs, Shoprite has kept an even keel, even riding out the storm of Christo Wiese’s ongoing travails and the not-unrelated departure of the legendary Whitey Basson. In other Shoprite-related news, Checkers is continuing to expand its range of vegan products to cater for an increasing number of customers who are choosing to follow a plant-based or flexitarian lifestyle. New product launches in various categories supplement Checkers’ already robust veggie offering, in addition to Checkers’ well-known and exclusive Simple Truth and Linda McCartney ranges.

Comment: Getting the basics right while keeping the innovation flowing. That’s how you do it.

File under obscure things of which we can be proud: the Shoprite Group’s Portfolio Management Office (PMO) has gained international recognition for its world-class project management skills as one of the top four finalists in the 2020 PMO Global Awards. Some of the ground-breaking projects managed by the Shoprite PMO include the roll-out (in under 18 months) of the Group’s Enterprise Resource Planning System across its operations in 15 countries and the highly successful launch of the Xtra Savings rewards programme. In July, the team won the 2020 PMO of the Year Award in Africa. The PMO team manages collaboration between all business units and the successful delivery, monitoring, and evaluation of projects. “This gives some recognition to our ability to innovate and adapt to challenges and changes in a rapidly moving retail sector,” says David Cohn, Group GM of IT.

Comment: A bit of global recognition is always nice, and in this case well-deserved.

A mixed bag from the Big Red One this week. First up, its bringing more financial services to its punters with an arrangement with FNB where customers who have lost their FNB Easy bank cards through theft or negligence will now be able to replace these for a comparatively low fee at Shoprite and Checkers stores. Currently, Standard Bank Instant Money™ account holders can withdraw money at any Shoprite or Checkers till point, and Capitec account holders can send cash to an unbanked individual for collection at any Shoprite, Checkers or Usave. Next: In its first year of operations, the Group’s Xtra Savings reward scheme has signed up ten million members, with R333m saved in the last month alone. And finally, Shoprite pharmacy MediRite has donated handwashing kits to schools around East Rand and produced a COVID-19 safety video for wide distribution.

Comment: Covering all the bases this week: loyalty, CSI and value-added services, with a bit of price thrown in. Nice.

Here’s one we’re going to file under Shoprite, although it could also appear in the Massmart column: last week, the Competition Tribunal confirmed a consent agreement between itself and The Big Red One preventing the latter from enforcing its exclusive lease agreement clauses with South Africa’s mall owners. Massmart are stoked – even though they’ve discontinued Game’s food-retail experiment which caused Shoprite to enforce the clauses in the first place. “Massmart's position has always been that exclusive lease agreements are intuitively anti-competitive and a barrier to competition, particularly to new entrants,” says Group Corporate Affairs SVP Brian Leroni. In happier news for Shoprite, over a million punters signed up for their Xtra Savings programme within 72 hours of launching after a successful trial at Checkers. That’s 400 per minute.

Comment: The Tribunal finding is good for the malls, too, who need all the tenants they can get right now.

Shoprite has always been of the ain’t broke, don’t fix it school, making changes to the business in response to new challenges or opportunities, and not necessarily going all-in on the next shiny object. However, in the last few months there has been no shortage of either challenges or opportunities, and this has awoken the spirit of innovation in the Big Red One. Initiatives include accelerating its e-commerce and delivery services via Checkers Sixty60 and Checkers Food Services, and the launch of virtual grocery vouchers via Computicket virtual voucher and online order fulfilment initiatives. The business is exploring other innovations including computer vision, AR, smart robotics, intelligent paperless solutions, and advanced video-conferencing solutions. Another innovation, of the more traditional variety and unrelated to the pandemic, is that Wendy Lucas-Bull is to bring her vast banking and consulting experience to bear on the Shoprite Board, where she is soon to replace Oom Christo Wiese as Chair.

Comment: A highly significant appointment, with, one hopes, ramifications for women in leadership across the industry.

An impressive set of numbers from Shoprite Holdings, all things considered: Group sales up +6.4% to a record R156.9bn for the year through June, with trading profit, excluding hyperinflation, up +10.4% to R8.3bn. Here in the Beloved Country, Supermarkets RSA increased sales by +8.7%, with Checkers a particularly pleasing performer at +13.5% up and Usave positively storming home at +16.5%, adding 14 net new stores for a total of 374. RSA Shoprite stores reported sales up +5.5% and added a net 6 stores to take the base to 503 stores. The two weeks before lockdown saw major sales across the Group, thanks in no small measure to panic buying. In other, perhaps not unrelated news, Shoprite announced that it intends to dispose of a majority stake in its Nigeria subsidiary and plans to exit Kenya by the end of 2020. For more info, see our summary here.

Comment: A great South African business, innovating and adapting at the most difficult time any of us can remember.

“COVID-19 has seen a once-in-a-generation shift to online shopping in South Africa, and it's a step change we believe is here to stay,” says Neil Schreuder, Shoprite’s chief of strategy and innovation. This as Checkers’ Sixty60 delivery service completes national rollout after three successful months of operation and the creation of 800 new jobs since lockdown started. There was a brief spell during the busiest times when it was forced to renege on its promise of same-hour delivery, but everything’s back on track now. In other news, not unrelated, of the Big Red One, the Checkers Xtra Savings rewards programme, which kicked off several lifetimes ago in November 2019, has signed up 4.7 million of South Africa’s discount-hungry punters. “These are attractive add-ons they have added which reinforce their brand in the market,” says Sasfin Securities deputy chair and investment guru David Shapiro, of both initiatives.

Comment: Nice work Shoprite, a combination of marketing innovation and sticking to the knitting, which sounds like a solid premise for our next Pinterest page.

Who doesn’t need some good news these days? Put your hand down, Bezos. We know we do, which is why we turn to the eagerly awaited news of this year’s winner of Shoprite’s Championship Boerewors Competition. Aaaand from out of leftfield comes Delano Jasper, 18, of Wellington ... that can’t be right! But it is. Jasper falls squarely within Generation Z and is a first-timer in this landmark event of the Worsmeister’s calendar. Reading between the lines, though, he comes from a long line of sausagesmiths: “It’s the first time I entered this competition, so I really had no expectations,” he says. “But we had a family challenge to make the finals this year.” Also, his mom Yvonne Blaauw was the 2018 winner. As of the 11th of this month, Jasper’s wors will be in fridges in Checkers’ across the Beloved Country, and wherever he goes, he will go in brand new Toyota Fortuner.

Comment: Great work, that young man! And the iconic South African retailer that made his success possible.

In support of its Money Market counters, and upping its dominance of the value-added services space, Shoprite has opened a transactional Money Market Account, available on the Shoprite app, enabling shoppers to send and receive money and transact online, opening up e-commerce to a whole new market. Money Market is essentially feeless, with no debit orders, giving punters full control over their finances, and requires no FICA, allowing anyone to open an account. It also allows businesses to process bulk payments, including rewards, incentives and grocery vouchers. In other Shoprite news, a Nigerian business, AIC, issued a summons against Shoprite in 2011 for being in breach of a JV agreement the businesses allegedly concluded in 1998. In July, a Nigerian judge issued an injunction against Shoprite preventing it from “hurriedly carting away its intangible assets, intellectual property and receivables from Nigeria”.

Comment: This seems to suggest that a hasty exit from Nigeria could be more complex for Shoprite than anticipated.

Just a week after Shoprite announced it would be upping sticks in Nigeria, it’s announced that it will be closing its City Mall store in Mombasa, Kenya, as part of a process of evaluating all of its operations across the continent, “based on current and future performance,” their words. Back home, in a trading update, the Big Red One let it be known that Group sales for the year through June had risen +6.4% to R156.9bn some change, with sales in its core South African business up +9.4% in the last three months of the fiscal year through June, even as customer visits declined by -7.4%. This may be attributable in part to their Sixty60 grocery app, which is apparently going great guns, currently operating from 87 stores around the Beloved Country – a rapid rollout considering it was running from just ten stores at the start of the lockdown, giving pause to rivals Woolies and PnP whose own online offerings are far more mature. Shoprite has also said it will be selling its DCs then leasing them back from the buyers, to free up cash in these straitened days.

Comment: With their typical blend of pragmatism and quick footwork, Shoprite seems to be riding out the current storm pretty well.

A trading update this week from Shoprite, which let it be known that despite the current crisis, sales for the year through June were up by +6.4% to around R156.9bn, with sales up by +8.7% here in the Beloved Country after a strong second half performance. While customer visits were down -7.4% during COVID, basket sizes grew +18.4%, more than evening things out. Elsewhere, not so good: sales were down -1.4% in its non-South African supermarkets. The pandemic also added costs, with R327.2m spent on such essentials as security, mobile clinics, PPE, temperature scanners, store and DC sanitation, employee meals, communication costs and remote network access, as well as R116.9m paid to staff including an appreciation bonus to help them through the lockdown. In other news from the Big Red One, Shoprite is thinking of exiting Nigeria after 15 years, and has accordingly started a formal process to consider the potential sale of all or a majority stake in its business in that beyond challenging geography, which has already sent the likes of Woolies and Mr Price packing.

Comment: One of the benefits of a crisis is that it sharpens focus and reveals what is truly important – for businesses and people alike.

A sea change in how business is done in South Africa, and we are not exaggerating. Last Wednesday, you see, Shoprite agreed with the Competition Commission that it would no longer enforce exclusivity agreements with malls against SMEs and specialty retailers, which may be competitive in those locales, joining Pick n Pay, which has made a similar move. The Big Red One has also agreed to immediately cease exclusivity against other supermarkets in non-urban areas, and to phase out these agreements in urban malls over five years. As you may recall, the Grocery Retail Market Inquiry (GRMI) report released in November 2019 found that exclusivity causes were depressing competition in grocery retail. Exclusivity has long been practiced by South Africa’s ‘Big Six’, covering 70% of malls, with agreements ranging from 10 to 40 years.

Comment: Good news for the little guy. Provided his or her business survives the pandemic, and there are still malls to trade in.

Even as it has been forced to close two stores in the Western Cape after an employee at each tested positive for COVID-19, Shoprite is innovating safe and contactless ways of collecting cash and providing goods and services while keeping shoppers and store staff safe, as the first retailer to offer payment via dynamic QR on a mobile app. Once they’ve filled their trolley, punters simply scan the QR code at the till point with their phones, which will display the exact amount payable, then pay using Masterpass, SnapScan, Zapper, FNB Pay or Nedbank Pay. The service is currently available in 29 Checkers stores and will be rolled out across South Africa within the next two months, with the rest of the continent to follow asap. Shoprite has also partnered with long-standing pal Computicket to allow concerned customers to send vouchers to needy friends or relatives via phone, redeemable almost immediately for the purchase of groceries. And finally, Checkers has announced a partnership with Mr D Food to deliver medicine to the homes of MediRite pharmacy customers during the lockdown.

Comment: All innovations designed during a pandemic, which will give the business an edge as the country reopens.

One of the larger conundra of this brave new world of online retail is how do we deliver to poorer communities? If you’re Shoprite, you don’t mess around with cell phones and delivery trucks (although you also do that) – you just bring them the entire shop. In the form of the extra-long Usave container store, spotted last week at Ocean View near Fish Hoek, as part of Shoprite’s outreach to communities in this time of corona, helping them observe the lockdown and practice social distancing while purchasing their necessities and little luxuries. Usave, you will recall, is Shoprite’s smaller format, smaller range, smaller budget offering, which offers an even-tighter range under its eKasi banner. “Thank you Shoprite, you have the correct plan and ideas but most of all the passion,” said a happy punter on social media last week.

Comment: As we’ve often remarked, Shoprite has a gift for combining the practical dictates of commerce while making a genuine connection with the communities it serves.

To Botswana, then, that quiet neighbour that keeps its head down and its lawn neat, whose kids go to nice schools and which seems to do very well for itself, although no one is quite sure what it actually does. Anyways, Shoprite in Botswana has just done something innovative and rather wonderful there, inviting eight suppliers to sell their produce directly to the public at various locations around the country in ‘Market Days’, which Shoprite has been running here at home since 2017. For the farmers, it provides an opportunity to showcase their work to other potential customers (although one assumes that Shoprite keeps them pretty busy anyway). For Shoprite, it gives their customers some visibility into their supply chain and the freshness of the produce they sell every day. On offer at the inaugural event was a fresh and mouth-watering combo of maize, chives, spinach, peppers, egg plants, butternut and tomatoes.

Comment: Excellent work from the Big Red One.

Something we didn’t highlight last week in our reporting on Shoprite’s interims was there relatively poor performance elsewhere in Africa, where they have been the undisputed leader in formal retail for the better part of a decade and perhaps longer, but where sales grew +4.8% in constant currency terms, and declined -3.1% in rand terms. Not being a business that takes adversity lying down, Shoprite has taken immediate action, reducing the number of new supermarkets planned for the next few months from 17 to 13, exploring other operating models like franchises, JVs and different formats, and assessing the viability of underperforming stores. It’s not all bleak: in Angola, where hyperinflation hit the business hard, the business has improved its liquidity and is better able to buy stock. In Nigeria, however, where xenophobic violence in South Africa saw sales decline -59%, Shoprite has yet to recover the goodwill of shoppers.

Comment: A complex and fast-evolving geography, where even a hardened campaigner like The Big Red One has tough lessons to learn.

We’re in the endless twilight of a season of interims and trading updates – 19 weeks here, 26 weeks there except for Christmas, Boxing Day and Gogo’s birthday – and next up is Shoprite, with as crisp a set of interims as one could hope for in these troubled times. Sales up +7% to R81.2bn for the six months through December, with Checkers and the Hypers growing sales by a stellar +11.2%. Beyond the borders, sales grew +4.8% in constant currency terms, but declined -3.1% in rand terms. A big downside was profitability though: excluding hyperinflation, trading profit was up +7%. Taking hyperinflation into account, it was down -3.9% to R4.0bn. Back to the bright side: Checkers’ Xtra Savings Rewards Programme has been a howling success, with 3.8 million punters signing up since it launched in October, and the new one-hour grocery delivery service, Sixty60, is also showing signs of promise. For our snappy summary of the results, click here.

Comment: “Ex Africa semper aliquid hyper”, as Pliny the elder was fond of remarking.

Oh ho, what have we here? Some time ago, you may recall, we ran a story on Shoprite’s advance on the catering and hospitality markets with its Checkers Food Service (CFS) brand. Now it appears that CFS has been running a website that provides not only to businesses but also to consumers – i.e. you and me – food and grocery items, at up to 40% off what we’d pay in store. What gives? While yes, the site is open to consumers, you would mostly be looking at bulk purchases, for starters. Like Makro, in the old days. And right now, delivery is only available in the Western Cape and Gauteng. Spend over a grand, free delivery within 72 hours. Anything less, 100 bucks. And oddly some items are indeed more pricy than you’d find in store. On the upside, the site carries over 8,000 lines, including fresh fruit and vegetables, meat and alcohol.

Comment: This site is really for businesses, and for people with a larger than usual chest freezer in the garage. But an insight into The Big Red One’s increasingly comprehensive business model.

Nice work from the Big Red One in the last six months of the ‘19, with sales growth across the Group up +7%. The big performer was liquor, which grew by around +20% for the period. Supermarket sales here in the Beloved Country grew +9.8%, excellent considering the constraints of the current round, and the low base from which they grew notwithstanding, but elsewhere in Africa the picture was not so peachy, with turnover down -3.1%, as a result of currency depreciations and major deflation in Angola. Incidentally, Shoprite liquor rival Tops at SPAR grew sales around +17.6% for the period – not a sign, say analysts, that worried South Africans are turning to the bottle, rather that the majors are taking a large chunk of market share out of worried independents, who may well be turning to the bottle as a result; we just don’t know. In other Shoprite news, asset manager Coronation has doubled its share in the business, taking it to just north of 10% and making it the largest institutional shareholder next to the PIC.

Comment: A solid update from Shoprite, which seems to have recovered nicely from its Gauteng DC issues in the earlier part of the year.

A grab-bag of goodies (and indeed baddies) from Shoprite this week. First up, the Big Red One has been fined a cool million for reckless lending, pertaining specifically to the cases of nine punters who, the High Court has determined, were clearly dicey credit prospects. Shoprite has also been ordered to provide debt counselling to similarly burdened customers. The nine in the meantime have settled their debt. Next, Oom Christo Wiese has flogged another 18.9 million of his shares for R2.5bn. That’s approximately 4,000 suitcases full of cash in a Business Class carry-on to London. Finally, Checkers reports that it is seeing an increase in demand for vegan and plant-based alternatives, with growing sales of the 90 vegan products in its wildly successful Simple Truth range and its exclusive Linda McCartney Foods line.

Comment: We can assume that if Shoprite are making a buck from it, it’s something of a big deal. That’s good news when it comes to plant-based dietary alternatives, essential as we make the necessary move towards a lower-carbon food economy.

A grab-bag of goodies (and indeed baddies) from Shoprite this week. First up, the Big Red One has been fined a cool million for reckless lending, pertaining specifically to the cases of nine punters who, the High Court has determined, were clearly dicey credit prospects. Shoprite has also been ordered to provide debt counselling to similarly burdened customers. The nine in the meantime have settled their debt. Next, Oom Christo Wiese has flogged another 18.9 million of his shares for R2.5bn. That’s approximately 4,000 suitcases full of cash in a Business Class carry-on to London. Finally, Checkers reports that it is seeing an increase in demand for vegan and plant-based alternatives, with growing sales of the 90 vegan products in its wildly successful Simple Truth range and its exclusive Linda McCartney Foods line.

Comment: We can assume that if Shoprite are making a buck from it, it’s something of a big deal. That’s good news when it comes to plant-based dietary alternatives, essential as we make the necessary move towards a lower-carbon food economy.

Shoprite are upping their game as the primary healthcare provider of choice – or at least of convenience – with the piloting of a Smart Clinic facility at the in-store Medirite pharmacy of Checkers Hyper Parow. What’s that, you ask, puzzled. Simple: it’s a clinic which offers an array of basic healthcare services making use of digital health technology such as Udoc and telehealth, which connects trained nursing professionals to a network of doctors. The nurse captures all the necessary patient data and (if needed) facilitates a video consultation with a doctor. The doctor, in turn, uses the info provided to make an assessment, provide a treatment plan, order special investigations or refer a patient if needed. “The cost-effective Smart Clinic model enables MediRite to increase its value offering to customers whilst making primary healthcare, for which there is such great demand in South Africa, more affordable and accessible,” explains MediRite GM Jaco Engelbrecht.

Comment: What’s the thinking here? Shoprite has always aspired to be a one-stop shop for everything from banking to healthcare. Another step on the ladder.

Community Gardens have been one of the mainstays of Shoprite’s corporate social responsibility programme for some years now and received a deserved boost in attention during ‘Giving Tuesday’ a couple of weeks back. The Big Red One now supports over 100 community gardens and 300 home gardens in an attempt to improve nutrition in South Africa’s poorest suburbs, and to generate income through the sale of surplus produce. The gardens are run sustainably, with home-made pesticides, and salvaged materials for the construction of everything from beds to benches. Crops are grown in rotation to maximise the yield from often impoverished urban soils, and Shoprite steps in with whatever’s necessary, from protective netting to Jojo tanks, depending on the requirements of each garden.

Comment: Inspiring stuff – and increasingly necessary, as small scale agriculture steps up to close the inevitable gaps that will develop in commercial models under climate change.

Shoprite has over 30 supermarkets in Angola, and during the oil boom was doing pretty well there for a spell. However, Angola has now fallen prey to hyperinflation, which has played merry heck with the purchasing power of punters, and the country has since become a broken arrow in the Shoprite quiver. Are they thinking of bailing? It would be a big deal if they were. While they’ve been pretty ruthless cutting ties with underperforming geographies in the past (adios, Egypt, au revoir Ile Maurice) they’ve never got out of one in which they’ve been so invested. And the rest of Africa is looking pretty good, with significant growth in places like Kenya, where they’ve opened four stores in a year, and Ghana. In the absence of a firm decision, then, they’re hunkering down, continuing to focus on controlling costs according to pragmatic CEO Pieter Engelbrecht.

Comment: These are the hard yards for retail in Africa. But retailers (and indeed shareholders) would be wise to remain invested on the continent, the difficulties of some countries notwithstanding.

In what could be interpreted as a slow-rolling palace coup, Shoprite’s nomination committee has convened to find a replacement for Christo Wiese, who was re-elected to the chairmanship of the Shoprite board at the recent AGM, courtesy, in no small part, of his disproportionately-weighted shares: he owns 10% of the Shoprite stake but gets 42% of the votes. And in a departure from the King Code on corporate governance, Shoprite CEO, Pieter Engelbrecht, has joined the committee too, as the representative of management. “We just want to ensure that whatever emerges from the process, management should feel it is good for the company,” explains Mr. E. This would appear to be in line with the views of analysts and shareholders alike, who believe the solid operational underpinnings of the business are poorly reflected in the tarnished sheen of the boardroom table right now.

Comment: The Steinhoff debacle has hit Christo Wiese hard, at the wrong end of an illustrious career. But it seems that Shoprite, at least, would like to move on.

We mentioned in passing last week that at the AGM, Christo Wiese had regained his spot as Shoprite chair. We didn’t tell the full story. No longer everyone’s favourite uncle, he garnered, if that’s the word, only 38.8% of ordinary votes, but because of the high-voting deferred shares under the control of his own Thibault Square Financial Services, the resolution passed. And there’s more: last week, it was announced that the respected Professor Shirley Zinn, tasked this past year with reforming Shoprite’s remuneration policy, sometimes against some pretty stiff headwinds, would resign as lead independent director. For, ahem “personal reasons.” Are these developments related? “Shareholders are not prepared to pay for (Wiese) to go away, but also don’t want him to stay and keep control,” says one analyst.

Comment: While Shoprite seems operationally sound, Oom Christo now has baggage. And the boardroom table is creaking under its weight.

We mentioned in passing last week that at the AGM, Christo Wiese had regained his spot as Shoprite chair. We didn’t tell the full story. No longer everyone’s favourite uncle, he garnered, if that’s the word, only 38.8% of ordinary votes, but because of the high-voting deferred shares under the control of his own Thibault Square Financial Services, the resolution passed. And there’s more: last week, it was announced that the respected Professor Shirley Zinn, tasked this past year with reforming Shoprite’s remuneration policy, sometimes against some pretty stiff headwinds, would resign as lead independent director. For, ahem “personal reasons.” Are these developments related? “Shareholders are not prepared to pay for (Wiese) to go away, but also don’t want him to stay and keep control,” says one analyst.

Comment: While Shoprite seems operationally sound, Oom Christo now has baggage. And the boardroom table is creaking under its weight.

Shoprite have handled the vicissitudes of the SA trade pretty well these past three months, all things considered, with quarterly revenue up +7.3% for the Group and an impressive +10.3% for its South African operations. Elsewhere on the continent, not so grand: sales fell -4.9% in a time of currency volatility abroad and xenophobic violence back home. Some stores in Nigeria and Zambia were forced to close in the face of reprisals against South African-owned businesses, of which, in Africa, South Africa has become emblematic. And speaking of Africa, this tersely worded and ominous statement from the Group: “Management is assessing the performance of the Supermarkets Non-RSA segment, with specific reference to the Group’s return on capital invested in Africa.” CEO Pieter Engelbrecht went further, telling investors at the AGM that the business might consider exiting certain geographies. Oh yes, and Oom Christo was elected back onto the board, leading to the shock resignation of Shoprite lead independent director, Prof Shirley Zinn, just a few short days later.

Comment: Interesting times for the Group, interesting times.

More on that deceptively simple new Checkers Xtra Savings rewards programme, and by way of that, more on their spanking new IT System on which they’ve spent blood and treasure in equal measure. The programme is similar to Woolies WRewards and the SPAR Rewards programmes, offering discounts on specific products each week. It also gives punter the chance to opt in to a charitable donation, to organizations like the Lunchbox Fund, Food & Trees for Africa or NSPCA using its ‘Swipe For Good’ function. What the programme doesn’t have as yet is tons of useful shopper data, like Pick n Pay Smart Shopper does on its +7 million active members. This is likely to change pronto: with Tesco’s customer data science supplier dunnhumby in the driving seat, Shoprite clearly has big plans for technology. And while the IT overhaul has been both expensive and disruptive, it may yet pay dividends. “Going forward,” says the Big Red One, “We will learn more about our customers from every change we make, allowing us to improve incrementally every day.”

Comment: With Checkers in the loyalty game, the stakes have just got a little higher.

Shoprite have just recently released their 2019 Sustainability Report in which they document their alignment with the United Nations’ Sustainable Development Goals. By any measure, their results have been impressive: they’ve subsidised staples to the value of R141m, donated surplus food and goods to the value of R60.4m and served more than 20 million meals to communities in need in the 2019 financial year. On the planetary front, they’ve recycled over 36,000 tons of cardboard and almost 4,000 tons of plastic across the business, and saved 32 million kWh of electricity by using energy-efficient lighting, reducing greenhouse gas emissions by 30,562 tons of CO2 equivalent. They measure their impact by five pillars: People, Customers, Communities, Suppliers and Planet, and believe their role extends beyond living their purpose of being Africa’s most accessible and affordable retailer to include developing and supporting its employees, customers and their communities.

Comment: A thoroughly pragmatic retailer, but one which nevertheless recognises its larger duty in South Africa and the world.

At Shoprite’s last AGM, you may recall, 73% of ordinary shareholders voted against the Group’s remuneration policy; now, it seems, they have sort of taken that to heart. They’ve announced that short-term bonuses for 11 directors including the CEO and the CFO will be based on a set of five criteria – hitherto unnamed – rather than the single measure of trading profit, as they used to be. These criteria will come into effect only next year. The structure for long-term incentives is TB eventually D, and will be presented at next year’s AGM, hopefully to general acclaim rather than howls of rage. In not unrelated news, Christo Wiese’s director fees have almost doubled to just north of R1.2m, for a healthy increase of +205% over the last couple of years. On the upside, or the down, depending on your perspective, he’s no longer Shoprite’s largest individual shareholder, having sold 19 million ordinary shares this last twelvemonth.

Comment: Time, don’t you think, for the Big Red One to move out of this ambit of boardroom shenanigans and just focus on the aisles.

Hot on the heels of Pick n Pay’s new Mall of Africa flagship last week comes a brand new Shoprite Hyper, in Sandton City, which might one day be an actual city. The behemoth features all the mod cons, including a temperature-controlled wine cellar, a decadent chocolatier bar, a coffee station , an in-store Kauai, a sushi bar, and a coal-fired pizza oven. The aisles will be wider and the floors seamless, for easier trolley-manoeuvring. It will also feature more jobs: the store employs 290 staff, of which 225 are women. And speaking of jobs: Shoprite created 3,175 of them last year, for a total of 147,000+ people on the payroll, with an emphasis on youth: 68% of staff are under 34. Incidentally, this makes it South Africa’s largest private-sector employer. Retail has been one of the few thin silver linings in the looming cloud that is unemployment: our industry grew employment +0.8% year-on-year for the first quarter of 2019, and added a total of 84,000 jobs in the second quarter.

Comment: In some ways, retail is South Africa’s essential industry, driving many other sectors, and providing economic growth and employment when both are in short supply.

There was a time when Shoprite was bestriding the continent like a colossus, while Pick n Pay was carving out its own little chunk in Zambia. No more: Shoprite has well and truly muscled in on the Zambia action, with the opening of its 37th store there this week, in Lusaka’s East Park Mall, just two kays down the drag from the hungry students of the University of Zambia. They’re offering more convenience meals and a wider range of healthier food products, as well as extended opening hours, from 8am to 8pm. And as is their wont, they’re going large on local procurement: 92% of dairy comes from local suppliers and 85% of fresh comes from small-scale local farmers. And they’re also talking up job creation: since first breaking ground in the country, they’ve provided Zambians with 4,600 jobs; this store adds another 200 to the total. Finally, they’re doing their bit for the community too: their Mobile Soup Kitchens serve meals at the Zambian Open Community Schools, where they’re also establishing food gardens.

Comment: A model that is working for them at home.

Another week, another Shoprite opening in Kenya, this one in the purpose-built and boldly-named Shoprite City Mall in Nyali, Mombasa – the first store outside Nairobi. Shoppers will enjoy all the usual plus a Meat Market, Hot & Cold Foods Deli, Fish Shop, Bakery and Fresh Fruit & Veg. The Group is punting benefits to locals at what is a difficult time for businesses beyond our border, pointing to the fact that 80% of what they sell is locally produced, and that the store will create 115 new jobs, 65% of them for women. There’s another store coming at the end of September, too. In tangentially Shoprite news, in case you were worrying about that record R1 beeeeeellion fine the Financial Sector Conduct Authority had slapped on Steinhoff, well don’t. They’re getting away with the gentlest tap on the wrist they could have hoped for, a R53m tiddler, on account of the fact that they’re in a pretty shabby state right now and they co-operated with the authorities (instead of skipping over to Mauritius with some suspiciously overstuffed suitcases? Ed).

Comment: But they’re not out of the woods yet… various aggrieved shareholders are pursuing them, including Oom Christo, who reckons he’s owed a bold and uncompromising R59bn.

Another week, another Shoprite opening in Kenya, this one in the purpose-built and boldly-named Shoprite City Mall in Nyali, Mombasa – the first store outside Nairobi. Shoppers will enjoy all the usual plus a Meat Market, Hot & Cold Foods Deli, Fish Shop, Bakery and Fresh Fruit & Veg. The Group is punting benefits to locals at what is a difficult time for businesses beyond our border, pointing to the fact that 80% of what they sell is locally produced, and that the store will create 115 new jobs, 65% of them for women. There’s another store coming at the end of September, too. In tangentially Shoprite news, in case you were worrying about that record R1 beeeeeellion fine the Financial Sector Conduct Authority had slapped on Steinhoff, well don’t. They’re getting away with the gentlest tap on the wrist they could have hoped for, a R53m tiddler, on account of the fact that they’re in a pretty shabby state right now and they co-operated with the authorities (instead of skipping over to Mauritius with some suspiciously overstuffed suitcases? Ed).

Comment: But they’re not out of the woods yet… various aggrieved shareholders are pursuing them, including Oom Christo, who reckons he’s owed a bold and uncompromising R59bn.

Things are not lekker with Oom Christo and Shoprite. “People are always talking to me about the deferred shares,” he grumbles. “But there is nothing on the table right now.” Except, presumably, for an open box of Ouma rusks and a lonely cup of rooibos. He refers of course to the 265 million deferred Shoprite shares, by which he has swing over 32.3% of the Group’s votes. In June, you may recall, rebellious shareholders put an end to Shoprite’s plans to swop the offending certificates for 20 million ordinary shares, valued at R178 a piece. And the share price is not playing nice either: after last week’s muted results, and given the ongoing weakness of the retail sector, punters are looking for other mattresses under which to hide their hard-earned. If Wiese had managed to unload his stock at the 2017 price, he would have realised around R3.5bn on the deal. “A deal at current prices might get him R2.3bn,” says a gimlet-eyed analyst, who preferred not to be named.

Comment: Schadenfreude is that frisson of delight one feels at the misfortune of others. Not something we feel right now vis-à-vis Oom Christo, but there are, we’re sure, those who do.

Stop the presses! Shoprite results are in, and to be honest, it’s a bit of a mixed bag: turnover up +3.6% to R150.4bn, and gross profit up +1.8% to R35.3bn. Operating profit was down, unfortunately, by -8.2% to R6.9bn, as non-RSA businesses turned in a trading loss of R265m as a result of forex shortages and currency devaluations, which meant that shoppers elsewhere in Africa were paying a premium for Shoprite’s almost exclusively imported offering. Sales were strong back home, however, growing +7.4% in the final six months of the year and boosting the overall performance. Where to from here? Shoprite will maintain its commitment to growth beyond our borders, while trialling a concept it’s calling ‘precision retailing’, a sharp focus on bridging existing gaps and mitigating externalities. “The year reflects two contrasting halves,” says CEO Pieter Engelbrecht. “However, we ended it very strong in the RSA Supermarket operations, increasing sales momentum, and are now back in business in H2 with improved volumes, visits and spend per visit.” For Ti’s succinct summary of the results, click here.

Comment: As the man has by his own admission not one but two crystal balls, we’re inclined to take him seriously.

Shoprite are partnering with the Nigerian Export Promotion Council (NEPC), which is sponsoring the retailer in its efforts to bring top buyers from across Africa to Nigeria for the Nigerian Food Event (NFE) 2019, where exhibitors will rub shoulders with the leading lights of the industry and showcase their products. The event will see 2,500 senior buyers in attendance and over 500 brands on display, with tasting sessions, live demonstrations, workshops and networking opportunities. In other news from Nigeria, a student organisation there has called for the expulsion of South Africans and protests at South African-owned businesses, including Shoprite, in response to the June murder in South Africa of Elizabeth Ndubuisi-Chukwu, the deputy director general of the Chartered Insurance Institute of Nigeria, which has perhaps understandably – even if inaccurately – been conflated with the recent spasm of xenophobia.

Comment: A tangled and tragic web, with repercussions far beyond the perpetrators of violence and their victims.

By contrast with Massmart, Shoprite have delivered a humdinger of a trading update, given the constraints of the current economy, with South African supermarket sales up +7.4% for the second half of the year through June, compared with +2.6% in the first half, and a banging +9.4% for the final quarter, for a total of +4.9% for the year. Group wide, sales were up +3.2% for the full year, with non-SA supermarkets down -7.7% and Angola tanking to the tune of -38.4%. First half performance, say Shoprite, was impacted by the completion of its ERP replatforming. “However, the continued improvement throughout the second half is pleasing,” says the sanguine CEO Pieter Engelbrecht, “and product availability now surpasses pre-system implementation levels.” He’s also pretty stoked with the gain in market share, “testament to our core South African business being back to full operational strength,” he says.

Comment: By Shoprite standards, a rocky start to the year. But what a comeback.

The Shoprite Group experienced 489 armed robberies and burglaries in the 2018 financial year. A shocking number of course, reflecting as it does the banal criminality of our society, but one that is on its way down as Shoprite beefs up its security efforts. These include a centralised Command Centre and an anti-crime team, with professional investigators and data specialists, enabling the business to monitor stores and vehicles, trigger security devices remotely – including on trucks – follow up on crime incidents and ensure suspects are arrested. The Command Centre sits at the middle of an intelligence network which delivers live information on protests and strikes, but also on actual criminal activities which might endanger assets, staff or customers. As a result of their endeavours, which include partnerships with the South African Police Service (SAPS) and the National Prosecuting Authority (NPA), arrests are up 200%.

Comment: That’s how you do it. That, and creating jobs, something on which our great industry needs to keep its focus.

Reminding us this week of what a global powerhouse we still could be – and in many ways still are – is Shoprite, which joins FirstRand, Sasol and MTN in the Business Chief register of Ten Biggest Companies in the Middle East and Africa, as measured by revenue and reputation as an employer. Coming in at number 6, the Big Red One is cited for its 2018 turnover and profits. In other Shoprite news, it’s being accused by the Namibia Food and Allied Workers Union (Nafau) of paying less than a living wage, no benefits such as a transport allowance, housing allowance or medical aid, and of preventing union members access to premises for recruiting purposes. For its part, Shoprite points out that Nafau lacks the requisite 50 + 1 percent majority required for recognition. Nafau dispute the maths.

Comment: Namibia continues to be a profitable but troubled geography for Shoprite, which might consider a bit of PR there and soon.

To Botswana, then, where Shoprite have opened their first in-country DC, buoyed no doubt by the well-published travails of Choppies, and with an eye for the main chance. Located in the industrial environs of Taung, Gaborone, the 3,700m2 facility is state-of-the-art, a term that in 15 years we have studiously avoided using in these pages, and that first appeared in the 1910 volume “The Gas Turbine: progress in the design and construction of turbines operated by gases of combustion” by Henry Harrison Suplee of Pennsylvania. Fact. Anyway, the state-of-the-art facility in question, will be occupied mainly by Freshmark, the Shoprite Group’s fruit and vegetable procurement, buying and distribution arm, and boasts storage across multiple temperature disciplines, tropical ripening rooms and value-added packing facilities.

Comment: All of which is to say: Shoprite are betting heavily on the future, and if we were of the punting persuasion, so would we.

15% of Shoprite’s voters have torpedoed the deal that would have seen the business buy out Christo Wiese’s high-voting deferred shares for R3.3bn, and convert them into ordinary shares. Not the result either the business or Oom Christo were looking for. He’s now stuck with 42.3% of the business instead of the 17.8% he would have held had the deal gone through. They, it appears, are stuck with him: he intends to maintain a “decidedly” active role in the business. It’s unlikely he’s just putting a brave face on things: he made it very clear that he was in no mood to negotiate. Analysts have expressed admiration for the mettle of the dissenting shareholders. “I think it’s heartening that institutional shareholders have at last found their voice and would not vote in favour of a transaction that was clearly not in their favour,” says Shane Watkins, respected chief investment officer at All Weather Capital, whom we knew as a young gadabout in a red Alfa 2000.

Comment: Act Three for Oom Christo then. Hopefully it will be as interesting as the first couple.

Tuesday was World Hunger Day, so fitting that we take a peak under the bonnet of Shoprite’s efforts to end hunger here in the Beloved Country. For starters, Shoprite and Checkers support 78 community food gardens across South Africa with ongoing training and mentoring taking place for at least 18 months, to ensure long-term food security. Gardens also receive essential infrastructure such as water tanks and gardening tools. They’ve also invested in 43 early childhood development (ECD) centres, providing 435,629 meals to learners so far. And they run a fleet of 19 mobile soup kitchens, used in part for disaster relief efforts. Finally, they cut waste by donating surplus food – 590 tons of it from their supermarkets last year, and 133 from their supply chain.

Comment: This is excellent work. As, we would say, it is with almost every one of our South African FMCG retailers. But to bring it scale, imagine if all of the retailers, and a few of the suppliers, could work in concert in one of these initiatives?

Why is Oom Christo so immovable on the price of his high-voting deferred Shoprite shares? The over R3bn price tag, he says, is worth it: Shoprite have obtained a fair and reasonable assessment of the value of the shares to justify the price. The shareholders opposed to the deal, he argues, are the only ones getting media coverage, and he makes nonsense of their claim that that control has no value. From big bucks to Little Checkers, the new promotion by which Shoprite are forging a shortcut to the wallets of punters through the cupidity of their children. Put differently, it is a collectible promo whereby Checkers and Checkers Hyper shoppers across South Africa will be rewarded with a free block pack for every R200 spent in store. Each block pack contains a unit that forms part of a mini Checkers supermarket and once all 35 available packs have been collected, consumers can build an entire Little Checkers store, and start fleecing tiny shoppers of their own by means of collectible promotions. And so on.

Comment: Contemptible stuff, we hear you cry. Perhaps so, but if they’re doing it, it obviously works.

Nice work from Shoprite, making it easy for punters at select supermarkets in KZN and the Eastern Cape to add R5 or more to their grocery bill for donation to Gift of the Givers flood relief efforts in those stricken regions. Tymebank have recruited up their 250,000th customer, a whacking 78% of whom have signed up at kiosks in Pick n Pays and Boxers around the country. Speaking of financial services, 125,000 people are now using Pick n Pay’s credit account to help buy groceries. Finally, Woolies has announced the national rollout, after successful trials, of a range of low-cost reusable shopping bags.

Comment: It’s hard to envision a day when our industry will finally be weaned of its destructive packaging habit. But we’ll take the incremental changes as they come.

For yonks now, Christo Wiese has exercised control over the Shoprite Group by wielding his special deferred shares, which carry more votes than ordinary shares. Now he’s agreed to give them up in exchange for the common-or-garden variety, relaxing his grip on the business. Shoprite have offered to buy back his shares in a deal worth some R3bn, which would include 20 million new ordinary shares. If approved (by ordinary shareholders nogal) this would reduce the voting interest of his Titan Group from 42.3% to 17.8%, but increase its economic interest from 14.8% to 17.8%, in case you were worried about where his next bottle of Dom Perignon was coming from. In other news of the Big Red One, an embarrassingly scant 26.98% of ordinary shareholders voted in favour of the Group’s remuneration policy last October, apparently.

Comment: With Oom Christo no longer front and centre, that’s a number that will no doubt be giving Directors pause.

Shoprite has always operated smartly at the tricky nexus between doing the right thing and making a buck at a price the punter is willing to pay. So its perhaps not surprising that their R5 deli meal initiative has been a howling success, selling 100 million of them since launching the affordable meal options not even two years ago. The meals range from potato hash browns at R2 a pop right up to R5 for fried fish. And this is not the only area where Shoprite has taken the circumstances of its poorer shoppers into account: they’ve fixed the price of the 600g in-house white bread at R4.99 since April 2016. It has also served over 37 million cups of soup in its hunger relief efforts, planted 62 food gardens and trained over 1,300 small-scale farmers, as well as donating half a billion worth of surplus food to charity.

Comment: Some of these endeavours seem to fly in the face of the profit motive. But doing good, as Shoprite has shown repeatedly, can indeed be good for business.

A little glimpse, it being a slow news week, into the competitive, lucrative but otherwise thankless world of the private label supplier. Verigreen – great name, btw, encompassing as it does both trustworthiness and a modest pun – is a Durban manufacturer and recycler of plastic goods, which include products for refuse disposal, cooking, baking, freezing and food protection. Started by husband and wife combo Mike and Thina Maziya, Verigreen now also boasts a contract for the manufacture of 25 different products under Shoprite’s Ritebrand and Housebrand labels. The great thing about Verigreen is that they source a lot of their plastic from a group of Supa Mamas – after whom they’ve also named their flagship brand, and this programme, currently based in KZN, where many quietly brilliant things originate, is likely to go national.

Comment: Over to you, Thina Maziya: “To land this business as a black and relatively young manufacturing entity attests to the fact that the Shoprite Group is indeed committed to giving market access to local entrepreneurs.”

Last week, we mentioned offhand that the Big Red One was looking at relieving Oom Christo of his inconveniently vote-heavy shares, of which he has a couple or two shoved under the mattress. Easier – or at least cheaper – said than done, turns out. “I really don’t think Shoprite shareholders are in the mood to help fund Christo’s retirement,” said one battle-scarred fund manager. There’s also the small matter that the shares are economically without value, although they represent a major power of veto on special resolutions by the board. But enough about disposal of a legacy that might be holding the business back – let’s talk about the rollout of the new SAP ERP, which weighed so heavily on the bottom line, but replaces the legacy system that was… oh, never mind. In point of fact, the old system was preventing new stores from being easily opened, and according to the Group the new one will be well and truly bedded down by 2020 and properly on fire, in a good way, by 2022.

Comment: We’ve observed, perhaps unfairly, that Engelbrecht is no Whitey Basson when it comes to quippage. “I’d like to be the person who takes over from me,” CEO Pieter Engelbrecht was heard to say recently. That’s almost Whitey-level cryptic, at least.

Those Shoprite interims and everyone – Shoprite themselves included – are surprised that the news is not as good as it used to be in the glory days. Sales up just +0.2% in the six months through December, to R75.8bn, with like-store sales down -2.7% YoY. In the rest of Africa, the Group recorded a trading loss of R61.8m, driven largely by currency issues in Angola, as against a trading profit of R552.7m last year. The worrying performance back home was driven by DC strike action causing out of stocks which cost an estimated billion in sales, the extended SAP conversion of over half the business and the longest period of internal price stagnation in living memory. On the upside, says the trading statement, “since January 2019, an improved sales trend is evident”. But for a wrap up of the numbers, have a look at our summary here.

Comment: In the absence of the immortal wit of Whitey, here’s something from Oom Christo, who showed up at the presentation, lending some gravity to the whole shebang: “Shoprite has been through tough times before. We proceed with caution, but we are not in any form or fashion about to run away.”

A game we analysts like to play is called “That’s not a retailer,” and it goes a little something like this: in order to draw attention to a retailer’s dependence on a non-core revenue stream, we compare it to another type of business altogether. So we’ve had, in recent years, “Pick n Pay’s not a retailer, it’s a bank,” and “Shoprite’s not a retailer, it’s a property developer” What then are we to make of the news that Shoprite has enabled the transfer of R1bn and counting in remittances from South Africa to Lesotho, in just three years? “It’s not a retailer, it’s Oxfam”? The transfers take place at Shoprite Money Market counters, naturally, and at just 2% per R900 are among the cheapest cross-border transfers in the world, saving the recipients an estimated R80m over the period. Shoprite is partnering with FinMark Trust to provide similar services to the people of Zimbabwe, Malawi, Mozambique and eSwatini.

Comment: Another plus is that 70% of the recipients in Lesotho are women; the service serves as a de-facto enabler of development in our landlocked neighbour.

Shoprite and Checkers supers have joined retailers from geographies such as Indonesia, the Philippines and Vietnam in getting on board with the JET8 Wallet, an excitingly-named virtual contraption that allows punters to earn hard cash from their social media postings, send and receive the associated social currency called J8T within their friend group, buy virtual collectibles and artwork, buy actual stuff from actual retailers, and assist them in earning social currency.Currently, 30,000 points of sale globally are available to users. In other news from the Big Red One, Sanjeev Raghubir has been appointed as Shoprite’s new group sustainability manager.

Comment: Back in the day, social currency was knowing exactly who at The Rift owed you a Black Label, and how likely they would be to repay it on any given night. Be that as it may, Shoprite have been early adopters of anything that gives them another way of receiving payment from their shoppers, and kudos for that.

Taking the pressure off you would-be beaus out there in this age of elaborately choreographed Insta-proposals is the enterprising fella who decided to pop the question at the Shoprite till point where first their eyes had met over a bag of sliced bread and a punnet of mushrooms. OK we’re not sure if that’s how it went down. But apparently it all went very well, with the teller was even more excited than the bride-to-be.

Comment:

Sorry Shoprite, which has endured something of a ragging at the hands of the business press and the analysts this last week. After the disappointment at its interims, upon which we reported last week, some interesting commentary. There are those who believe that the business over-invested in their new IT system and distribution centre at a time when the embattled SA punter could not support that sort of spending. Others argue that new auditor reporting standards have played merry heck with the final presentation of the underlying numbers. Still others, more prosaically, point to deflation in food and Shoprite‘s exposure to the stressed lower end as being the chief culprits.

Comment: Shoprite’s seemingly unstoppable ascent was the great story of the last decade. It is to be hoped that the recovery will be one of the big reads of the next couple of years.

So the Deloitte’s (grandiosely titled) ‘Global Powers of Retail’ 2019 report is out, and good news for Shoprite, in a bittersweet way, is that with the collapse of Steinhoff into scandal and penury, the Big Red One was our globalest power of retailness back in FY2017, in a solid 86th place. SPAR made it into 140th place, with Pick n Pay in third at 160th and Woolies at 179th. Number one was Walmart, with turnover of half a trillion dollars, followed by club-discounter Costco at $160bn. While our retailers are relatively small globally, Africa looks promising, second only to Latin America in regional growth in that FY. And retail itself seems a good space in which to operate: the top 250 cumulatively grew revenue +83% over FY2017, for total global value of $4.5trillion.

Comment: A bit of perspective there. SA retail is relatively small, globally, but has lots of potential, while in terms of shopper in-store experience and ranges on offer – it can be argued – sits alongside those at the top of the log.

Another trading update, this time from Shoprite, which reported sales growth of just +2.6% for the six months through December – 5 percentage points down from last year – and a decline of -13.3% in rand terms for sales beyond our borders, due in part to currency fluctuation in African markets. While the shocking economic climate has a role to play, Shoprite’s troubles have also been precipitated by a couple of own goals, including product availability challenges stemming from issues at the Gauteng DCs, and protest action against the new warehousing system. December quarter sales, on which all retailers depend, were actually -0.3% down YoY. On the upside, liquor sales grew +20% for the period. Some commentators are speculating that Shoprite may slow down its attack on African markets; while we have seen for ourselves that it is investing more heavily in its Checkers and OK franchise divisions. In other news from the Big Red One, it’s appealing the R20m Competition Tribunal fine imposed over the Computicket debacle we reported on a couple weeks back.

Comment: Shoprite, once apparently bulletproof, has encountered some inevitable headwinds. How it weathers these will reveal the true mettle of the business.

The Competition Commission has recommended that the Competition Tribunal fine the Shoprite Group and Computicket a total of 10% of their annual turnover for anticompetitive practices, which is what we call steep, and which caused punters to flee the share to the tune of over 4% before a slight recovery last week. At issue is the fact that Computicket – acquired by the Shoprite Group in 2005 – locks large sports and entertainment venues into exclusive agreements which prejudice smaller resellers, and discriminates between large and small customers on pricing. It’s a hellishly complicated saga which has dragged on for over a decade, based on original complaints from Strictly Tickets, Artslink, Going Places, TicketSpace and Ezimidlalo Technologies. Shoprite seems inclined to fight the recommendation.

Comment: The inclusion of Computicket services into the Shoprite retail offering seemed a stroke of genius. The acquisition of Computicket may – according to the Tribunal – have been a bridge too far.

Big up to Shoprite, for the opening of their first store in Nairobi, taking on Carrefour in the lucrative Kenyan market, where at 33% formal retail penetration is second only to South Africa on the continent. The store takes over space once occupied by Nakumatt, the collapse of which, along with Uchumi, has opened up the market for foreign retailers. One of the big challenges is the cost of space, a factor which has caused Shoprite to turn down some otherwise promising sites.

Comment:

News from up north is that Shoprite is opening its first wholly-owned DC in Nigeria, a 4,700m² facility, most of which will be used by Freshmark, the Big Red One’s fruit and vegetable procurement, buying and distribution arm, and the rest of which will be for dry goods. Located in Lagos, the DC boasts all the mod cons, including a banana-ripening room, and allows suppliers, including small farmers, to deliver directly to the business for easy distribution, and for Shoprite to add value by doing some of its own packaging. A little further South, and to the right, Shoprite is expanding its operations in Zambia, opening its 35^th  store in that mineral-rich democracy. The new store, its 11^th in Lusaka, is located in the Novare Great North Mall, adding another 142 jobs to the 4,200-strong workforce in the country, and another shot in the arm for local suppliers, who provide the business with 78% of its merchandise in-country.

Comment: Shoprite’s advance into Africa is textbook stuff – it hasn’t been easy, but they are nailing it. The Ti analyst team are tracking corporate FMCG retail growth in Africa closely – contact the Ti team to see how they’re stacking up.

Shoprite are at it again, giving away attractively priced vehicles like there’s no tomorrow. This year they’re upping the ante in their annual Win a Car promo, give away no fewer than 150 brand new VW up!s to shoppers who spend at least R100, or buy any of over 50 participating brands, with no limit on entries. Still the Big Kahuna of holiday promos.

Comment:

Emboldened no doubt by the spirit of rebellion abroad in the world these days, a growing and vocal minority of Shoprite shareholders are registering their disapproval at the Big Red One’s remuneration policies, in particular vis-à-vis their executives’ salaries. At the AGM last week, 57% of shareholders voted in favour of the policy, down from 70% last year, while 43% objected. CEO Pieter Engelbrecht earned R20.3m in 2018, down from R25.8m in 2017, but will pocket as much as R33m if he hits his numbers this year. This latter is even at this early stage very much at issue: the market out there is tough, and the business grew sales just +0.4% in the quarter through September. Also of note at the AGM was the absence of one Oom Christo Wiese, who also did not attend the board meeting afterwards.

Comment: Executive remuneration is a thorny issue but one where one supposes great gains in goodwill could be made by executives and businesses willing to tighten their currently comfortably accommodating belts.

Helping businesses offload their hard-earned this week is Shoprite. To its already impressive portfolio of financial services it is now adding a function which enables businesses to make cash transfers to multiple recipients – like staff salary accounts – for free. That’s right, gratis and mahala. The delivery system for this is of course the Shoprite Money wallet, a USSD system which enables punters to deposit, withdraw or send money as well as – and this point is crucial – buy groceries at any till point in all Shoprite, Checkers, Checkers Hyper and Usave stores without cash exchanging hands. They can also buy electricity or airtime. Shoprite Money launched in May 2018, and has reportedly already signed up 100,000 account holders.

Comment: Smart move – the payroll functionality may well result in an explosion of users, as businesses sign up their employees for the system to ease their payday headache. And every one of those users is a potential Shoprite customer.

It’s long been the habit of certain smart-alec analysts to spout the nonsense that “Shoprite is not a retailer, it’s a property business.” Of course Shoprite is a retailer, a very good one, but one that also happens to make some fairly impressive coin off its ownership of retail properties across the Beloved Country and beyond. And this week we get an insight into just how much, with the news that the Big Red One is to auction no fewer than seven non-core retail centres across SA, five of them in the Western Cape, and all of them handsomely endowed with anchor tenants from the Shoprite stable. Shoprite recently flogged a commercial building in Paarl for upwards of 25 bar, also on auction, so in a market which shows undiminished appetite for retail property, the business is likely to do quite nicely out of the upcoming sales, thanks very much. 

Comment: Don’t mention it. Anyway, another doubtlessly canny move from a business which basically defines the term.

Comment: We’ll give the last word to CEO Pieter Engelbrecht. Mr E? “This has been a very tough year – the toughest I can recall. I am proud of what has been delivered under very trying circumstances.”

In Namibia, where Shoprite has received some serious stick from government and labour alike for its employment practices, it has dropped a R4.5m suit against 93 of its workers who went on strike in 2015 at a tricky time of year for the Big Red One. Tensions still prevail, however, and let’s face it, suing the workers is never a good look.

Comment:

Making up half the sky this Women’s Month are Shoprite, which to mark the event are unveiling a series of women-headed crèches with which it has partnered. In keeping with President Cyril’s call for the eradication of poverty through early childhood development, Shoprite is helping the centres through training, structural upgrades and access to nutritional meals for learners. To date six early childhood development centres in five provinces have been transformed through the intervention. The business is also increasing its spend with women-owned suppliers, have upped this total by an impressive 148% since the beginning of the year. This is of course off a low base, but the individual gains are impressive: one farmer who used to supply Shoprite with 90-odd bunches of dhanya a week is now delivering 900 per day. Shoprite anticipates further gains for women in the supply chain in the next two years.

Comment: The empowerment of women in business and in society is an opportunity that will make the technology revolution look lame by comparison.

Not exactly stratospheric stuff for Shoprite, which increased sales just +3.3% to R145.6bn for the 12 months through June. In a rare bit of bad news from the Big Red One, Shoprite have let it be known that sales for the year through December 2018 are likely to be hit hard by hyperinflation in Angola and the devaluing of its Kwanza, which has lost 50% in Jan against other currencies. Shoprite has 30 stores in Angola, where it has recently bought a DC, and they still believe that growth prospects are good in that challenging geography. Beloved retail analyst, Syd Vianello, has some sage words for the business. "The situation can turn around quickly, they’ve just got to ride it out," says the man who defines the terms “doyen” and “maven”. Supermarkets in SA grew sales a more wholesome +5.7%.

Comment: This will be a speedbump. But still, it’s a bit of a shocker from SA’s traditionally most bullish retailer.

East Africa is not for cissies, nor for the incautious, facts which Shoprite appears to be keeping in mind as it executes its steady but circumspect expansion in that promising geography. Take Uganda, for e.g., where the business set up shop in 2000, but as of six months ago had only two stores. Now as Kenyan rival Nakumatt battles liquidity problems, Shoprite has taken over three of its stores, in a retail arena also abandoned by that other failed Kenyan business Uchumi. And while no one is denying the challenges of serving the Ugandan market, this modest expansion comes at a fortuitous time, with the shilling depreciating against the dollar, and the Ugandan economy looking set for lift off. Shoprite also has plans to enter Kenya before the end of the ’18.

Comment: Excellent work from the Big Red One, a model for any retailer wishing to business in the Motherland, provided that retailer has deep pockets and good intel on what Shoprite is actually up to.

Shoprite continue to lean on the tried and tested strategy of value, to keep customers loyal in these troubled times, sometimes in very specific terms: the business has either subsidized or frozen prices on 6,793 tons of sugar, 8.3million litres of cooking oil, 3.4million litres of milk, 16,118 tons of maize, 9,555 tons of rice and 144.1million loaves of bread since April 2016. This among a far-reaching range of measures to keep prices low and offer value in the face of the VAT increase and the seemingly endless rise in the fuel price. Doing right by the planet, SPAR and Pick n Pay both went all-in on the recent International Plastic Bag Free Day initiative. And Massmart, driven by a boom in the construction sector in those countries and poor availability of building supplies, has plans to open six new Builders Warehouse stores in Kenya, Mozambique, Swaziland and Zambia, over the next two years. Builders, you will remember from last week, is one of the high spots in Massmart’s business at the moment, and a reliable contributor to both profitability and growth.

Comment: Good work all round, from a sector doing its bit to keep the dear old SA economy afloat.

Trouble down at the mill for Shoprite, whose stores were threatened with shutdown last week in a dispute between the National Transport Movement (NTM) union and service providers contracted by the Big Red One. Drivers and Warehouse workers were militating for a minimum wage of R12,500 per month plus benefits; but have apparently been told that this is unrealistic. Also at issue, it seems, is the shadowy presence in the mix of labour brokers, who have a long history of clouding the wage issue in South African labour practices. In other Shoprite news, the shareholders got jittery last week in the as-it-turns-out-incorrect news that Oom Christo was selling 17million of his shares. In fact, he was simply placing them with the banks as collateral for loans – although, whether these are new or existing loans, remains unknown.

Comment: It seems unfair that the fortunes of the Shoprite share should be tied to the personal travails of Christo Wiese, but that, one supposes, is the model, and there’s little that can be done about it.

Shoprite now has 2,800-odd stores spread far and wide across this great continent of ours – a continent, which, most retailers will agree, is devilishly tricky to deliver stock on, or to, whichever you prefer. How, then, does Shoprite do it? You won’t find the answer here. They have the recipe to their secret sauce firmly under lock and key in their Brackenfell bunker. It’s no secret, though, that they saw the benefits of centralised distribution way ahead of most of the competition. And they’ve kept at it, centralising even further with the opening last year of their Cilmor facility in Cape Town, which covers 123,000m² and combines the operations of five separate DCs, in ambient, frozen and chilled sections. It’s said to be the most technologically advanced of its kind on the continent.

Comment:

Shoprite launched its Retail Readiness programme in February 2016, with a view to making a dent in South Africa’s youth unemployment numbers, as well as training up its future staff. The programme comprises an eight week course in the basics of retail and equips graduates, who receive an NQF-level 3 qualification, for a future either within the Group or without – perhaps even in their own independent retail business. Since inception, 8,688 young people have been employed by the Group, putting the Big Red One on the way to achieve its goal of 12,000. The course includes three weeks of theory in basic business principles providing participants with an understanding of the financial, legal and business requirements of setting up and running a small to medium enterprise in conjunction with a large retailer, and then they go on to work in various departments for five weeks, including produce, butchery and the deli.

Comment: Worthy stuff, with the beginnings of a pool of franchise partners should Shoprite ever need one.

Shoprite has launched a new mobile money service to extend its outreach to SA’s many unbanked shoppers. By using their Shoprite Money mobile wallet, punters will be able to deposit, withdraw, send money and buy groceries at any of the till points in all Checkers, Shoprite, Checkers Hyper and Usave stores – all without the benefit of a formal bank account. A revolutionary move and a great way to attract new customers and retain their loyalty.

Comment:

Rocky times for Shoprite in Namibia, or “Nambia” as the most powerful man in the world likes to call it. The Namibian Labour Ministry has gathered what it is ominously calling a “dossier” on Shoprite’s labour practices, highlighting that fact that 42% of the workforce there are classified as “permanent part-time employees” and don’t enjoy the same wages or benefits as permanent staff. The ministry demanded a meeting with the um, board of directors and shareholders in April, Shoprite counter-offered with a meeting with the Namibian leadership or alternatively a face-to-face with the board sometime in May – an offer the ministry rejected. And now, it seems, things have come to something of an impasse. “You must remember that we are the State and we are not a banana republic,” rumbles permanent secretary in the labour ministry Bro-Matthew Shinguadja ominously.

Comment: And no one is suggesting you are. But good luck getting anything operational out of a board of directors. Shoprite, for its part, might do well to embark on an aggressive PR campaign in some of the territories where incursion by powerful South African enterprises is not universally considered a good thing.

The gift of laughter is a precious thing. Which was doubtless the thinking behind the Gifts to Wow Mom display, packed to the rafters with household cleaning products, in their Checkers Van Der Lingen store in Paarl last month. An honest mistake, which like others before it went viral before the PR people had managed to tweet out an apology. This hot on the heels of a controversial TV campaign which had a daughter aspiring to work at Shoprite like her mom, and a viewer complaining that the ad set a low bar for achievement. The Advertising Standards Authority found in favour of Shoprite, establishing that the ad did nothing to “withhold benefits, opportunities or advantages from black people” and various commentators pointing out additionally that Shoprite was also the provider of more traditionally aspirational positions as well as its nevertheless still valuable blue-collar opportunities.

Comment: Anyone offer us a job at Shoprite, let’s just say we’d be flattered at the very least.

Look, if Shoprite couldn’t make a buck from it, they wouldn’t be doing it. So giveaways, with which we have at times expressed mild exaggeration, have become hard news now, and worth of inclusion above the fold as it were. So here goes: Checkers have launched the newest iteration of the “Little” campaign for the wee ones, and it’s not a Little Store, it’s a Little Garden, with 24 different seedlings to collect including eight veggies, eight flowers and eight herbs. Customers will be rewarded with one Little Garden seedling kit, containing a small biodegradable pot, a soil pod, seed paper and a pop-out name tag for every R150 spent in any Checkers or Checkers Hyper store across South Africa.

Comment: Stroke of genius, as always, this time with more of the feel-good factor than the nag equation. And why, after all, should the very young be spared all the frustration and heartbreak of growing your own veggies, eh?

Nice work from the Big Red One, who is busily upskilling no fewer than 4,000 staff of the specialist departments, including bakeries, delis, and fish, offering them a clear career path, and assistant chefs training to NQF level 2, offered in partnership with the International Hotel School. The training includes everything from telephone etiquette to knife skills and the preparation of sauces, and is run over four months in monthly three-day blocks. “We want to offer our employees opportunities to grow their careers and continue climbing the culinary ladder within and outside our business,” says Moga Pillay, spokesperson for the Group’s training programmes. In other Shoprite-adjacent news, Steinhoff have sold 6% of its STAR stock for R3.5bn in an ongoing effort to raise cash and claw its way back to respectability. The Steinhoff share price promptly hit a new low.

Comment: We have long been of the view that the best thing an employer can offer staff is training – and the best thing an employee can bring to the table is a desire to learn.

Shoprite CFO Marius Bosman, says the Big Red One, will retire in June – a story you may expect to see down in the In Brief section. But this being Shoprite, it’s a bigger deal than that. Mr Bosman, you see, had worked under Whitey Basson for 25 years, and there are those among the analysts who are saying this retirement signals a conclusive end to the Basson era, and a signal that Pieter Engelbrecht is putting his stamp on the business and making his own appointments. That may be something of a stretch – Bosman had, after all, only been appointed as FD in 2014. The new appointment is Anton de Bruyn, who has been with the Group for 15 years, most recently as deputy general manager group finance, so he’s hardly a new broom. And Bosman will stay on as a consultant to wrap up the financials through June.

Comment: In our next life, we’re going to come back as a financial analyst. You can say anything with impunity, and then they throw big handfuls of cash right in your face.

The Midlands Mall is a landmark for weary travellers making their trek to the annual joys of the Lower Marine Parade or Uvongo. It’s also the thrumming heart of the Pietermaritzburg retail scene. For pensioners in the area, it’s endless concourses are a safe and convenient place to take their morning constitutional. And it is undoubtedly a great place to shop, especially now that it has a spanking new Checkers gracing its new extension. It’s the tenth of Checkerses’ new-look stores, its design being reflective of two major global retail trends – convenience and shopping experience. The elevated customer experience includes wider aisles and shelves, with impressive in-store service departments such as a Cheese Deli, Coffee Bar, Wine Shop and Sushi Bar. We recently enjoyed visiting another Checkers new-look store in Canal Walk (previously Century City), which showcased many of its impressive new-look features, including a café, cellar-style wine shop and the newly launched Fresh-X. Take a walk through the store with the Trade Intelligence Store Visit feature here. And in other Shoprite news, the Group plans to open just under 100 supermarkets across the African continent in the next 18 months, the majority being Shoprite stores, with Usave stores totalling almost 20 and Checkers following closely behind.

Comment: Covering all the bases, with characteristic energy and drive.

Having shifted its focus from the grim post-Soviet landscape of Eastern Europe to the lusher plains of East Africa, Shoprite now finds itself head to head with French retail behemoth Carrefour. This is an inevitable and long-awaited match up, with both businesses making strides on the African continent, Carrefour in the north and Shoprite sub the Sahara. In February, Shoprite secured leases on spots in seven prime Kenyan malls, where they will open stores this very FY. Carrefour, in the meantime, is opening its fifth store this year, aiming for the wallet of the posher punter in a country where growth in household spending is thought to be somewhere a touch above 5% per annum. That said, most Kenyan households still have disposable income of under $5,000 per annum, creating fertile ground for Shoprite’s Usave discount brand. But don’t write off the locals: Tusky’s and Naivas have over a hundred stores between them, and keep prices down by shopping local.

Comment: That’s it. We’re packing our puttees and pith helmets and dashing off to cover the most exciting retail story on this great continent we call home.

Doing the right thing by the not-for-profit community this week is Shoprite, whose new Act for Change buying card allows welfare organisations and social enterprises a 5% discount across participating outlets, as well as the opportunity to save cash for a rainy day. One such client is the Vlottenburg Community Organisation, which operates a feeding scheme for children in Kuils River, and which participated in the pilot.

Comment:

Christo Wiese is rather hopefully touting the idea that, in something which could only be described as a turn up for the books, Shoprite could be interested in buying Steinhoff Retail Africa (STAR), investment home to the jewel in Wiese’s retail crown, Pepkor. Back in the innocent pre-Steingate days, STAR was looking at buying into Shoprite, and Whitey was reportedly having none of it. Now that the shoe appears to be on the other foot, Shoprite boss Pieter Engelbrecht is keeping the Whitey flag flying, and having none of it. "We are trying to focus even more on food retailing than another completely different line of business,” he says, although he does admit that a putative association with STAR would involve the sharing of such amenities as financial services. In the meantime, Shoprite have announced that their Steinhoff-tinged plans for Eastern Europe are now off the table, and that their focus might now be instead on the more promising markets of East Africa.

Comment: Shoprite’s survival of the Steinhoff scandal has been a textbook instance of luck and good judgement.

It’s been an anxious year for Shoprite, what with the precipitous resignation of its iconic boss and the implosion of a business with which it came close to being more closely related than would have been healthy. Never mind though: they’ve turned in a tidy set of interims, with turnover growing +6.3% to R75.8bn and operating profit up +11.3% to R4.1bn, despite a growth in expenses of +9.3%. Shoprite’s SA supers were responsible for most of the sales, at 81%, and sales outside of SA declined by -0.4%, losing a little share of the total too. For more on these, have a look at the Trade Intelligence crisp little summary here.

Comment: Let’s leave the final word to them then … Mr Engelbrecht? “This is a fantastic set of results … if you unpack the numbers, given the rate of deflation, it was an extraordinary performance.

Look, we like to report the good news every now and then, those small acts of kindness the PR people like to pop in your inbox in the hopes that it will be splashed all over the front page of next week’s Tatler. But our retailers are a busy bunch on the CSI front, and we can’t always. This week’s different though: Shoprite’s water meter challenge is not just noteworthy but topical. One hundred and ten schools have signed up, and collectively they’ve saved 21million litres of water worth around R1.1m since November. The initiative, you will recall, involves the installation of smart water meters that measure and report on water use by the minute. It also includes plumbing maintenance and interventions to affect behavioural change among learners and their teachers. Shoprite committed themselves to the first hundred meters then threw down the gauntlet to the corporate world; 82 other businesses promised that they’d install a further 260 metres.

Comment: Those are some big numbers, do the math. Oh, alright, let’s see – carry the ten, round it off, that’s about 70million litres, worth R3.7m give or take. Excellent work, Shoprite and friends.

Helping out the punters this week is Shoprite, which has announced that for the moment, its disaster relief fund – that’s R1.4m – will be harnessed in the pressing cause of water relief. Inundated – you’ll excuse us – with offers from shoppers who wish to donate bottles of water, The Big Red One has instead made it possible for them to make a donation in R5 increments at the till point, saving on packaging costs and enabling Shoprite to respond to people’s needs in the most efficient way possible. In other Shoprite news, MediRite Pharmacies are now offering pensioners free access to health checks which include blood sugar, cholesterol, blood pressure and body mass index (BMI) tests. And in a reminder for Shoprite punters about the bullet Whitey dodged on their behalf, the share hit a record high last week before edging back down a bit, even as Steinhoff tanked and Star – the investment vehicle into which Shoprite was to be bundled – traded 20% down from is December price.

Comment: Shoprite’s humanitarian efforts are guided by the pragmatism that make them such a great South African business.

“Whither Shoprite?” you ask, Byronically, your hand upon a globe or even a skull, your forehead high and your features noble. Easy on the drama there… Shoprite are fine: Group sales grew +7.4% for the six months through December, factoring in internal inflation, with SA supermarket sales up +7.8%. By the same measure, Group sales grew +3.3% in the same period last year. The star performer this time around was furniture, growing +10.8%, while the OK Franchise division led the charge in groceries. All in all, the analysts reckon, Shoprite continues to pick up market share from businesses which for the purposes of a compelling narrative must be called “the competition”, trading off its advanced supply chain operations and its aggressive focus on price and promotions to attract the lower LSMs.

Comment: As we may have remarked before: sell Steinhoff, buy Shoprite.

Checkers has added three new variants to its popular range of Oh My Goodness! kiddies’ convenience meals, which was voted best in South Africa by the Sunday Times ‘Tried & Tested Food Awards’ last year. We won’t trouble you with the details here, but suffice it to say that the success of the range is further evidence, if more were needed, of the trend of “Time is a Luxury” identified above. The range’s wholesome formulation deeds into the “Living Healthy” trend, also identified above.

Comment:

No surprises here, but it seems that the acquisition of Shoprite might be on the rocks, given the shaky status of the business which was to acquire said pan-African retailer. Although investors are now concerned that Oom Christo may have to put his Shoprite shares up for sale to maintain liquidity, which won’t do their price any favours. The merest suggestion of a silver lining may come in the generous offer of Mr James Wellwood “Whitey” Basson to step up to the chair of that great business should Christo Wiese feel (or indeed be) compelled to step down. Is Whitey glad the merger – which he stiffly opposed – didn’t squeak through? Whitey is a philosopher, and religious: "Are you asking if the Pope is Catholic?” he asks rhetorically.

Comment: Let’s give the last word to Piet Viljoen, executive chairman of investment company RECM. "Poor ethics is part of capitalism,” he observes, “because greed drives poor ethics.” Ok wait, let’s save the last word for ourselves: “Only if we continue to celebrate greed as a feature rather than deplore it as a bug.”

A colleague of ours who knows these sorts of things reckons that neither Christo Wiese nor Whitey Basson had an inkling of the juggernaut of shady practices that was barrelling down the tracks toward the Steinhoff empire. Whitey, says our source, left Shoprite because he fundamentally disagreed with the Steinhoff takeover. And that, until the next exciting instalment of the saga, is all we have to say about that.

Comment:

A couple of really nice initiatives from the Big Red One this week. The first is a corporate challenge they’ve thrown out there to get smart water meters installed in the Western Cape’s thirstiest schools. Having put in 100 to date off their own bat, Shoprite have got enough pledges to put in another 100, including 50 from Premier Foods. The meters measure and report water use by the minute by transmitting user-friendly consumption information to an internet app‚ and users are notified of any unexpected usage patterns via SMS and email. The initiative has echoes of Shoprite’s efforts during the 2016 drought, when it trucked water to needy communities in the hinterland. The spend initiative under consideration today, though, has more to do with food than water – Shoprite are offering deli meals for R5 and under for hungry shoppers across the Beloved Country, and have extended their subsidy on house-baked bread, which has been retailing at R4.99 a loaf since April last year. 

Comment: Excellent work there Shoprite – solid, practical and humane.

We’d love to be a fly on the wall, or the receiver or something, when Shoprite has its conversation with shareholders on the more thorny than usual issue of remuneration. This after 65% of the Big Red One’s outside shareholders (that’s almost 30% of all shareholders) voted against the business’ remuneration policy at last week’s AGM. New JSE policy requires that businesses getting over 25% disapproval on issues of remuneration have to engage with shareholders; accordingly Shoprite suggested a teleconference. After last FY’s outcry against Whitey Basson’s R50m payola, Shoprite have scaled things back somewhat, with new CEO Pieter Engelbrecht on a tighter contract than his predecessor, although the PIC, a major investor, has expressed concern that it is skewed too heavily towards fixed remuneration with insufficient detail provided on performance criteria.

Comment: The exit of so powerful a figure as Whitey will inevitably change the nature of the Shoprite business, bringing it in line with more traditional levels of shareholder accountability and engagement. We are observing with interest and enjoyment the seeming ease with which Pieter Engelbrecht has stepped into the role, and is driving the business forward, beginning to make his own mark as leader of this impressive retailer.

We reported last week that Shoprite was taking over a location from the ailing Nakumatt, in Kenya. Nakumatt itself is in talks with rival Tusky’s to discuss a partnership which would enable it to remain in business. And Shoprite, say the experts, are waiting in the wings to see how those talks pan out. With Carrefour having already taken over a Nakumatt space itself, things in Kenya could get very, very interesting.

Comment:

Shoprite is doubling its footprint in the burgeoning East African economy of Uganda, adding stores in Entebbe and Kamwokya to the two already on the ground, as rival Nakumatt struggles to find a foothold. Shoprite was the second international retailer to open shop after Metro, which subsequently shut down. Since then, its chief rivals for the hearts and wallets of the growing middle class have been East African outfits like Nakumatt and Uchumi. The business is also in talks to open up its first Kenyan store – in a location recently vacated by Nakumatt. This looks like the strategy of choice for Shoprite in East Africa’s biggest economy, where a more established retail market sets up higher barriers to entry. All of this just a couple of years after Shoprite, with characteristic pragmatism, closed shop in the frankly impossible geography of Tanzania.

Comment: Shoprite made it to 110 in the Deloitte Global Powers of Retailing survey last year, with now parent co. Steinhoff at 72. Just a hunch, but we reckon the Big Red One might make it into the top 100 in the next couple of years.

So what’s been up over at Shoprite? Oh, this and that, this and that. For starters, they’ve very kindly installed playpumps in schools in Queenstown and Tsolwana, which historically lacked fresh water, bringing to 34 the number of such initiatives they’ve sponsored. Playpumps, as you know, are an invention so basically ingenious only a South African could have thought of it. Shoprite has a tradition of helping South Africans affected by natural disasters, something not likely to be in short supply in the decades ahead. There was also a piece in the local press about Tru-Cape Fruit Marketing having delivered its 20 millionth crate of the good stuff to Shoprite, which in all honesty is more of a Tru-Cape story, although it does give a good indication of the scale of the Shoprite Operation. And speaking of scale, the listing of Steinhoff African Retail (STAR), new home of Shoprite, has garnered R16bn for parent business Steinhoff, which placed some 23.19% of its interests in the newco. 

Comment: We’ll leave this one to you. Anyone?

The Big Red One has launched its expansion drive with the opening of 14 new stores last week, creating 820 new jobs along the way. This added to the 6,027 jobs created for the FY2017, cements its position as SA’s largest private employer. And if that’s not good news enough for you, they saved a packet on CEO Pieter Engelbrecht’s paycheck, too, which came in at R31m and some change, compared with Whitey’s last bonsela, which was closer to a cool 100 bar. But back to them new stores… the latest crop includes several liquor stores and a Usave in Aberdeen in the Eastern Cape, a historically under-serviced area of the sort Shoprite are targeting. 82 new stores are planned for 2018, including Shoprites, Checkers, Checkers Hypers, Usaves and Liquorshops. According to the newly flush Mnr. E., “Over the past year 2.4% more customers voted with their feet and wallets to buy at our stores and we processed over one billion transactions.” 

Comment: The canny way that Shoprite translate their present scale into yet more growth, taking few missteps along the way, is something to see.

Seven Shoprite cashiers appeared in court last week on charges of theft for accepting tips. According to Shoprite, tipping goes against a company policy which does not allow staff to have personal cash on them during working hours. “Shoprite is obliged to take action in order to protect its assets and therefore involved the police to investigate suspicions of theft at its Pelican Park branch,” said the business in a statement, sticking very strictly to the letter of the law.

Comment:

‘Allo, ‘allo, ‘allo, wot ‘ave we ‘ere? It’s Shoprite, isn’t it, running a nice little game on the side, in the form of “reckless lending” (the National Creditor Regulator’s words, not ours) to punters they hadn’t vetted properly for creditworthiness. The Big Red One was hit with a R1m fine, the first big judgement the Regulator has handed down but, in the ominous words of the manager for investigations and enforcement, Jacqueline “Judge Dredd” Peter, “It won’t be the last.” The lending in question was not, naturally, in the grocery division, where wiser counsel tends to shy away from unsecured debt, but in furniture, where the business model is basically built on the stuff. Among other discrepancies, Shoprite was allegedly taking unverified incomes other than the borrower’s into account when approving loans. 

Comment: Tough times, tough measure from the NCR. Other retailers would do well to burn the midnight oil and get their books in order.

Comment: We’re almost certain it didn’t go down like this at all.

You will recall that Shoprite are reputed to have designs on the market in Eastern Europe – specifically, Poland, where word in the street is that the Big Red One is eyeing the acquisition of a smaller chain. And Steinhoff, you will recall, owns the Abra chain of 100 furniture retailers in the country. Just saying.

Comment:

Those Shoprite results then, delivered in energised tones by CEO Pieter Engelbrecht, eight months into his tenure in the cavernous surrounds of the impressive new-generation Cilmor DC in the Cape, complete with a phalanx of ceremonial forklifts and their beaming operators. Cut to the chase, though: turnover up +8.4% to R141bn for the year through to June, with trading profit up +11.6% to a hefty R8bn and diluted HEPS slightly ahead of that at +11.9%. The question on everybody’s lips, though, was whither, trading margin? Again, up: from 5.6% last year to 5.76% in the 2017 FY, a strong result,  despite the toughest conditions in recent memory, and Shoprite are citing a scientific +0.45% increase in market share, equating to additional sales of R1.5bn. Non-SA supermarkets were again an impressive performer, growing sales +11.7% compared with +8% back here in the Beloved C. Looking ahead, their strategic focus areas in a nutshell: customers first, grow LSM 8-10, private label, more franchise, Africa, strategic expansion from DCs like Cilmor which consolidates stock from 500 different suppliers. For a more detailed view of it all, click here.

Comment: So solid stuff as we’ve come to expect. And that shiny new DC, huh? Nice.

Something of an imbroglio – is that a word? – over at Shoprite, where The Big Red One is struggling to get minority shareholders to embrace the idea of a R1.7bn payout to one Mr James W. “Whitey” Basson, latterly the CEO. Mr J.W., you see, has an agreement that when it came time for him to offload his Shoprite shares, Shoprite itself would snaffle them all up, lock stock and barrel, at the asking price on the day. Shoprite have beaten him down on this – from R211 per share to R201, and RMB, canvassed for an opinion, has declared the payment fair to shareholders. Shoprite have also promised the establishment of an R84m fund to educate the previously disadvantaged, presumably as a sweetener to shareholders like the Public Investment Corporation (PIC), who might otherwise have stymied Whitey’s bonsela. However, the re-purchase requires 75% shareholder approval, and given that only a few at the top actually knew about the deal in the first place, this majority is far from guaranteed. 

Comment: It is going to be fascinating to see how this one plays out. Whitey Basson is not generally the one who blinks first.

So the Steinhoff deal is back on the table then, having been abandoned back in February. Heading back to the drawing board with a philosophical tug on his meerschaum pipe, Oom Christo Wiese has proceeded calmly to unbundle Steinhoff’s African holdings, including Pep, Ackermans, and the JD Group into a separate entity called STAR, through which it will list these assets on the JSE. And also, incidentally (or not, Oom C being a sly old jakkals), through which it will now acquire a controlling interest in Shoprite, in a deal worth R35.5billions of rands. Having entered into call option agreements with three major Shoprite shareholders - Titan Premier Investments, a company controlled by a Wiese family trust, the Public Investment Corporation and the Lancaster Group – STAR will hold about 22.7 percent of the economic interest and 50 percent of the voting rights in The Big Red One, and Wiese’s dream of a more consolidated structure will be realized. Ahahahahahaaaah!

Comment: Behemoth, anyone? Steinhoff is on the verge of becoming a global power in grocery retail, in one fell swoop.

After grim tidings in trading updates from Woolies and Massmart last week, you were looking forward to Shoprite’s, weren’t you? Us too. However, at first glance, it was a source of some concern rather than the sheer delight we have become so accustomed to from The Big Red One: sales for the full year will be up around 10%, or 6.9% on a like-store basis, compared with a more buoyant 14% in Shoprite’s first half – confirmation, if any were needed, that this great sector we call home is truly up against it. It, being the recessionary conditions which currently prevail. Elsewhere in Africa, things were only moderately better, with sales growing 13.5% as currencies fluctuate and commodity prices continue soft. What’s the plan there Shoprite? They’re continuing their push into Woolies and Pick n Pay territory, gleaning what still might be had from the upper end of the market with Checkers, while continuing to provide value at the embattled mid-to-lower levels through Shoprite and Usave, alongside the full-steam-ahead focus on growth beyond our borders into Africa. We await their official full-year results with bated breath.

Comment: Shoprite are renowned for stepping up to any challenge. We have no doubt they are cracking open their war chest as we speak.

In a time of lowered economic expectations and a stressed shopper base, the Shoprite Group are seeing growth in the affluent end of the market, and planning accordingly. They’ve introduced a range of ready-to-eat goodies like gourmet lamb shanks and teriyaki-and-ginger-basted pork ribs you would normally expect to see on the shelves of a top-end retailer we won’t mention but it starts with “W” and ends with “orths”, and hopes to have 500 of these products on the shelves by the end of the year. The Big Red One is also planning to open 23 new Checkers this year, for a total of 230.

Comment: Shrewd move? Time will tell, although so far no one’s got rich betting against Shoprite.

In the spirit of our Youth Day campaign, Shoprite are investing heavily in the future of the Beloved Country, springing R20million a year for bursaries in scarce skills like pharmacy and chartered accounting, and seeing 3,000 beneficiaries find gainful employment in the past decade through the programme.

Comment:

In recent weeks, Shoprite has been on something of a streak when it comes to doing the right thing by the community. Last week it was bringing community gardens into the value chain, this week it’s something called a #YellowPacketChallenge, which will run until 9 July, by which South African consumers are to donate grocery bags filled with non-perishables to individuals and organisations in need. And this being 2017, those who’ve bought the bag then get to post it on Twitter or their Facebook page, and challenge a friend to do the same. Shoprite will match each such good deed with one of its own. “It is incredible what can happen when people come together for a good cause, and we want to show that anyone has the capacity to give back and make a difference in their communities,” says Marketing Director Neil Schreuder.  

Comment: An initiative reflective of the adage we at Trade Intelligence stand firmly by, that doing good is good business. And indeed sustainability, when approached correctly, is just that.

Walking softly and carrying a big spade this week is Shoprite, which in its unassuming way is giving market access to several of the community garden projects in which it is involved. To raise awareness of World Hunger Day on Sunday, produce from the gardens was sold in Shoprite and Checkers stores around the country. The Big Red One works with identified specialists in this area, including Urban Harvest and Food & Trees for Africa to ensure that community organisations are mentored and equipped to create and maintain their gardens, this with a view to alleviating hunger and generating income for vulnerable individuals and organisations. As reported here before, Shoprite, along with some of the other major retailers, already provides surplus food to hundreds of non-profits involved in feeding the poorest of the poor.  

Comment: As the world population grows beyond the capacity of big business to feed it, the day may come when helping communities feed themselves is an important part of the food business model.

That sly old fox Whitey Basson has cashed in his Shoprite chips (well, 8.7millon of them, anyway, of a possible 9.1million) to the tune of – wait for it – R1.8bn. R60m of which he snaffled by allegedly doing some fancy footwork on the timing of the sale. And leaving Shoprite shareholders with interest on the purchase to the tune of R144m. Shoprite is obliged to buy Whitey’s shares back in terms of a clause inserted surreptitiously into his employment contract. There’s the whiff of conflict of interest about the transaction, as Whitey is an executive of the business, and also the suggestion that said executive believes Shoprite’s growth may be slowing. Although, to be fair, just a week ago Whitey was sanguine about the businesses prospects, in Africa and even beyond. 

Comment: Is this the kind of move which suggests an amicable separation? Do Whitey and Oom Christo still share a bottle of Klein DasBosch Director’s Reserve in the Lapa on a Sunday afternoon these days?

A bit of an under-the-radar announcement here from Shoprite, which tells us it intends to spend around $571million US in the next five years expanding its operations in Angola, in partnership with the Angolan Technical Unit for Private Investment (UTIP). This investment will cover the construction of 15 new shopping centres, another 22 supermarkets (of which three have already been opened), a warehouse, two residential structures for staff, and improvements to four existing stores. This will expand Shoprite’s footprint to cover 11 out of 18 provinces, and will create 5,600+ new Angolan jobs. For all of this, UTIP is handsomely giving the Big Red One a 65% reduction in industrial, capital and property taxes for 10 years. 

Comment: That’s how you do it!

Well Prost and Nasdrovya to Shoprite, who, we are told, are marching into Eastern Europe like that other Red Army before them, in order to hedge against a possible decline in sales in recently-downgraded SA. According to CEO Peter Engelbrecht (too soon to name him “Ou Piet”? Probably) they will be targeting former Iron Curtain states which have either “low competition or high economic growth” or presumably both where such are to be found. And competition in the Eastern Bloc is thick on the ground: Tesco, Carrefour, Lidl and Aldi, to name just a few of the foreign businesses. The idea, says (oh what the hell?) Ou Piet, is not to go in guns blazing but to go slow. “We are not going to over commit ourselves to learn if the market accepts us, says O.P., with just a hint of the phlegm and pragmatism of the previous CEO. 

Comment: We still can’t believe that it is now possible to write a Shoprite piece without any reference whatsoever to Whitey Basson.

People in Nigeria – and elsewhere in Africa – are understandably hurt and angered by outbreaks of xenophobia here in the Beloved Country. This has repercussions for the businesses who trade elsewhere on the continent. Like Shoprite, in Nigeria, where a protesting mob had to be restrained by the local police from giving South African nationals a taste of xenophobic medicine. There have also been calls for businesses like Shoprite to be turfed out of the country – calls which alarm mall owners and smaller retailers alike, who depend on the business to bring in punters in their role as anchor tenant. There are also those who point to Shoprite’s contributions to local sourcing and employment. And Shoprite itself, which condemns xenophobia in the strongest possible terms: “We remain committed to working with industry and the appropriate consumer groups so that decisive actions are taken against those involved in violent crimes and intimidation against foreign nationals as well as to convey our strong position against xenophobia”, says management.

Comment: Business is not part of the problem when it comes to xenophobia, which results from a toxic combination of ignorance and a lack of opportunity. But business can be part of the solution.

“Oh My Goodness!” is not an epithet which falls frequently from the lips of Gordon Ramsey, who famously prefers the stronger stuff. Nevertheless, that is the name of a range of healthy and reputedly delicious kids’ meals for Checkers, containing only locally grown veggies and free range meats. And while we’re talking marketing within the Shoprite group, the eponymous retailer has, a touch further north and to the left, launched a “Proudly Nigeria Product” campaign aimed at strengthening their ties with consumers, suppliers and the country generally. And sticking with the subject, that “Something Big is Coming” teaser you may have seen turns out to refer to a massive bus ticket giveaway – just in time for the Easter hols when everyone packs up and heads down to the seaside or the hills and home.

Comment: With all of its scale and supply chain sophistication, it’s sometimes easy to miss the fact that Shoprite’s greatest strength, perhaps, lies in its marketing and promotions, from the shelves on up.

An unseemly spat between Shoprite and a supplier of sugar holds up an unflattering mirror on how it is between retailers and suppliers generally. Hold on to your synapses, this one’s a little tricky. Pearl Island, a company that provides packaging and warehousing services to Shoprite, ordered 50,000 tons of white sugar from a business called Starways in 2014. Starways duly delivered about half of that, in consignments, then the import-duty went down from R2,395 a ton to around R320. Pearl Island demanded a corresponding price cut, at which Starways demurred, muttering something about rand hedges and the exorbitant cost of keeping the stuff on Starways’ premises while they sorted things out. Pearl Island duly went ahead and imported cheaper sugar from Brazil, while Shoprite – who Starways assumed was funding the deal – distanced itself from the whole sordid affair. Starways’ application in the Cape High Court has been dismissed with costs; now they’re taking it on appeal.

Comment: Sometimes the length of an arm isn’t quite enough to keep one’s name out of the headlines.

Up north, in Zambia, Shoprite have gone into partnership with a little outfit called Vodafone, which provides the locals with those little wireless telephones everyone seems to be so keen on these days. Vodafone will be setting up store-within-a-stores in several Shoprite supers, which will presumably benefit from the additional footfall. For Vodafone, which is just setting up its networks in Zambia, it will be an opportunity to sell some phones without having to splash out too furiously on retail infrastructure, as well as to grab some drive-by Shoprite trade. Vodafone Zambia CEO Lars Stork is apparently well-chuffed with the arrangement, although really we put this line in only so you could rejoice in the splendour of his name.

Comment: What’s Shoprite’s long game with Vodafone? We’ll keep our eye on this one.

New Shoprite CEO Pieter Engelbrecht has let it slip that, absent the guiding hand of Steinhoff at the wheel, Shoprite itself has some fairly dramatic plans for expansion off the continent, into other emerging markets, and that to achieve this plan it might have to split into two like some predatory super organism in the primordial seas. In the meantime, 116 South African stores and 49 stores in the rest of Africa next year.

Comment:

Showing this week that it’s equally capable of going it alone, and doesn’t need any fancy mergers thanks very much, was Shoprite, which turned in a very tidy set of interims. Turnover was up 14.0% to R71.3billion, with operating profit climbing 9.4% to R3.7billion. The South African supermarkets business, making up 80% of total supermarket sales, grew 10.7% to R53.7billion, although there was zero like-for-like growth in the face of the highest internal inflation for a good long while. Lots of store openings though – 147 all told, including 29 net new SA supermarkets and 22 beyond our borders. But being Shoprite, what they really got excited about was that shifting and even arguable target: market share, where, they aver, they grew half a percent, adding to the customer base by 6.3%. Argue with that if you will.

Comment: Patchy but pleasing, particularly the sales growth in a tight economy.

So Shopstein has lurched off the table and into the cold storage of history. The deal hinged as you know on an exchange of shares between parties, as follows: Shoprite were going to acquire the African retail assets of Steinhoff, including Pep, Ackermans, the Speciality Group, including Shoe City, John Craig, Refinery and Dunns, and the Pep and Ackermans African operations, making payment to Steinhoff in shares. The value of the transaction would be negotiated “taking into account the best interests of both Steinhoff and Shoprite shareholders.” Well, as it turns out, Steinhoff (read Oom Christo Wiese) and its biggest shareholders could not agree on an exchange ratio for the shares which were to change hands, and the deal is off, leaving Oom C. one presumes, to moodily throw a whole bunch of cash into a battered carry-on and go shopping in London instead.

Comment: We’re a little torn. The deal would have given the combined entity the scale to be a major global player, but on the other hand, too much retail consolidation is not good for us back here in the Beloved Country.

Turns out that the Shoprite/Steinhoff merger (to which, with apologies to Mary Shelley, we will henceforth refer to as Shopstein) was first conceived over a decade ago, when the years still had a zero in them and so did the winters. And having waited so long, and surviving the exit of Whitey Basson no less, the deal may yet have to wait a little longer. A renewed cautionary, you see, suggests that some of the main majority shareholders remain to be convinced of the merits of the transaction, notably – perhaps, the cautionary doesn’t provide much detail – the price at which they’ll offload their stocks if they so choose. The two biggest Steinhoff shareholders, Oom Christo’s Titan Premier Investments Proprietary and the Public Investment Corporation are all for the deal, Oom Christo having a documented liking for big things.

Comment: So not a done deal, then. Interesting to see how – and whether – the smaller investors might be appeased.

The Shoprite interims, then, for the six months through December, telling a story somewhat sunnier than that of Massmart, with South African sales up 10.7%, and like-store sales a still-respectable 7.4% with internal inflation running at exactly that also. Sales as you know have been clobbered by high inflation, which hit 6.8% in December and by rising food prices which soared during our worst drought since 1904. Beyond our borders, different story: sales were up 32.2%, or 14.2% on a like-store basis, against a backdrop of forex shortages and a commodity bust on our perennially-promising continent. Counter-intuitively, furniture sales, which may have been expected to decline as food prices rose, grew a handsome 10% for the period.

Comment: Shoprite results, while still very respectable, just aren’t the same without the wit and wisdom of Whitey to help them go down.

The merger that will inevitably come to be known as Steinrite, or perhaps Shopoff, we haven’t decided which, is as you know a pretty big deal. But what’s in it for Oom Christo? “I like scale,” explains the big man, simply. He owns 23.1% of Steinhoff and 15.93% of Shoprite, and somehow, the deal is going to add up to a little more for him than the sum of these not insignificant parts.

Comment:

So here’s how it’s going to go down, listen carefully: Shoprite are going to acquire the African retail assets of Steinhoff, including Pep, Ackermans, the Speciality Group, including Shoe City, John Craig, Refinery and Dunns, and the Pep and Ackermans African operations. And for this lot, Shoprite will pay Steinhoff handsomely, in shares, following which Steinhoff will hold a “significant interest” in the newly-bolstered Shoprite Group. The value of the transaction will be negotiated, we are told, “taking into account the best interests of both Steinhoff and Shoprite shareholders.” Both of which groups include, as you know, a Mr. C. Wiese. The resulting entity will be known with a certain justifiable inevitability as Retail Africa, and it will have sufficient heft to see off any global competitors, positioning the combined businesses as the leading multi-format discount retailer on this majestic continent we call home. Additional benefits will include infrastructure and services sharing; product specialization and indeed product diversification; supply chain optimisation; customer loyalty, choice and convenience; and people management benefits. As part of the deal, Steinhoff will also be buying out the respective Shoprite shareholdings of Titan and the PIC in a share exchange.

Comment: Impressive. Great for the business in Africa, although back here at home we might feel a certain sense of disquiet at this massive chunk of consolidation hurtling toward the retail industry like the asteroid out of ‘Armageddon’.

We honest FMCG types do not usually trouble ourselves with the affairs of furniture retailers, with their “no money down” and their “five years to pay.” But when the retailer in question is one of our own, and is serving as a bellwether (look it up, look it up) to the condition of the dear old SA consumer, we’ve been known to make an exception, so here goes: Shoprite reports that its lending arm, Shoprite Investments, has experienced a decline in credit sales as punters reduce spending in response to the weak economy.

Comment: And this, let’s face it, augurs poorly for December’s retail sales numbers.

Shoprite’s expansion beyond the borders of The Beloved Country have brought great opportunities for suppliers, and not just those at home. Case in point: Zambeef, which as you may have discerned is a beef supplier from Zambia. And they are kicking their heels up with joy at Shoprite’s drive into West Africa, which likes a slice of beef as much as the next sub-Saharan region. Zambeef, you see, are contracted to run Shoprite’s in-store butcheries there, and Zambeef is gearing up for expansion: they recently raised $65milion from the disposal of shares to UK outfit the CDC Group. Shoprite opened six new stores in Nigeria and one in Ghana in the last FY, for a regional total of 25 Shoprites and six Master Meats outlets. Another four Shoprites are on the way in Nigeria in 2017, and one in Ghana, so happy days.

Comment: A win-win for everyone: Shoprite has a totally hands-off approach to the Zambeef-run departments; Zambeef gets to expand beyond its wildest dreams. An interesting continental model for other businesses.

Last week, we indicated that we felt the timetable for Whitey Basson’s departure from Shoprite seems a little truncated. Now, there is some conjecture that the man is not simply “tired” and “gatvol” (his words, not ours), but eager to make his departure should the speculated Shoprite/Steinhoff negotiations kick in. According to certain analysts, Whitey could not see the commercial value in what would essentially be a consolidation of assets in Christo Wiese’s empire, and in fact had become something of an impediment to the move, asking publically, and only a little cryptically, what benefit there would be in putting the likes of a Toyota and an Anglo American together. The markets seem to bear this view out, with the share price jumping 5.5% on the announcement of Whitey’s retirement rather than the other way around. And that R50million bonus now seems with the benefit of hindsight, a harbinger of dramatic changes in the offing.

Comment: Proof, if any were needed, that as far as the punters are concerned, you’re only as good as the next buck you’re going to make for them.

… Nigeria Today, which reveals the following: “50% of Nigerians don’t know who is the owner of Shoprite Nigeria Supermarkets. What you need to know is Shoprite isn’t a Nigerian company. Shoprite Nigeria is just the subsidiary of Shoprite Holdings Ltd, a popular South African retail firm founded in 1979 by South African Billionaire Mr Christo Wiese.”

Comment:

When the time comes, we will embark on a 12-city retrospective tour, with bejewelled elephants, sword swallowers, troupes of performing monkeys and, this being Africa, a highly-regarded Mbongi to tell of the man’s feats. But we’re not ready to go there yet, so we simply note here that the Shoprite Group has announced that Whitey Basson will be retiring at some unspecified time in the relatively distant future, after a leisurely handover period with his appointed successor Mr Peter Engelbrecht … what? What?!! In fact, he is bailing at the end of December, of this year nogal, which tells us one of two things: 1. That the decision has been taken in some haste, for reasons which are not yet clear, or the more likely 2. That Shoprite decided on the transition a decent while ago and conducted the handover with typical (and enviable) discretion. Engelbrecht has been with Shoprite for 20 years, most recently in the role of COO. Whitey will be on tap to help him and the team through any rough spots.

Comment: Whether Engelbrecht – or anyone – could match The Great Man’s turn of phrase at an analyst presentation is doubtful.

Shoprite’s new mall in Delft in the Western Cape is not universally popular with the locals, it turns out. In an open letter to Whitey Basson, Cape Town Mayor Patricia de Lille and city manager Achmat Ebrahim have called for the suspension of the development until Shoprite engage more meaningfully with the community. Of particular concern are the 300-odd spaza shops in the area which would doubtless suffer. The letter was prompted by complaints from the Delft Development Forum (DDF) and the Black Business Chamber (BBC) that The Big Red One refused to engage with them directly and ignored their proposals on how Shoprite and the community could work more closely to benefit all parties. Other public officials aver that various engagements took place, including a Q&A in June attended by 200 community members. Two community liaison officers have also been appointed by an ad hoc community representative committee.

Comment: Tricky terrain. But, we are operating at a time where the sustainability of communities is paramount, and the organisation that takes the lead, promoting a symbiotic relationship between corporate and independent business, will be the one which is truly regarded as investing in the long term sustainability of the South African economy and its people. When small businesses hurt, so do communities – and so do the businesses which serve them.

Doing quite nicely for himself this week out of the proceeds: Mr JW “Whitey” Basson, whose R50million payday has been the subject of some indignation in the press, 50 large being the amount Mr B. was paid as a discretionary bonus for the year ended June as part of Shoprite’s short-term incentive plan, in part because the business exceeded its target for trading profit growth in 2016. And also because the Big Man has not received a pay increase, or incentive rewards, since 2013. And finally, say Shoprite, because since taking the reins in 1979 he has transformed the business into a – in fact the – major player in SA grocery retail, creating tens of thousands of jobs in the process. Detractors say that it would be useful to know also what those at the bottom end of Shoprite’s salary scale are paid.

Comment: Doubtless, in any normal economy, this sort of executive remuneration is justified. But in a country like ours, at a time like this, the optics are not great.

Oom Christo Wiese has let drop the bombshell – if by bombshell you mean a large heavy object wrapped up in a mattress and several duvets, from a not particularly dizzy height – that Steinhoff, owned substantially by Oom C., might be open to the idea of acquiring Shoprite, owned, not insubstantially, by a Mr. C. Wiese. So we’re not talking a “Tesco buys Pick n Pay” scale bombshell, more a rejigging of the administrative structure of certain large assets. What we are talking about, however, is, potentially, a R400billion consolidated retail business with furniture, food and groceries under one roof, one that is now represented on five of the six possible continents. Wiese describes the putative move as a “natural development”, as, aged 75, he contemplates retirement.

Comment: But don’t get too excited. Oom C. has a lot of irons still in the fire, including the opening of 500 New Look stores in China – New Look being a UK fashion retailer owned by Brait, owned – again, substantially – by the man himself.

Checkers, the posher scion of the Shoprite family, is doing right by both planet and people in a newly-minted partnership with Food and Trees for Africa and 11 community organisations, whom it will be helping to upgrade food gardens and establish new ones. This with the aim of addressing food security needs in communities where food is scarce and its sources uncertain. Hunger relief is a core focus of the Big Red One’s CSI programme, under which over R100million in surplus food is given away every year, even as a fleet of soup wagons circulates in the hungrier reaches of The Beloved Country, providing bowls of the warm stuff where most needed. Community gardens have enjoyed similar success – Wathint’ Abafazi’s Sustainable Food Garden in Bethelsdorp now feeds 200 people, and will add more to that number with an investment from Shoprite.

Comment: Food security is a massive and looming problem. But its solutions may be humbler, and more local. Nice one, Shekazi.

“What would you benefit by putting Anglo American and Toyota together?” asked a magnificently oblique Whitey Basson, when quizzed by reporters about a speculative merger between Shoprite and furniture giant Steinhoff. Kicking the question up the tree, he suggested that Oom Christo would be the man to ask about such a deal. Oom C said with equal impenetrability that theories about such a deal “may be as right as they are wrong”, like the cat in Schrödinger’s speculative box. In the “for” column is the fact that Steinhoff is looking to double its value in the next five years, and that Shoprite’s furniture division could use a little help. Also, of course, that Oom Christo is a pivotal figure in both businesses. In the “against”, would be the fact that Shoprite is doing just fine on its own.

Comment: Amidst all the brouhaha in the press about this potential transaction, Whitey let slip the fact that Shoprite is looking once more to open shop in India, and to expand to markets like Vietnam and Cambodia. There, now, is a story.

Steeping deeper into Woolies territory, Checkers has just launched a new range of convenience meals for the discerning punter. Endorsed by the no less august a body than the South African Chefs Association (SACA) – who have also given the nod to the butchery department’s premium pork and aged beef cuts – the Ready-to-Cook range offers such choice selections as slow-cooked lamb shanks, oxtail and Malay chicken curry. Checkers is the first retailer to enjoy the SACA vote of confidence, and is launching a new series of TV ads in celebration. These will star such luminaries as Jenny Morris, Peter Goffe-Wood, Benny Masekwameng and Bertus Basson. 

Comment: Look, to be honest, this does somewhat have the ring of a commercial rather than a spontaneous endorsement. Even so, it’s a bold investment in the ongoing business of positioning Checkers as a destination for the serious foodie.

Those Shoprite results then, with anticipation for which you have been agog: turnover for the 53 weeks through the end of June was up 14.4% to over R130billion, with trading profit on that up 15% to R7.278billion, on a margin which stayed unchanged at 5.6%. Outside of SA, performance soared like the mighty bateleur over the African savannah, with sales growing 32.6% for a contribution to Group turnover of over 17%. Back home, a more mature market; sales grew 10.9% to R94.167billion, generating a trading profit of R5.814billion. And all of this on internal inflation of just 3.5%, or under half the national rate of food inflation, which speaks well of Shoprite’s commitment of value for its consumers and the efficiency with which it runs its big red machine. Not one to let a results presentation go by without sticking to the competition, however obliquely, CEO Mr James “Whitey” Basson let it fall that market share remained solidly above 30%.

Comment: Shoprite’s position as Africa’s biggest retailer now appears unassailable – something they’ve achieved by moving fast but sticking to the fundamentals. Nice one.

Retail shares eh. Not much going on there, are we right? What? Well then! Shoprite’s share price jumped more than it has in the last eight years on the news that The Big Red One increased turnover 14.4% to R130billions of rands for the 53 weeks through June. The big earner was retail beyond our borders, growing at 32.6%, with West Africa showing the most promise even as rumours surge that Shoprite may be about to exit Uganda, its last outpost on the other side of the continent. Back home, sales grew at an understandably more modest, yet still impressive 10.9%, despite the conditions, which have caused headaches across this great sector we call home. 

Comment: A typically bullish performance from the business, even in these tough times.

Perish the thought that Checkers would let a marketing opportunity go to waste, even if it does come on the back of an abject apology by the Sunday Times for misrepresenting the relative cheapness of a basket of goods at Checkers, compared with that of a competitor whom out of consideration for the delicate sensibilities of our readers we decline to name. The Sunday Times survey and the subsequent campaign by the competitor were found to be false, a fact trumpeted by Checkers in an ad campaign of their own. Says Shoprite Checkers marketing director Neil Schreuder, “We work extremely hard to defend our price leadership position in the country and we appreciate that the Sunday Times admitted that Checkers has the cheapest food basket.” Words reflected in the Shoprite Group trading update, a neat little summary of which you can read right here.

Comment: In these times of shrinking household budgets and rising food inflation, retailers are apt to become sensitive over issues of price.

Last year, those harassed parents among us will shudder to recall, Pick n Pay set the world of shopping with kids ablaze with the Stikeez craze.  But, as ever not willing to be outdone, Checkers have launched their own tot-tempting treasures (and as it turns out grown-up tempting treasures), in the form of Checkers Little Shop – essentially, little toy groceries that you will get given free if spend enough wedge on the real thing. While perhaps based loosely on the Shopkins brand in the US, Little Shop is way cooler – they’re based on SA’s most beloved grocery brands.

Comment: We’ve been accused of a certain jaded cynicism when it comes to marketing ploys, but this one is an absolute scorcher. To quote one happy Twitter Mom: “@CheckersSA is it wrong that I am more excited than the kids about the Little Shop Mini groceries.”

Get into bed with Shoprite, is the key takeout (what does that even mean? Ed) this week. Especially if you’re a sizeable Zambian (and London-listed) beef (and pork, egg and chicken) distributor called, well, Zambeef. Since signing the concession agreement with Shoprite in 1995 for in-store Meat Market butcheries in Zambia, the business has gone from strength to strength, with operating profit up 200% in kwacha, assisted thither by Shoprite’s rapid expansion, with seven new stores in those geographies in the intervening years, and seven more to come by the end of this one.

Comment: A fascinating business model, no mistake – supplier-run stores within stores. There have to be seven or eight different ways of making money out of an arrangement like that.

Doubling down – well, actually we’re unsure of the exact proportion but you get the picture – on their investment in Angola this week are Shoprite, who are set to drop another $572m into that oil-fuelled economy. Late last year, Angola overtook Zambia as Shoprite’s biggest foreign holding and despite the deflation of the oil price; such luminaries as Bloomberg expect good growth to continue apace there. Shoprite, as you may recall, already has 56 stores in Angola (including franchise), many of which it will be refurbishing – and has recently opened the Luanda store which burned down last year. The Angolan government is not without appreciation for Shoprite’s commitment, and is investigating potential tax breaks and other incentives for the Big Red One.

Comment: This is Africa, anything can happen. But at this point, it would seem that Shoprite’s lead on the continent is basically unassailable.

You know us. Salt of the earth, meat and potatoes sorts. Not given to irresponsible speculation about who’s buying what shares and on behalf of whom. We leave that sort of thing to the clever chaps, and indeed chapette’s, over at erudite rags like the Financial Mail. And this week, they’re wondering idly about why Shoprite Directors Carel De Wet Burger, through the Callie Burger Trust, and Brian Weyers each loaned out R20.1m worth of Shoprite Shares to Investec Bank in a scrip lending transaction, for fees of an undisclosed sum. Reading between the lines, the FM seems to think that this has something to do with the fact that while retailers have profited fairly handsomely from the rise in food prices, generous rains this year could bring inflation to a crashing halt. According to the invaluable Investopedia, scrip lending “is important to short selling, in which an investor borrows securities in order to immediately sell them. The borrower hopes to profit by selling the security and buying it back at a lower price.”

Comment: Which would tend to support the view that things might be expected to cool down for Shoprite and the other retailers later this year.

Don’t blame the drought for your high prices, retailers! This according to retailer Mr James Wellwood “Whitey” Basson, who avers that the Shoprite Group, for one, will continue to go out to bat for the dear old South African punter “and not tolerate food price increases which were not based on fundamentals”. This lack of tolerance suggests that the challenge was for suppliers as much as competitive retailers, who be fair are also doing their bit to ensure that prices remain as low as possible. Pick n Pay, for example, kept their selling price inflation down to 3.1%, against CPI of 5.3%. Whitey believes that food inflation might be starting to ease, as the rand stages its recovery against the dollar and the dams start slowly to fill.

Comment: Our retailers with their massive buying power do indeed perform an important social function as a bulwark, however temporary, against the ravages of inflation for our poorest citizens.

Stop us if you’ve heard this one before, but in FY2015, Shoprite bought goods worth R90.1billion from suppliers, and sold these for a gross (and indeed handsome) profit of R23.5bn. It’s this simple equation, if you will, that makes Shoprite the biggest retailer in Africa and here in the Beloved Country, able to achieve vast economies of scale and spread the wealth around, both to the suppliers in question and a number of ancillary sectors, like mall developers. But you couldn’t achieve this without the systems in place to back you up, and these The Big Red One has in plenty: a network of DC’s all powered by the latest in supply chain IT, and the experienced professionals to keep the system humming along. And also, the loyalty of the suppliers from whom they are getting such sweet deals.

Comment: OK, supply chain 101 in a slow news week. But you never did stop us…

We reported recently on a Shoprite strike at the Centurion DC, mounted by 1,000 casual employees under the #outsourcingmustfall banner, which dips cannily (and of course angrily) into a basket of related social movements. That strike ended last week, but the anger remains, with 500 workers marching on the DC to present a petition to management. At issue is the fact that 90% of the facility’s staff are employed on behalf of Shoprite by labour brokers, who pay lower wages – as low as R23 per hour for DC staff, allegedly, and as little as R13 for outsourced cleaners. Shoprite is of course not alone in getting staff off the payment payroll – by 2012, 16,400 of Woolies store staff were flexi-time and only 590 full-time.

Comment: It’s tricky equation for workers – the dignity and security of full time employment versus any job at all.

Unofficially, because no one’s reporting it any more, Shoprite has the biggest share of the FMCG retail market, at an estimated 35%. It runs over 1,100 supermarkets, and has made the most impressive inroads into Africa. And yet its share price has gone flat in comparison with PnP (up 39% in the last year and SPAR up 9%). Wat makeer, ouens? Well for starters, things could be worse. Massmart’s down 17% for the year and Woolies 4%. One of the problems for Shoprite is its exposure to the lower LSMs, who are taking particular strain in these difficult times. Also the oil economies of Nigeria and Angola, ditto. And some of Shoprite’s share is being challenged by new entrants like Choppies. For their part, Shoprite are expecting reasonable results in the second half of the year.

Comment: Which should bring the punters back on board once more, and lift the share price to its customary elevation.

The Big Red One has come under the scrutiny of a bold new twitter handle and labour movement, #OutsourcingMustFall, which last week called for an immediate end to the hiring of labour through brokers at the Centurion DC, where one employee has been on the job since 2002, earning R13 an hour, and where 90% of the staff are not on the business’ actual books. Protestors from the organisation are demanding, inter alia, that Shoprite stop hiring through brokers, that all current brokered workers go onto Shoprite contracts and that staff receive a minimum wage of R10,000 per month. In happier Shoprite news, Whitey Basson attempted to pour oil on the merrily bubbling waters of national anxiety last week, averring at a business breakfast in Stellenbosch that he wasn’t losing sleep over the dear old South African economy, that he didn’t think Moody’s would downgrade us to junk and that while the dirty Gupta laundry should certainly be washed, it shouldn’t necessarily be aired in public.

Comment: And Whitey Basson is a man we’re inclined to take seriously.

Shoprite was one of the early adopters on this continent we call home, rushing into other African countries where other retailers feared to tread, setting up supply lines, building malls and generally getting on with things. And spreading the risk attendant upon being the biggest fish in the South African pond. This is a strategy which by and large has paid off. But the problem with spreading the risk, is that the risk is then spread, and as the price of oil tanks in Nigeria, for example, sliding nearly 40% since last year, and the naira crumbles (to the tune of 28%) to the dollar, the Big Red One is now exposed to tough conditions in not one but two giant African economies. But not to worry, says Whitey. Nigeria is going strong, and even some of the more stubborn supply chain issues there are soon to be resolved, as Shoprite works with local officials and suppliers to ruk things reg. For example, 76% of stock there is now sourced locally, which helps Shoprite avoid the red tape involved in importing stuff.

Comment: Shoprite is having to adjust its expectations in Nigeria. But it is by all accounts there for the long haul.

You will by now have received our sober and comprehensive review of Shoprite’s interims. For those few who didn’t, here’s the lazy, irresponsible man’s version: Turnover up +8.8% to R62.52bn, solid, but substantially behind the 12.5% reported for the same period last year; operating profit up 15.3% to R3.38bn and operating margin up from 5.1% to 5.4%; liquor stores the star performer with sales growth of 31.6%; 217 new stores of which 52 were South African supermarkets. And at this point it’s over to you Mr James Wellwood “Whitey” Basson: “Shoprite has done very well in my view, in a very depressed and difficult economic climate. Sales growth for the second quarter was substantially better than the first quarter.”

Comment: On sales growth, we ourselves prefer not to opine. But the profit numbers suggest efficiencies observed and costs curtailed, always critical at a juncture like this.

Another week, another African country moaning about Shoprite like they’re the government or the rinderpest or something. This week it’s Namibia, where the Namibia Commercial, Catering Food and Allied Workers Union (NACCAFWU) is complaining about both Shoprite and the government, averring that the latter has opened the door to exploitation of workers by the former. Last year, you see, The Big Red One dismissed 130-odd workers involved in a wildcat strike at Rundu and Gobabis, while allowing 185 strikers in Windhoek to keep their positions (subject to a disciplinary hearing which has been postponed twice). Why the double standard? asks NACCAFWU.

Comment: As we’ve mentioned before, Shoprite seems to be something of a soft target and a lightning rod for organised labour and other interested parties in the Frontline states. Or perhaps a soft target on top of a lightning rod.

Moving on from last week’s less than stellar interims are Shoprite, who are quietly doing the right thing by the people of QwaQwa, home to some of the worst-affected communities in the current drought. Through Operation Hydrate, formed by various communities, NGOs, religious groups and companies, Shoprite has distributed some 50,000 litres of water to thirsty people, at Tsheseng Shopping Centre, the Elizabeth Roos Hospital and various desiccated points along the R47. An issue in the area has been the Fika Patso Dam, which used to provide 40 million litres of water a day but whose levels have now fallen below 10%.

Comment: This is not corporate social investment, which we rather suspect generally involves a return at some point. This is straight compassion, in a time of desperate need.

Over at Shoprite, in the meantime, sales grew 8.8% for the Group, to R62.5bn for the six months through December, with South African supermarkets up just 7.2%. In mitigation, internal inflation was held down to 2.7%, indicating an aggressive drive to keep prices affordable for SA’s hard-pressed consumers. Like-store sales, in the meantime grew only 0.1%, indicating almost no growth at all. Analysts have also suggested that the numbers reflect the brutality of the recent price war between Shoprite and Pick n Pay, and might even indicate that the Ackermen are clawing back some of the market share they have lost to The Big Red One over the past five years or so. On the upside, strong seasonal sales saw an improved performance in the second quarter, and Whitey Basson remains sanguine about the prospects for growth elsewhere in Africa, the slowing of the Nigerian and Angolan economies notwithstanding.

Comment: Swings and roundabouts, ay.

A slow news week, unless you happen to be the local Shoprite in Warri, Nigeria, which we’re glad we aren’t. That store, located in the ominously-named Delta City Mall, you see, fell victim to one of those periodic bouts of Nigerian excitability, with an invasion of youthful looters suspected to be from the Uvwie Local Government Area of Delta State. Uvwie is a town outside the city of Warri; it is one of the Kingdoms of the Urhobo and has a king, Ovie, who rules over the traditional institution of the town. But back to the looters: the scallywags made off with an estimated 20 million Naira’s worth of goods, or US$100,000 and some change, and only one was arrested. The fracas, if that’s the word, began when one Me Henry Baro, the suspended chairman of Uvwie Local Government Area of Delta State, allegedly had a disagreement with a naval rating at the shopping mall on Friday morning.

Comment: Riots stemming from angry words with sailors are just one of the hazards our intrepid retailers face when venturing beyond our borders. Still, you would have thought they could have seen it coming.

After the crippling slugfest between American producers and our own Ministry of Trade and Industry over tariffs on US chicken imports, a fresh scuffle has broken out about the fate of the 65,000 duty-free tons now allowed across our borders. Half of this, you see, goes to previously disadvantaged middlemen, and the rest is divided among retailers according to historical import volumes. Shoprite, for one, are having none of it. While they understand the whole previously disadvantaged thing, they say, they are concerned that the middleman situation will prevent needy consumers from benefitting from the low low prices. And they are also concerned that import volumes do not equate to actual sales. Their words: “Shoprite believes that using historical imports to determine the allocation of the quota is disingenuous since it by definition, penalises retailers who have supported the local producers for many years.”

Comment: Shoprite sells 60% of all frozen chicken flogged locally, you know what we mean, so it’s fair to say that they’re very much entitled to an opinion on this one.

The Holiday Season, eh. That blessed time of year when we reach out to those less fortunate than ourselves, and make peace with those whom we have wronged. And when, in completely unrelated news, retailers dish out awards to deserving suppliers. For example, Shoprite, whom we have chosen because of their festive red and white livery. Among the fortunate this year was Upcoming Supplier of the Year Connie Ferguson, whose business Koni Multinational Brands sells a range of body lotions to The Big Red One, and which saw growth of 460% this year in Checkers alone. Also on the Nice List were Unilever, which received awards in both the perishables and ambient categories, and Kimberly Clark under toiletries.

Comment: Shoprite now does business with over 50 women-owned service providers and suppliers, a small but important and growing constituency.

Last week, erring on the side of snide as we occasionally do, we referred to Shoprite Zambia GM Charles Bota as being “almost certainly incorrectly spelled”. We apologise for this: Mr Bota, a Zambian, spells his name as given. We suggested in the same story that Shoprite was being unfairly targeted by Government for pricing irregularities, where different prices were being attached to merchandise of the same weight. A 2kg pack of sausages was given as an example, with one unit being priced almost seven times higher than another identical unit. We still cannot imagine that this is as a result of a Shoprite-wide scam, as the Zimbabwean National Broadcasting Corporation is suggesting. A mistake, or general carelessness perhaps. This week, Shoprite is under fire for high proves in the Eastern Province, whose permanent secretary mounted a fact-finding mission which established that a 25kg bag of mealie-meal was selling at Kwacha 85 in Shoprite compared with around K65 and K63 in other stores respectively. The Secretary mentioned that he was aware that some shop owners were trying to make the Patriotic Front (PF) Government unpopular through the hike in the prices of foodstuffs.

Comment: It still seems to us that Shoprite is being singled out for attention in Zambia, and that this in some way answers political motives. If anyone cares to enlighten us as to what is actually going on, we would love to tell that story.

It may now be reported that in Zambia, Shoprite have joined forced with the Freemasons, the Illuminati and the Elders of Zion in a devilish plot to terrify and confuse the peace -loving population by means of misplaced pricing labels. This according to the intrepid newshounds of the Zambian National Broadcasting Corporation, which has found that, and we quote, “a packet of Sausages weighing 2-kilogram was priced at as high as 2-hundred and 12 Kwacha while the other was priced at 36-kwacha.” Which we take to mean that one – or indeed both – of a possible two packs of sausages was incorrectly priced. The Patriotic Front’s Vice Chairperson for Media and Publicity, Mr Sunday Chanda, conducted his own investigation into the enormity, while Shoprite GM, the almost certainly incorrectly-spelled Mr Charles Bota, assured the ZNBC that Shoprite was “a law-abiding entity that wants to operate within the law by ensuring that customers get the best prices for goods”, and also by abiding the law.

Comment: Clearly, large foreign businesses operate under a perhaps understandable cloud of permanent suspicion in an ex-colony like Zambia.

Comment: OK, so we shouldn't perhaps have stopped the presses for this one. But it does shed light on some of the petty challenges and frustration of operating in some of the less legislated markets.

Exciting stuff, this Expansion Into Africa business. It’s taken some time, but finally the big boys are getting the message that there’s a buck to be had beyond our borders. What? Never! Turns out Shoprite are coming up for their – wait for it – 20th anniversary in Zambia! From brave beginnings, The Big Red One is now the largest supermarket chain in the country, with 44 stores, 3,000 locals on its payroll and 75% of its product sourced from local businesses. In fairness, it hasn’t been all plain sailing, with pushback on occasion from labour, government and dishonest shareholders, but Shoprite have stayed the course. One of their big success stories lies with the humble potato, 7million kgs of which Shoprite now procures yearly from local growers, who have set up storage facilities to extend the supply season of that earthy crop.

Comment: One day when the book on retail in Africa is written, Shoprite’s successes and challenges in Zambia will have a chapter all of their own.

Meanwhile, over at Shoprite, the shareholders are getting restless, as they’ve been known to when times get tough. Shoprite’s biggest investor, the Public Investment Corp. (PIC), which has a 12.6% stake in The Big Red One, has taken issue with the how (not the how much) of Whitey Basson’s paycheck, which at R50.1million is structured almost entirely as a fixed payment, rather than a performance-based salary. The PIC was among a number of investors at the AGM which voted against the policy. And while we're on the subject of Shoprite, an intrepid (and no doubt swarthy and swashbuckling) Spanish outfit, Distribuidora Internacional de Alimentacion SA (DIA), is setting up shop in Nigeria, where it plans to open 100-odd stores in the next five years. DIA is Europe’s third-biggest franchise operation, with almost 7,000 stores and 49 DCs worldwide.

Comment: And it’s a mark of Whitey’s success that experts are wondering whether DIA has what it takes to go head-to-head with Shoprite, rather than the other way around…

We’re not sure what to make of this, so we’ll just throw it out there: Shoprite has apparently fallen afoul of the National Credit Regulator, which has referred the Big Red One to the Consumer Tribunal for reckless lending under the National Credit Act. This after the Regulator found that Shoprite Investments and Shoprite Insurance Company sold retrenchment and occupational disability cover to pensioners and old-age grant recipients. It also suspects that these divisions sold retrenchment cover with a waiting period of six months on a six-month loan. The issue, apparently, is that the sale of retrenchment and occupational disability cover to pension grant recipients imposes an “unreasonable cost on them because they cannot claim benefits under these covers. Shoprite has promised to investigate the allegations as soon as it receives the appropriate docs from the Regulator.

Comment: Shoprite has a long-established tradition of being a one-stop shop for everything from rugby tickets to financial products to food. This, it turns out, is not without its pitfalls.

Zambia and Shoprite have never had what you’d call an easy relationship. There was the time Shoprite was ordered by the government to pay its workers triple the minimum wage, just because. The time when some of its Zambian shareholders traded Shoprite shares illegally on the Lusaka Stock Exchange. Then there was something about expired food, although we’re pretty sure that one was made up. Now it’s Polish milk. Apparently Shoprite has been importing UHT milk from Poland into Zambia, which is a net importer of the white and frothy, its own dairy industry being in its infancy. Shoprite had permission to bring milk in from South Africa, but not elsewhere, so the government has asked Shoprite to cease the Polish imports while it investigates the matter.

Comment: It seems that Shoprite has become a lightning rod in Zambia for any squeamishness about globalisation. Although it seems to be soldiering on regardless and taking these little obstacles in its stride.

Excellent work from The Big Red One, who announced last week that over 400 deaf and hearing-impaired people have found positions within the Group over the past six years in the retailer’s Decade of the Deaf Project in partnership with Employ and Empower Deaf (eDeaf) and our good friends the Wholesale & Retail SETA, who together, have trained the candidates in 13 different skills programmes. One of the more heartening aspects of the endeavour (and there are many) is its coaching capacity building programme in which deaf employees from previous intakes are trained to coach the new intake of deaf learners, and all stores are sensitised in communicating with deaf staff members.

Comment: Deafness can be a lonely and frustrating row to hoe. A project like this one demonstrates that it need not be.

There was a time – how long ago it was, how young we seem in the picture! – that we used to wonder idly which UK retailer would be buying which of our local supers. Now it seems that Shoprite – and we drop the name advisedly – might be looking at a purchase in the UK, going where SPAR and cousin Pep have gone before. We use the term advisedly, because it is in fact Oom Christo Wiese who has been doing the nosing around. He already owns a 19% stake in frozen food chain Iceland, “has been linked” as they say in the business pages to a potential deal with Morrison’s, and has been heard to observe that his investment business Brait might be interested in a more mainstream supermarket. Price wars and a changing consumer landscape have depressed the chains there for some time, but he airily dismisses these tough conditions as nothing he hasn’t seen in the dear old SA market. 

Comment: We’ll keep you posted. Again, would our own great businesses be devoting time and treasure to acquisitions abroad if we could manage the economy better at home? We do not know.

Continuing to make a splash as a retailer and property owner in Africa’s Biggest Economy (that, unforgivably, is Nigeria and not us) would be Shoprite, which last week broke ground with Resilient Africa for the Shoprite Shopping Mall in Ibom Tropicana Complex in the state of Uyo. If indeed one breaks ground for, and not in, or indeed of, or at.

Comment:

More on those Shoprite results of which we apprised you in our special report last week: turnover up 11.2% to R113.69 billion for the year to June 2015, with trading profit up a solid 10.7% to R6.3 billion. The big news about growth is that the business spent R823 million opening 49 stores in South Africa during FY ’15, but over a billion opening just 23 stores on the continent. And next year, there’ll be more to come, with over R600million apiece earmarked for growth at home and abroad, where the priority markets will be Madagascar, the DRC and Uganda. In Africa last year, sales grew 13.5%, outstripping growth back home by a burly 3%. Whitey Basson was atypically bearish about growth at home, in fact saying that with the ambitions of Spar and the recovery of Pick n Pay, Shoprite’s market share would be tricky to grow past its current level of 32%.

Comment: Commendably straight shooting there, Mr. James W. We’re looking forward to the next ten years in Africa, though.

Another set of results, another set of humdingers from The Man, (quoted admittedly from the interims back in Feb) This time around we see a more muted and reflective Whitey than the one to whom we are accustomed.
On Fiscal Policy: “I’d like to hear (Minister of Finance, Nhlanhla Nene) say that everybody whose surname starts with a ‘B’ pays no tax!”
On Gambling: “Las Vegas is not a bad place to have a superstore.”
On the Way Forward: “Everybody that has a saving should try and pass that saving on in the hope of creating jobs in South Africa because that in the long run is what we need.”

Comment:

Shoprite Chair Oom Christo Wiese is being recognised at this year’s World Retail Congress in Rome with his induction into the World Retail Hall of Fame. This year, he is joined by Kip Tindell, visionary founder of The Container Store chain in the US, Mohammed Alshaya, executive chairman of his eponymous (ahem) group in Kuwait, and Juan and Reinaldo Solari, former chairmen of the Falabella group of Chile. Wiese has been characteristically humble about the honour, mentioning (although not by name) the thousands of people to whom he feels he owes his success, and casting some illumination upon the general excellence of the SA retail sector, which, he says, “grew out of the needs of an unusually diverse society spread over a vast geographic area. Using some of the best international examples as a point of departure,” he continues, ”we created our own unique solutions which enable us to trade today with great success across several continents.” 

Comment: We couldn't have put it better ourselves. So we didn't.

Despite our bold assertions to the contrary last week, Shoprite will not be exiting Uganda anytime soon. Shoprite – in line with its strategy of building retail space where none exists in Africa then opening stores there – owns two malls in Uganda, Lugogo Mall and Clock Tower Centre. And it will not be selling these to Kenyan outfit Nakumatt; rather, it will be seeking to expand its operations in that stable and promising economy. We picked the story up from the Nairobi-based Business Daily, and Nakumatt has plans to list on the Nairobi Stock Exchange sometime in the next five years. Perhaps there was a bit of flag-waving going on there. 

Comment: Sorry about that, we’ll check our sources more assiduously in future.

Comment: The sophistication and maturity of East African retailers has made entry into those markets difficult for South African businesses. And as Massmart has recently shown, acquisitions and JV’s there are not without their challenges either.

That sneaky little sneak preview of the Shoprite results you didn’t even know you were waiting for, released last week in a trading update. The results themselves are due August 19, which would make them a proud and domineering Leo… where were we? Ah yes: Group sales up a very solid 11.2% to R113.7billion in the year to June, with the SA supers up 10.5%, compared with 8.7% in the last FY. The 189 supermarkets beyond our borders grew sales 13.5% in rand terms, or 15.5% in local currencies. Like store sales across the Group grew at 4.3%. All of this, says Shoprite, points to a growth in market share, amid the tough conditions which now prevail in the Beloved Country. 

Comment: Some good numbers there. And considering the Big Red One’s brutal ways with overheads, one assumes that trading profit will be similarly pleasing.

Last week, you may have heard, Shoprite finally succumbed to the vagaries of the 2003 Eastern Cape Liquor Act, under which retailers were disallowed from selling wine alongside groceries, but given a generous ten years to comply. On Tuesday last week, the High Court found, as Shoprite had averred, that the ability to sell wine alongside food did indeed constitute “property” – but also found that in this instance Shoprite had not been “arbitrarily deprived” of the property in question. Shoprite will now have to close the wine sections of 27 of its Eastern Cape stores, which they believe will result in the loss of around R40million in sales per year. Their only hope now is to persuade the court that for a grocery business, a wine licence is in some way essential to a dignified life.

Comment: Which would be a stretch, even for so silver-tongued a grocer as Mr James W. Basson.

Comment: So the small to medium-sized guys do pose a real and powerful threat when the conditions stack up in their favour. Another reason for the township folk from our previous story to smile.

The Big Red One continues on its relentless drive to bring everyday low prices to South Africa’s deserving, wherever they may be found. And this week, they may be found in Langa, Cape Town, where a spanking new Shoprite has touched down at the Langa Junction, and in Dawn Park, Gauteng and in Ixopo, whence you may recall a lovely road runs into the hills, which are beautiful beyond any singing of it. There’s also a new Checkers in gay Parys. Shoprite (The Group) has opened 27 supers since July last year, and is on track for 25 more by the end of June. In recent years, it’s been targeting residential areas and commuter hubs, in order to save it customers on transport, which consumes a sizeable chunk of their disposable income. And importantly for those of us in the Beloved Country, it has created 8,000 new jobs, which are in increasingly short supply.

Comment: Just some store openings, really. But it's the why, not the how and the what, that makes Shoprite great.

Whether you’re after One Direction tickets (and we’re not in any way implying that you are) or a quick transfer of pin money to your dear old Mum in northernmost Limpopo, Shoprite have always been quick to step up to the plate, offering value-added services above and beyond the call of duty to SA’s deserving. So it will not surprise you to hear that they’ve entered into a JV with M4JAM, a micro-jobbing platform which offers really small amounts of cash for really small jobs, like popping your head out of a window to verify the accurate positions of local landmarks for Tom Tom, or filling out a quick mobile survey. Now you’ll be able to get your M4JAM payments in cash at all 990 Shoprite supers around the republic. And perhaps spend a bit of it there, too, all the while helping Shoprite get some of that pesky cash out of their system, a problem we wish we had. 

Comment: Win, win and, as far as we can tell, win.

Guess which South African food retailer is the most profitable. Spoiler alert! It’s Shoprite, trading in 2014 at a margin of 5.6%, leading SPAR at 3.4% and absolutely clubbing Pick n Pay, whose margin has declined to 1.6% from 3% in 2005, the last time it drew with rival Shoprite. Why is this? Simple really: Pick n Pay has allowed its overheads to overflow, while Shoprite has squashed theirs into the very manageable trommel they now occupy, while at the same time edging gross margin northwards from 20.1% to 20.8%. And what of Woolworths, you cry? Well to be fair, with their mix of merchandise, the Dapper One look more and more like a retailer of durable goods, with an elevated margin of 9.9% to match, and no fair comparison with the stalwarts in the trenches of grocery retail. 

Comment: Nice one there, Whitey and kie, who have always shown themselves equal to the grinding task of the incremental victory.

In an unusual move for a listed entity, Shoprite is suing eleven of its shareholders for illegally trading Shoprite securities on the Lusaka Stock Exchange, shenanigans which you will recall have been recorded, if obliquely, on these pages. Shoprite want the shares back, plus a cash payment of 3 million Zambian Kwacha, and for the LSE to correct its records accordingly.

Comment:

Shoprite have taken their fight for your right to pick up a bottle of Robertson’s Chardonnay to go with the yellow tail to the Constitutional Court, arguing there that the ban on grocery retailers in the Eastern Cape from selling wine alongside groceries is an “arbitrary deprivation of property”. The closure of table wine sections in 27of its stores will, claims the Big Red One, lose them about R40million in sales every year. The “property”, however, is not the cash in this case, but the licences themselves, which lapsed in 2013 when the window period of 10 years stipulated in the 2003 Eastern Cape Liquor Act had run its course. Senior Counsel for Shoprite, Jeremy Gauntlett, taking a leaf from the Whitey Basson playbook, avers that "It’s not ground rhino horn that (his) clients are trying to sell next to the muesli." This in response to the Eastern Cape’s contention that alcohol is a an “addictive psychoactive drug” to the regulation of which special consideration should be given. 

Comment: R40 bar, while not exactly chump changes, wouldn’t put a dent in Shoprite. But a ruling like this could prove to be the thin edge of the wedge, which is probably why they’ve gone constitutional here.

More on those Shoprite interims (turnover up 12.5% to R57.5bn, profit up 11.5% to R3bn, sales up 12%, remember them now?). According to Mr James W Basson, who runs the show, the last six months were better than the previous ones because of the lower petrol price and not much else. Shoprite publicly called on all players in the value chain to pass these saving on to punters, and to invest in job creation, which the Big Red One did to the tune of 13,000 new hires in the last fiscal. On the downside, having saved R4million in transportation costs for the month of December, Shoprite was forced to fork over R8million in diesel to keep the generators running during load shedding. Mr B is worried about the future of power in South Africa, specifically when it comes to food security. 100 farmers, he says, provide 70% of the food sold in his stores, and these are not operations which run on wind pumps and paraffin lanterns. 

Comment: Mr B is a shrewd operator and a great – if justifiably worried – South African.

Comment:

You’ve been pacing anxiously, and thrashing about in dampened sheets at night. Gnawing on pencil ends, and reaching for the Rothmans in your bottom drawer. Don’t attempt to deny it. But do take a breath, and relax a little. The Shoprite interims are in and they’re not bad. Turnover up 12.5%, with operating profit up 9%. Operating margin was down a tad, from 5.3% to 5.1%, but who’s counting, especially in these torrid economic times? Breaking it down, turnover at Shoprite supers was up 9.7%, Checkers 12.9%, and Usave up a big 13.6%. Moving north, constant currency growth in Africa is up 15.4%, despite the hit the low oil price has delivered to places like Angola and Nigeria. 

Comment: But you would have known all this had you been a Ti subscriber, and received our flash update on Tuesday.

The ever-disingenuous Shoprite (look it up, look it up), in an annoyingly clever marketing ploy, have made headlines this week, by challenging rivals to pass on the savings from fuel price cuts to consumers. “But, but, that’s not fair!” wail Pick n Pay. “We already did!” splutter Massmart. “Well not exactly, but we could have!” It is, in all fairness, a little tricky to prove the direct relationship between costs removed from the supply chain and specific prices on shelf, or to demonstrate that your competitors have or have not passed specific savings on to consumers, with the implication that you of course have. It is demonstrably, true, however, that Shoprite’s internal food inflation hit a 13-month low of 4% in December last year. 

Comment: A fact upon which the pugilistic retailer is now capitalising.

With the Pepkor/Steinhoff merger, it would seem that Christo Wiese has cemented his reputation as the Lion of SA Retail, and that the time has come for him to survey his vines with a glass of the good stuff in hand and reflect upon his legacy. Not so, say certain excitable analysts who point out that there is at least one peak left for him to scale, if you don’t mind us switching our metaphors. And that would be the alliance of Steinhoff and Shoprite, a move that would see the rise of a furniture, food and clothing giant that could threaten Walmart’s ambitions in the developing world at least. Wiese is, as you know, a major shareholder in each business – a position he’s been much given to leveraging in the past. And a merger would massively boost the footprint and buying power of both, from Africa to the former Iron Curtain. 

Comment: As our own economy teeters on the verge of stagnancy, expansion into global markets by some of our most successful businesses will become the big story of the next ten years. You mark our words.

This month, Famous Brands will open its first in-store Debonairs in its Angolan JV with Shoprite, in the town of Benguela. It seems a little early to us, but now both parties are talking about taking the relationship to the next level. First up, they’re keen to work together in Geographies (ahem) like Zambia and Nigeria, where Shoprite has a significant footprint. The attraction for Famous, in particular, is the difficulty of making a buck back home, where unemployment loiters stubbornly around 25%, and where consumer spending has been depressed by strikes and rising inflation. Conversely, economies north of our border are growing, and along with them, the appetite of consumers for modern retail and mass-produced pizza alike. 

Comment: This wave of defensive growth by South African companies into new territories is both an indictment on a mismanaged economy, and paradoxically one of the best hopes this economy has. If you catch our drift.

A week without Shoprite news would be like a week without – oh, we don’t know, something big and powerful and profitable, we suppose. This week, it’s their interims, with turnover for the six months to December 2014 up 12.5% to R57.5billion. Like store sales grew 5.1%, with internal food inflation running at 5.2% compared with the national average of 8.4%. In SA, sales grew 12%, boosted by a 13% kick in the merry month of December, while performance in Africa at 15% was more muted than we’ve come to expect. This was because of The Big Red One’s strategic withdrawal from Tanzania, as well as a store fire in Angola. At 12.2%, growth on furniture was also pleasing and this will no doubt be helped along when the Wetherly’s investment comes on-stream. 

Comment: One in the eye for all the Jeremiahs, naysayers, doubting Thomases and moaning Minnies who said Shoprite, and the rest of retail, was headed south in a clockwise direction if you know what we mean.

Last year, Debonairs Pizza set up shop in a Shoprite in Eldorado Park. This year, Debonairs’ parent Famous Brands and the Big Red One are going a little bolder, with a JV of sorts (they’re calling it a tie-up, but hey) across the continent, where quality fast foods are as rare as gleaming aisles of groceries. Debonairs stores will be set up alongside Shoprite’s Hungry Lion chicken shops in Africa, with the first one opening in Angola in Jan. Debonairs has just opened its 500th outlet, and is Africa’s leading pizza brand, although it faces stiff completion from Dominos and Pizza Hut, also making inroads. Among the other chains operated by Famous are Wimpy, Steers, Milky Lane and tashas, as you are well aware. 

Comment: And with Shoprite Chair Mr Wiese in a transactive frame of mind, well, who knows?

In what has been described as the biggest deal of its kind in the Beloved Country for at least five years, SA’s biggest furniture business (and Europe’s No. 2), Steinhoff, has just acquired Africa’s biggest retailer, Pepkor, for the tidy sum of 62.8 billion ront. Together, the businesses will own over 6000 stores on three continents, including Poland’s biggest non-food retailer, with a combined turnover of R155billion. Here’s how the deal went down: Steinhoff buys 52.5% stake in Pepkor, which is owned by Titan Premier Investments Proprietary Ltd., which is controlled by Wiese, and another 37.1% from Brait Mauritius Ltd., subsidiary of Brait on whose board Christo Wiese sits. Awkward questions have also been raised about the purchase of further Steinhoff shares Mr. Wiese (who was already a Steinhoff shareholder) made shortly before the deal was announced. 

Comment: From hereon in, one supposes, Oom Christo will be doing his Euro transactions not with a briefcase but with a wheelbarrow.

Stepping quite literally into the void created, if that’s the word, by the demise of Ellerine, is Africa’s canniest retailer, Shoprite. Ellerine went into liquidation on the failure of parent company Africa Bank Investments Ltd. The Big Red One, strapped for nothing but retail space, is reported to be one of two retailers in talks with the administrators to take over the leases on 200-odd of the doomed furniture business’ 940 stores. Shoprite has already taken 10 of them for the furniture business. They have mentioned that they would like to double the number of furniture stores over the next ten years, shifting its focus away from the major urban hubs to the smaller, dustier places where Ellerines once thrived. Handing over the leases to a major player like Shoprite will limit the fallout for landlords and perhaps some of the retrenched Ellerine staff. 

Comment: Definitely some merits in the move after the unfortunate events leading to the downfall of a great South African retail brand.

Shoprite’s less than stellar (which is exactly what we mean – slightly less than the usual stellar) results saw jittery shareholders running for the hills. A quarter’s good performance (turnover up 12.3% for the three months to September) has seen them all swaggering back, punching their chests, spittin’ terbaccer and hootin’ and hollerin’ about all the manly things they had been up to in the hills, and where are my durn Shoprite shares? This braggadocio saw the share price jump 7.11% a five-year record, to R151 on Monday. However, while local supermarket sales were up a pleasing 11.9%, growth elsewhere in Africa climbed only 15.9%, down from last year’s admittedly unsustainable 24%.

Comment: Seems the Big Red One has got over the platinum strike blues. Not encouraging for rival Pick n Pay, which would have taken temporary heart from Shoprite’s full-year results.

The bad news for Mr James Wellwood “Whitey” Basson is that they’re coming after him for his salary. The good news is that “they” are an asset management crowd who own a bit of Shoprite stock and rejoice in the utterly, utterly ludicrous name of “Mergence”. Perhaps they are late 90s ambient DJs in their spare time. Whatever the case, they have pointed out that while Mr JW is only the tenth top-earning CEO in the Republic, he is number one when it comes to income inequality with his labour force, out-earning the average Shoprite drone 725 times, just about twice the ratio of number two, AVI. Which is all well and good, they say, when the Big Red One is on a roll, but when NPAT is growing at a scant 6.6%, as it did last year, different story. So it was pitchfork time down at the AGM, we are told, with Mergence slapping executive remuneration on the agenda. 

Comment: In fairness. Whitey has taken a self-imposed salary freeze for two years in a row, taking home just R49.9million this year, and hasn’t picked up the old bonus check from the front desk either.

In Namibia, the Big Red One is under threat from a nationwide strike by the members of the Namibia Commercial Catering Food and Allied Workers Union (NACCAFWU), who cite the retailer for a basket of alleged offences which include poor salaries, exploitation, unfair deductions and unfair labour practices. In response, Shoprite’s ever-classy Sarita van Wyk declined to comment on the specific allegations when emailed, writing that “Shoprite Namibia does not wish to conduct labour relations in the press, but needs to point out that the statements made by NACCAFWU are not accurate in all respects.”

Comment:

Anyone can open their first store in the DRC. Well, almost anyone. In fact, almost no one come to think of it. Except Shoprite. And you know what? They’re going to follow it up with a second, and not in the rarefied, sterile, air conditioned wastes of Kinshasa, either. Oh, no. They’re setting up shop in Luano City, a mall which has currently gone under construction on the outskirts (vultures, jungle giving way to shacks) of the southern mining hub of Lubumbashi (saloons, occasional pistol fire). Luano City, we are told, is an initiative of the quite delightfully-named international entrepreneur Preston Haskell, with whom we’ve occasionally played polo. Or did we make our escape with him from an exploding bunker, in a white Lamborghini, wearing a black satin Givenchy evening gown? We forget. Anyway. Luano City opens next October, and is 6,000m² big.

Comment: Powerful stuff from the Big Red One. And of course, from dear Preston. Dear, dear Preston…

This one’s a little tricky, so watch our lips: Shoprite (and Clicks, and presumably any other corporately-owned in-store pharmacy chain there may be kicking around) are battling to earn their daily rind selling prescription medications to the sick of South Africa. This is not just because of the single-exit-pricing legislation which forbids them from negotiating with their suppliers (which must sting a little), but also because the medical aid racket here is so consolidated, with 85% of MediRite’s sales, for e.g. being bankrolled by the big three: Discovery Health, Metropolitan and Medscheme, giving them a bit of swing when it comes to negotiating the dispensing fee they’re able to charge. Adding insult to injury, retailers are often left with the bill when claims are rejected. 

Comment: A consolidated industry, dominated by a few big players? Excessive buying power? We’re sure we've seen this movie before…

And so at last to Namibia, where Shoprite are embroiled in an imbroglio, so to speak, accused by the Namibian Standards Institution (NSI) of mislabelling products grown in SA as Namibian, and selling these in its Freshmark, Checkers and Shoprite outlets. The Big Red One has 11 days to rectify the situation, apparently. Seven days ago…

Comment:

Shoprite, as you may have heard, is Doing Big Things in Africa, a continent which lies north of South Africa’s borders. They’re erecting malls and laying down warehouses, building supplier networks and generally striding around in those two-tone safari shirts that your dad is so fond of, like the manly men and strong, proud women that they are. What they are not doing, of course, is bringing the South African suppliers with them: 80% of goods sold by the Big Red One in their three top-performing countries on the continent come from Europe, Latin America, the East and Africa itself. This is because South African suppliers are crowding the south bank of the Limpopo like nervous wildebeest during the migration, eager to sample the lush grasses on the further shore but nervous of the costs and risks involved in doing so, as well as the dent this might threaten to short-term profitability.

Comment: Although businesses like Tiger Brands and Pioneer have shown themselves quite equal to the challenge.

The Big Red announced their FY2014 results on Tuesday to much gasping from the markets and financial analysts who, for not meeting their expectations, saw it fit punishment to drive their share price to a five-month low. This was despite turnover breaking the R100bn mark, hitting R102bn, a growth of +10.5% over the previous year with real growth of 5.7% after adjusting for internal inflation. Africa continues to be the star performer with turnover growing a blistering +26.8% while South African turnover, whose consumers are becoming more used to moths than Randela’s in their wallets, grew by +8.7%. Other divisions, made up of LiquorShop, MediRite, OK Franchise and the Money Market sundry offerings, delivered turnover growth of +0.3%, with OK Franchise impacted by the loss of two big buying partners over the period. “We performed extremely well in a very tough market” said Mr Basson. The group continues to invest heavily, opening a net 125 new corporate stores and the supply line to support them, all in anticipation of the next upswing in the economy. 

Comment: Perhaps when we expect too much, we don’t see the real achievements that are made…. just saying.

It’s not usual for us to comment on the goings on of fast food, but this one hits home. Shoprite is pulling out all the stops, bells and whistles to rebrand and refurbish its quick-service restaurant, Hungry Lion, in the attempt to not only compete against the likes of Steers and KFC, but also to take over the world! (ahem…. ok just the southern part of our continent then). Launched 17 years ago, the chain has 168 stores in eight southern African countries, and while in the past they were placed inside or right next to a Shoprite, now only 10 remain attached to the stores.

Comment: And with Shoprite’s buying and sourcing power to fall back on, who’s to stop them.

One of the things you might expect as you venture north to where the infrastructure isn’t, is a store and warehouse fire which takes three days to put out. Or such was the experience of Shoprite, at their Palanca branch in Luanda, Angola last week.

Comment:

Those Shoprite results you’ve been badgering us about. Here you go, then: turnover up 10.5% to R102biljoens, with stores Beyond Our Borders – now counting for about a fifth of turnover – up a whacking 26.3%. This would be the first time the Big Red One – or for that matter any retailer – has made it past that psychologically daunting R100billion mark, and this despite a rocky start to the year across the sector. Canny analysts are of the view that the achievement will give Shoprite additional swing with manufacturers and even greater advantage in the old economies of scale department. Centralised distribution, of which Shoprite was an early adopter, as well as an efficiently-run supply chain haven’t hurt either.

Comment: We look forward to the dry wit and bluff one-upmanship that generally accompanies the formal announcement of the results.

So right after Shoprite announced their exit out of Tanzania, they are dead set on expanding into Nigeria. Why wouldn’t they want to invest in the largest economy in Africa? The aim is to open over 200 stores there over the next five years, with another five stores due to open by the end of the year. And we have every reason to believe that Shoprite is investigating opportunities to add stores in the cities of Apapa, Festac and Ota and some parts of the South-South (that’s very South to the rest of us) Zone of Nigeria.

Comment:

Meanwhile in Zim, Shoprite’s 59 OK stores are coming up for a $16million overhaul in the face of stiffer retail competition, shelves with stuff on them not being enough anymore to attract the better class of shopper. Thought you’d want to know.

Comment:

At last, perhaps, it may be revealed why Oom Christo likes to pack a few extra pounds in the LV carry-on when holidaying in the UK. He’s hoping, you see, to introduce northerners to the joys of cheap takkies and cut-price school uniforms through his new venture, Pepkor UK. Which, you will be riveted to know, is headed up by two diamond geezers, ex-Asda CE Andy Bond and sidekick Mark Elliott. Excited speculation up and down that normally imperturbable archipelago is that the trio may be planning an approach to Sir Philip Green for the purchase of his retail outfit British Home Stores (BHS, don't you know, fwha, fwha!). The idea, it appears, would be to leverage Pepkor’s monstrous buying power to compete on price in the UK’s formidable retail sector. Pepkor has stores all over Africa, in the brutish Antipodes, and in Poland.

Comment: And you know, sticking it to the Brits after all these years couldn’t be all bad, could it?

Seven years ago, you may recall, smaller Shoprite shareholders were bridling, if that’s the word, at a Brait-backed attempt by Big Daddy Christo Wiese to buy them out at R25.50 per share. He did in fairness up his offer to R28, but those same little fluttery bits of ephemera are now going for R167 each, and the shareholders who remain are no doubt doubly relieved that the bid failed. And Mr W himself, it must be said, hasn’t done too shabbily on the shares he holds as The Big Red One’s single largest investor, with a personal fortune in excess of $4billion, and SA’s wealthiest individual. And his takeover of Pepkor, whose value soared tenfold since he pulled it off in 2004 for R2.1billion, hasn't hurt none either.

Comment: A man so wealthy, in fact, that he forgets about the 600,000 quid he has squirrelled away in the Louis Vuitton for a rainy day…

If you’re the governor of Imo State, southern Nigeria, the opening of a Shoprite in your provincial capital is a very big deal indeed. Chief Rochas Okorocha, who currently occupies that position, is well chuffed with the imminent arrival of the Big Red One, anyway, punting it as the beginning of great things for the state capital Owerri and its people. Reading between the lines, Imo is a heck of a place, blessed with an abundance of natural resources including oil; cursed with too many people and not enough malls. But with the breaking of the ground for the Owerri Shopping Complex, site of Shoprite’s second store in the south-south region, something at last is coming right.

Comment: With foreign direct investment in Nigeria growing at 20% per annum, the Owerrians and their governor have cause for excitement.

Despite the recent contre-temps, if that’s the word, with government and stock exchanges and unions and whatnot in Zambia, The Big Red One are going ahead and opening more stores in that copper-rich cliché country anyway. This according to Shoprite Zambia’s FGM, a man with the non-Zambian name of Charles Bota. Coming up soon: a new store in Kafubu Mall, Ndola, then Twin Palm Mall in Lusaka, then a mini-Shoprite, which sounds intriguing, in Kapiri Mposhi in September or October, then a potential store in Chililabombwe, a second one in Mongu and perhaps another in Kitwe’s new Mukuba Mall, currently under construction. All of these will bring the total in-country to a not-insubstantial 26, which is what we in the industry call footprint.

Comment: And how about those wonderful names? They practically dance off the old Remington.

The acquisition of Shoprite’s three Tanzanian stores by local heroes Nakumatt is to be delayed until the middle of the year while the Fair Competition Commission has a gander at the deal and a jolly old conflab about it, with no reason given. Undeterred by this setback, The Big Red One is going ahead and opening its second store in Abuja, Nigeria, with 7 now trading and a total of 44 targeted for Africa’s newest biggest economy.

Comment:

Shoprite’s decision to exit the perpetually bad-tempered geography of Tanzania looks increasingly like a good idea. The latest – 100 workers have taken The Big Red One to the Tanzanian equivalent of the CCMA in a benefits dispute which has subsequently gone to the Labour Court. This in the final, dying hours before Shoprite hand their three stores over to Nakumatt, who purchased them in a four billion shilling deal. Nakumatt have been trading there since 2011; Shoprite since 2001. While Shoprite, as we have seen, have an appetite for difficult and chaotic markets, Tanzania, where the government took them on for a preponderance of South African product on the shelves, was a bridge too far.

Comment: There’s that famed pragmatism the punters know and love.

Just so they’ll never have to prove their gung-ho credentials to anyone, ever again, and also for the $$$, Shoprite are launching their newest Nigerian store in Kano, chief commercial hub of the troubled North, and itself something of a basket case: power supply problems, factory closures, an economy which was struggling even before the start of the Boko Harum Islamist insurgency, 67% unemployment, you name it. But on the upside – a huge and under-serviced population, and a home in the $110-million Ado Bayero Mall, Nigeria’s largest. Shoprite are once again voting with their wallets, shelling out $20 million on the store which will bring to eight the number they have in Nigeria, a market we confidently predict they will dominate in the years and decades to come.

Comment: A troubling trend, though, this new tendency of insurgencies to name themselves after seventies prog rockers.

Shoprite’s growth outlook is promising, according to the fundi’s who study this stuff, despite the fact that they reported the slowest growth in eight years in their recent interims. Their Q ratio, which is the ratio of their market cap to the value of their tangible assets, is a deceptively handsome 2.62, where anything over 1 means that shareholders believe in the value of the business’ intangible assets, like brand equity, innovation, customer experience and the all-important market dominance, this latter a subject which is raised unfailingly by Mr Basson during results presentations. Part of the appeal for punter’s is the Big Red One’s bullish charge into Africa, where all its chosen markets are showing high expected GDP growth, particularly Angola, Ghana and Nigeria where growth currently exceeds 6%.

Comment: Welcoming news for those punters who have become accustomed to good news from Shoprite every results cycle.

If you like to dip into the Child’s Treasury of Bland and Impenetrable Verse that is SENS, as we occasionally do, you will have noticed that a Mr Christo Wiese is exercising his options to purchase R42 million in Shoprite stock, roughly distributed equally between Single Stock Futures Contracts and Ordinary shares, in the belief, presumably, that too much of a good thing is never enough.

Comment:

Claiming that e-tolls will cost the business R4million in additional distribution costs per annum, Shoprite are applying for exemption from the Purple Pickpocket’s depradations. Their argument is that e-tolls will drive up food prices for everyone, and this cannot be a good thing. Shoprite currently run a fleet of 529 trucks, collectively covering 140, 000km every day, much of it on the soul-sucking tarmacadam of Gauteng. Their contention is that these vehicles should occupy a similar niche as exempted public transport – an argument with which certain fine legal minds beg to differ.

Comment: At R4million a year, they might consider just kicking the increase back up to the supplier. Although we’re sure the thought has never crossed their minds…

Those interims then, for which we had to stop the mighty machinery of the Tatler presses: turnover up 9.7% to R51.1billion for the six months to December, with trading profit under a bit of pressure, up just 7.5% to R2.690billion. Africa, as always, is the exciting story for The Red Army, with turnover up 28.1% in rand terms. Putting this into perspective, the South African supermarket division grew just 7.6% but contributed R38.275 billion to the total. And while Whitey Basson does not expect trading conditions in SA to improve substantially over the next year, this will not put the brakes on expansion: Shoprite is opening 101 new Corporate stores, including 74 Supermarkets, before June of this year. “We certainly don’t want to get into the situation where 10 years from now we have a stud farm with cows which are 200 years old,” says the Groot Meneer with customary sagacity.

Comment: Still, a good bet in the long run, if you have a bit extra squirrelled way under the old mattress.

In its ongoing effort to practice loyalty without ever uttering the word, perhaps, Shoprite has engaged with the dangerously under-capitalised dunnhumby to apply their customer centricity solutions across grocery business. According to the bumpf, dunnhumby, a leading customer science company, will work closely with the retailer to segment and engage with customers of its more than 1000 grocery retail outlets across Africa more effectively. This will include using Shoprite's own data to better understand customers and improve the in-store experience, focusing, by the sound of things, on better understanding the spending patterns of the consumer segments who shop at Shoprite’s various retail brands and formats.

Comment: Will a branded loyalty programme ensue? Shoprite themselves are unlikely to tell us just at the moment…

Shoprite, you will be impressed to know, claims the Madiba shutdown cost the business R260million, compared with R200million for Massmart, not that anyone is comparing. This created a deficit of about 0.7% of turnover for the 26 weeks to the end of December, during which period turnover grew a slower than usual 9.6% to R51billion, compared with 13.8% in 2012. Like-for-like store sales were up 4.3%, and growth in SA topped out at 7.6%, with prices up just 3.8% compared with official inflation of 5.6%. Beyond our borders, sales were up 14.9% compared with a (probably unsustainable) 23.5% last year. Punters have expressed their disappointment with a 4.4% decline in the price of the share.

Comment: Even Shoprite, exposed as it is at the lower end of the market, is not impervious to the difficult trading conditions this time around.

Tanzania, let’s face it, has never been a piece of cake, but it still surprises us to learn that Shoprite is selling its stores there (one in Arusha, two in Dar es Salaam) to Nakumatt Holdings for around R26million. Nakumatt, you will recall, has 45 stores in East Africa, including Rwanda and Uganda, but has pretensions on markets as far flung as Burundi, Zambia, South Sudan (where plans have been understandably suspended at the mo), DRC, Nigeria, Botswana and Malawi, flogging groceries to an emerging middle class with increased spending power. Nakumatt was hit by significant losses in the Nairobi mall attacks, but has been handsomely paid out by insurance, and is expecting significant foreign investment in the next few months to fuel its expansion drive.

Comment: For Shoprite to be bailing, Tanzania must indeed be as challenging as its reputation suggests.

Shoprite has just launched its 1000th supermarket (and 1460th store), a spanking next-generation Checkers in Langverwacht Plein in Zevenwacht. More of those numbers: 70% of adult South Africans now shop with Shoprite Checkers, which lays claim to 26 million shoppers annually in one form or another. All of this adds up to R93bn ront in turnover and a market cap of R100bn, and jobs for 114,000 souls. Langverwacht Plein itself is an expression of Mnrs Basson and Wiese’s appreciation of both their fabled Dutch heritage and their enjoyment of owning the properties in which their other businesses trade. It will also contain Shoprite’s 209th standalone liquor store.

Comment: Hearty congratulations to a home-grown phenomenon. We know whereof we speak when we say that the South African grocery sector has much to be proud of, and can compete with the very best, anywhere in the world.

Shoprite (the retailer, not the Group) asserted their dominance at the 2013 Times / Sowetan Retail Awards, garnering (if that’s the word) the Grand Prix for the fifth year in a row. Here we’re going to cheat a little and quote verbatim from boyishly handsome Marketing Director Neil Schreuder. Over to you, Neil: “The Shoprite brand's positioning is built on its commitment to "lower prices that you can trust always". Shoprite is the low price champion and low price leadership is its strategic point of differentiation.  It aims to ensure that South Africans from all walks of life can afford to have their food needs met regardless of their income level. Grocery shoppers literally interact with the brand every week and consumers can feel the difference at the till when buying their weekly groceries.”

Comment: Good work, the Big Red One. Named (by us) after a famous infantry division, Shoprite achieves what it does by a dogged adherence to the basics of good retail practice while keeping a strategic eye on the distant bridgehead.

Zambia: What could possibly go wrong, eh? Stable political system, packed to the gills with resources and a friendly well-educated populace. Aaaaaangghhh! Wrong! Further light on the Shoprite sale saga in the country formerly known as Northern Rhodesha: Shoprite is suing certain of its Zambian shareholders in order to reverse the purchase of shares now worth more than R302million. And lest you naively thought that shares could be bought and sold willy-nilly, not all transactions are created equal. This one, for instance, was the sale of shares by a company rep at a discount, to Zambian shareholders. And not the sort that offer you emeralds for dollars in the market, either, no sirree, we’re talking the local pension funds of businesses like Standard Chartered, Standard Bank, Sandvik and SABMiller, to name just the ones beginning with the letter S. Shoprite are reputedly offering repurchase at a discount of 25%; the shareholders in question, are perhaps understandably not budging.

Comment: There is a wariness in certain geographies of South African companies bearing expansion plans, of which this imbroglio is perhaps a nuanced and complicated expression (that ought to confuse ‘em – Ed).

After the recent unpleasantness with the spurious shares and the expired food, things have hotted up once again for Shoprite in Zambia, where the Big Red One recently fired 3,000 striking workers, with the option of re-employment, (after two warnings, it must be said), and now the Zambian government is issuing less-than-veiled to throw them out altogether, on the ground that Shoprite may have been within their rights, and all that, but that isn’t how we do things around here. At issue, apparently, is the minimum wage that Shoprite and the National Union of Commercial and Industrial Workers (NUCIW) has thrashed out between them, and which the workers (and now apparently the government) consider insufficient given Shoprite’s status as the Biggest Show in town. At time of press, both parties were still rumbling, the workers were still kicking their heels and Shoprite’s 30 stores were still open.

Comment: A possible case of the tall business syndrome, where Shoprite represents everything that is multinational – the arrogance, the profits, the otherness. A tricky situation to negotiate.

“Christo Wiese does not pay a lot of tax’” says Christo Wiese, and we’re quoting verbatim here. “But Christo Wiese does nothing,” he goes on, which sounds like a win/win where only one person is winning. But then he goes on to elucidate: “Everything I do is done through companies, and those companies are among the top five taxpayers in the country.” Fair enough.

Comment:

In difficult times, it seems CEOs take comfort in punditry when they scratch out their intro to the annual report. Last week we had Simon Susman laying it at the door of government and the unions. This week it’s Mr James W Basson taking on the manufacturing sector for its “lack of innovation and competitiveness.” Manufacturers, he suggests, are going cap in hand to the government for protection against cheap imports against which they cannot compete, rather than striving to be more globally competitive. And with the manufacturing sector in decline, he avers, so too is the customer base for retailers like Shoprite. Indeed, some analysts have pointed to the disinclination of manufacturers to invest in  capacity which would make them more competitive, opting instead to blow it all on dividends and directors salaries.

Comment: Practices which, in fairness, retailers have also been known to indulge.

Anyone here an expert on the workings of the Lusaka stock exchange? Thought not. Right then, we’ll have to do this ourselves: Shoprite is attempting to reverse the sale of shares in certain transactions undertaken by its transfer secretary in Zambia, while the shareholders concerned, including the Luxembourgeois outfit Blackstar Group SE, are fighting this reversal, arguing that the shares they bought were legit. Shoprite is also withholding the payment of dividend to Zambian investors pending the outcome of the action in the Zambian High Court, The Blackstar Group, in their own words are “an investment company, whose objective is to gain exposure to the growth on the African continent largely through companies in South Africa with the underlying themes of strategic market position and strong cash flow.” Which sounds a bit like Shoprite to us.

Comment: Sort it out, you lot. Or at least tell us what’s going on.

A torrid week for the Big Red One in Mozambique where as you know you can get done three times before you get to Punta for not having a ZA sticker on your Fortuner. Last week, the National Inspectorate of Economic Activities closed five supermarkets in Maputo, Matola, Boane and Chimoio for allegedly selling past-its-sellby stock. They were re-opened two days later, but an investigation is pending. Shoprite’s only word on the matter so far has been that the closings stem from the dismissal of a store manager some weeks ago who was fired for selling remaindered margarine at the back door, although they have conceded that from time to time older stuff might inadvertently get left on the shelves in even the most jacked supermercado.

Comment: Shoprite have been bringing modern retail to the people of Mozambique since 1997; it is to be hoped that the current spat passes like the land breeze of Bazaruto when the rising sun warms the shore.

Broadening its already substantial non-retail offering to punters this week was Shoprite, which is now offering eBucks rewards on purchases at their many, many stores. eBucks, you will recall, is FNB’s in house loyalty programme which, it appears is branching out somewhat. Shoppers will get up to 15% in points back on their purchases, Shoprite will get a loyalty programme without having to build and brand it themselves, and FNB will no doubt make cash in the arcane and unfathomable way one does when one dishes out points and rewards.

Comment:

With domestic growth slugging along at 2% while Nigeria and Angola get their acts together and convert oil into Moet, Shoprite is more excited about the prospects for growth beyond our borders than they’ve ever been. This as the Big Red One missed its profit for the 12 months to June, raking in a still-tidy 11% to R5.39billion on sales growth of 12% for a total of R92.7billion. The big performers here at home were Checkers and Usave, both taking share from Shoprite as well as from the competition. Plans for next year include 171 new stores, 47 of them abroad. And they intend to invest in the price leadership which differentiates them from the rest, but which carries a price of its own when it comes to the old margin. Explaining the more muted tone of this year’s performance relative to the brassier numbers of the past, Whitey Basson cited widespread labour unrest, rising costs fuelled by a weak rand, falling commodity prices and consumers’ lack of disposable income due to their high level of indebtedness.

Comment: Still, eh? The down-home genius of SA’s biggest retailer continues to amaze and delight.

Another set of results, another set of crackers from The Man:

On public transport, and what have you: “It’s a lot of money that now has to go for taxis and trains and what have you that used to go into food baskets.”

On international competition: “Is Walmart still in South Africa?”

On thermodynamics and online retail: “The ice cream seems to melt before it gets to the house of the person who ordered it.”

On… well, quite frankly, we aren’t sure what: “We haven’t seen any of the sort of runaway-trying-to-conquer-the-world-with-a-canoe. …” (spoken wistfully)

Comment:

When everyone else turns in disappointing trading updates, the analysts wag their fingers and wonder about the implementation of this strategy or that five-year plan, clicking their tongues and looking sideways at the CEO or the ruling family. When Shoprite does it, as they apparently did last week, they click their tongues and look sideways at the dear old SA consumer. We say “apparently”, of course, because 12.1% for the year to June is still growth, R92.7biljoens is still turnover, and like-store performance of 5.8% still beats inflation. The worry though is twofold – second-half growth came through at only 10.4% compared with 13.8% in the first half, and the analysts’ own expectations had put the final sales figure at closer to R95 big ones. Accordingly, shares across the retail sector took a beating this week.

Comment: All of this goes to confirm that the slowdown in spending by SA’s cash-strapped and credit-besieged consumers is in full swing, particularly in the middle to lower end of the market where Shoprite traditionally does so well.

Exciting news for the residents of Ibadan city in Nigeria, where Shoprite has opened a new store within the merged Cocoa and Heritage Malls. You would have thought Kanye West was in town, what with the throngs that poured into the new super around opening day. There was “mad human traffic” according to one of the shoppers and “queues all over the place” of people buying groceries, meat, notebooks, school items and even beans of locusts… no that can’t be right?… oh locust beans, that fruit pulp and seed extract providing a nutritious ingredient for traditional soups, sweetmeats and condiments across West Africa. It seems the store has brought much delight all round, with locals eager to take advantage of the new ‘one-stop’ shopping experience and even competitors saying that the market is big enough for everyone to benefit. In fact they believe the SA corporate will bring new punters, who previously did not venture there, to the retail hub.

Comment: Nice work Shoprite, but then that’s what we’ve come to expect from the Big Red One in Africa, isn’t it?

Some moving and shaking going on at the Shoprite Remuneration Committee with Christo Wiese stepping down from his position as chairman with immediate effect, while Mr JA Louw has been appointed as interim chairman until a permanent replacement is found. “A further announcement will be made in due course,” says the Big Red One.

Comment:

And in more news of an African flavour, Shoprite’s exec Director, one Mr Christo Wiese, has warned against brashly going where no one has gone before, sagely reminding us all that expansion across the continent will take time and effort. “People say Africa’s time has come, but I can tell you, it is taking time to get going,” says he. Among the challenges facing our bravest retail pioneers in Africa are logistics, the lack of shopping malls and high streets and a fragmented supply chain which means you have to pretty much bring you own paper plates and plastic forks to the party. But what’s this? Another market just waiting to be exposed? Well yes, if you believe that Shoprite plans on opening as many stores in Eastern Europe this year as it has in the whole of Africa over the last 15.

Comment: And why shouldn’t you?

In Nigeria, it would seem (which come to think of it is the way a lot of good stories start) that Shoprite has been targeted either by kidnappers or jihadis or disaffected residents of the Niger Delta, as part of a plot to sow disorder in Lagos. A terror cell which may or may not have been associated with warnings that bombs had been planted in an undisclosed number of Five Alive juice packs, was uncovered in the capital, with one shudders to imagine what consequences for its members.

Comment:

“You young people think you know about large vegetables,” said Oom Schalk Lourens, tugging on his meerschaum on the stoep one sunny Tuesday morning in March. “But let me tell you this: if you had seen the great pumpkin of 2013, grown by Oom Drikus Kleinhans for the annual Shoprite and Checkers Giant Pumpkin Competition, then you would know that you had seen a pumpkin of truly impressive proportions. At 379.5kg, it was so large it barely fitted into his king cab, and he had to ask his nephew Theunis and four of his friends to help him lift it out.” He looked at us shrewdly from under the brim of his hat. But Oom Schalk Lourens was known to be the greatest liar in the Marico, so we paid no attention to him.

Comment:

It isn’t easy being a behemoth. Just ask Christo Wiese who has of late been bemoaning the lack of trade infrastructure and basic commodities in Africa where the future of Shoprite so demonstrably lies; specifically the lack of eggs. Which no doubt would raise a green flag for the likes of Rainbow, which has ambitions on the continent. He also decries the difficulty of getting work permits for management staff in some of the more protective economies, and points to the fact that only 15% of trade on the continent is inter-African. It’s not all d and g, however. In Zambia, for example, 80% of fresh produce sold comes from Zambian producers; when they opened shop in 1995, it was closer to zero. 

Comment: And with Whitey Basson saying that he prefers SA’s prospects to those of Europe, The Big Red One seems to be reinforcing its position as the force in African retail.

More general musings on the Big Red One and its drive for territory. Did you have any clue as to the scale of their ambitions on The Continent Formally, And Unfairly, Known As Dark? Gather round the tamboetie fire and have a listen to this: The African strategy according to no less a personage than the eminent explorer Sir James Wellwood Basson, is Shoprite’s “future growth driver”. Right now they dwarf the efforts of other retailers on the continent, with 144 supermarkets in 16 African countries, but this is small potatoes, or indeed yams, compared with their ambitions: they’re involved in more new store negotiations than ever before, with plans for 175 supermarkets in the pipeline, 41 of which are planned for Nigeria and 43 in Angola.

Comment: The competitors, when they arrive, may have to content themselves with selling groundnuts and airtime by the sides of dusty roads.

Shoprite’s share price has dropped from R206 at the beginning of the year to about R175 now. “Unfair!” you cry, and by jingo, you’re right: its interims were not what could by any stretch be described as bad, with revenue up 14%, helped along by a 28% increase in sales elsewhere in Africa, 11.5% here at home where the rest of the market managed only 8.2%, and operating profit up about 13.2%. And the auguries seem similarly hopeful for the Big Red One: while Africa comprises 13% of turnover now, the sky’s the limit in the decades ahead, and in the short term, growth on the continent should cover any shortfalls in a not-yet-saturated market back home. And Shoprite’s growing anyway, with 74 stores opened in the last 12 months and almost 40 stores planned in the next. So why then the decline in the share price? It’s possible that recent events here in SA have reduced the likelihood of an offer being made by foreign suitors anytime soon. 

Comment: The vagaries of the market, eh.

Shoprite’s EeziCoupons – those mobile thingamajigs that The Big Red One rolled out without much fanfare last year instead of throwing it all down on a loyalty programme – are nifty little devils. Traditional paper coupons, you see, have fallen from grace with the brands, who dislike having to fork out for concept, design and printing if they can help it, and with punters, who in this age of convenience aren’t keen on countless bits of paper in their wallet to be redeemed one at a tedious time. Enter EeziCoupon, where punters view all available coupons on their phone, pick up the corresponding product on the shelf, purchase those products and redeem them by keying in their single wiCode at the tillpoint pin pad.

Comment: When it comes to mobile, we’re approaching a kind of singularity, where the phone becomes a broadsheet, wallet and research survey all in one. 2013 is going to be big.

For the first time in 137 years, give or take, Shoprite has, by its own rigorous standards, produced a less than stellar set of interims, growing sales 13.8% to R46.7billion year-on-year for the six months to end-December. “Where’s the problem?” you ask, as panicky investors cause the share price to decline 3%. It might be an issue of where the growth is coming from: 28.2% beyond our borders and just 11.5% here at home.  This as South African punters battle with high personal debt levels, rising electricity prices and persistent unemployment without the cushion of a couple of billion of barrels of offshore oil to fall back on – although the above-inflation wage increases, government grants and low interest rates should provide something in the way of mitigation.

Comment: The news has had some of the more breathless analysts speculating in their non-sequiturial way that this signals the beginnings of a resurgence for Pick n Pay, but come on.

OK, normally we might consider it to be beneath us somewhat to report on the doings of a single-store outfit, but this time we’d be wrong. Durban’s Brett Latimer and Paul Beltramo have dropped 75 bar on opening a 2400m² super on The Bluff in Durban, and called it Oxford Freshmarket. The last time they started a business named after a posh English university, they sold it to Massmart for R500million. Woolies have entered into a partnership with Deacons, their one-time major franchisees in Kenya, to run their retailing operation there under the banner of a new business, Woolworths Kenya Proprietary limited, as a JV in which the Dapper One will hold a 51% stake. Choppies have launched their first South African hyper, a 3610m² whopper in Brits, Northwest. Game have increased their grocery allocation to 20% of retail space, with a long-term strategy to grow to 5000 line items in all its stores, and 85 Game Foodcos up and running by 2016.  Pick n Pay’s champion franchisees John and Peter Baladakis are opening a 3800m² concept store in Brentwood Park in the East Rand, and Shoprite are pretty much keeping on keeping on.

Comment:

Shoprite who last year pioneered a sort of nameless loyalty programme awarding instant airtime for purchases of marked products have gone and done it again, with SA’s first workable mobile couponing initiative. This time they’ve named it: it’s called EeziCoupons, and once again the emphasis has been on rollout and execution, which is a very Shoprite way of doing things. Here’s how it works: shoppers view coupons on their cellphones, purchase those products and enter their WiCode on the pin pad at the till. The total discount is deducted, and the savings revealed at the bottom of the till slips.  The WiCode (so named for the WiGroup which has developed the system) gives punters access to thousands of bucks worth of discounts at once. It also gives Shoprite access to absolutely scads of data about which shoppers want what.

Comment: And all without so much as a rubel being spent on an actual loyalty programme.

Shoprite are still involved on some sort of how’s-your-father with various Zambian shareholders who do not feel that they have received the dividends due, to the extent that the Big Red one – or it’s Zambian subsidiaries – have been given seven days to koka or else. As the story has been covered only by the partisan Zambian press and Shoprite are maintaining their customary stoical silence, it’s difficult to fathom what if anything is owed to whom by whom.

Comment:

It was Shoprite’s AGM last week, and newly enlivened by the gloomy news from rivals, no doubt, and his own very pleasing numbers – sales up 15.6% for the first quarter and 34.3% in Africa – ever-ebullient CEO James Wellwood Basson was more robust than ever, setting about himself briskly with a birch switch at various targets: GDP (“We’re losing the edge, we’re growing at 2%; we need Africa.”), bureaucracy (“It’s a constant fight to get stuff approved or not approved in South Africa”), job creation (“My biggest worry is that job creation in South Africa is so low”), Eskom (“The electricity bill could go to 3.5% to 4%” from its current 2%) and bureaucracy again (“We supply our stores in Angola with 275,000 tons of beef from Argentina and none from South Africa because of all the regulations”). On that red tape, he notes that they’ve opened an office in Portugal, because it’s easier to manage supply from there than from here.

Comment: Tell it like it is, you irascible yet beloved doyen of the industry, you.

The Big Red One will soon be opening their sixth store in Nigeria, in the newly-built Kwara Mall in Ilorin, the capital of the agriculturally well-endowed Kwara state, whence Shoprite is in discussion about sourcing much of its produce.  At 3,700m2, the store will be as large as the flagship in the Palms, Lagos.

Comment:

Celebrity psychopath Gordon Ramsey is lending (which is almost certainly not the right word) his support to Checkers’ enthusiastic endeavours in carnivorous excellence in a series of television commercials. Says Checkers marketing maven Neil Schreuder: “We worked incredibly hard to make our butchery offer world-class, and to have someone of Gordon's calibre endorsing our range is an absolute privilege.” Says Gordon: “@#$%ing right it is!”

Comment:

Sorry ad guys, but we’ve sold a couple of dodgy names ourselves over the years. So we know how you did it: “Ku is isiZulu for it’s, dough is slang, almost completely unused in South Africa, for money. And kudos are congratulations or something. That’ll be 60 grand.” Kudough Credit Solutions, however, is Shoprite’s new financial product, an instant credit check you can get at any Money Market counter. Banking insofar as it is permitted by law is a big deal for the Big Red One – in the last results, 90% of profit growth came from revenue streams other than retail, in which the Money Market basket features large.

Comment: We usually just time the laughing when we approach our bank manager for an extension on our overdraft. Take the square of that, and you get, in tens of thousands, exactly what we’re already in the hole for.

OK it’s not a Shoprite story, but something we neglected to mention in March was that Brait, the private equity business which numbers Chriso Wiese among its owners, bought a 19% stake in the Iceland Group, which owns value food retailer Iceland Foods, discount frozen food retailer Cooltrade and frozen food exporter Itex. A stake paid for, we assume in crisp bills we just happened to find in the old hand luggage.

Comment:

After months of pensive finger licking and skyward gazing by the panel of judges, the 2012 winner of the annual Shoprite Boerie contest has been announced. It is no less a personage than Piet Nkambule of Newcastle. No stranger, he, to contests of taste, texture and the correct thickness of intestinal wall, he has entered the competition 19 times out of a possible 20.

Comment:

Wait…here’s one, here’s one! Shoprite is selling life insurance! That’s right, now you can literally insure your entire life at Shoprite…what’s that? Oh, right. Shoprite in Namibia, that is, where The Big Red One has entered into, what we in the industry call, a “joint venture” with insurance crowd Trustco, and get this, are offering free cover to any punter who spends more than N$20 a pop and is in possession of a cellphone. Seems a bit too good to be true, but there you go. It’s very much in keeping with Shoprite’s drive to provide a one-stop shopping experience, and to reward loyalty with stuff, although not under the aegis, as it were, of a formal loyalty programme.

Comment: Wonder how it would fly back home, where people seem to die more and also there are more of us.

He may not like to throw money at SARS, but Christo Wiese loves chucking it at Shoprite, having bought two lots of single share futures for R58million in the past couple of weeks and exercising options worth R207bar. Given the current share price, he’s already made a cool R3million on his latest investment in the Big Red One.

Comment:

The cannier among those gimlet-eyed men (and of course women) who are called to the hard, lonely road of analysm have long been of the view that Shoprite’s interest – and indeed revenue – in Africa is as much about retail property as it is about retail. So it would not have surprised them, at least, to hear that The Big Red One is about to drop $205million on retail infrastructure in Nigeria, where the bucks and the punters are to be found in abundance, but the malls are not. They’re planning to add another nine stores to their existing four by mid next year, and are going even greater guns in Angola, with no fewer than 21 planned. To serve all of these, new DCs are planned for Luanda and Lobito in Angola, which has the highest per capita income in Africa right now, and one in Nigeria. Back on the home front, meanwhile, the surprising news is that Checkers will be running a direct-to-caterers business out of their DCs, called Checkers Food Services, in response to demand. And even more surprising is the fact that Shoprite is opening an office in India, with a view to kick-starting its stalled operations on that vast and mysterious land mass.

Comment: Shoprite: Leviathan or behemoth? It’s too close to call right now.

Pick n Pay and Shoprite are apparently under investigation by the National Consumer Commission (NCC) whose agents found expired products on the shelves at one store belonging to each. The National Consumer Commissioner, Mamodupi Mohlala-Mulaudzi, is reputedly shocked (coughgrandstandingcough) and is not ruling out the possibility of a class action, although whether she has the power to rule one in is moot.

Comment:

News from the Mr William Paulse front is that the 34-year old father of two from the Cape became the 100,000th person to be employed by Shoprite, in his case as a LiquorShop controller at N1 City. In the FY which ended in June, the rapidly-growing Big Red One, having opened 90 new outlets, added 7,000 jobs to the economy, equalling their 2010 haul.

Comment:

After 33 uncomplicated years of arm wrestling, beer and coarse jokes, the men of the Shoprite Board are welcoming a woman into their midst as an independent non-executive director. And being Shoprite, they’ve gone all out. Anna Mokgokong has a medical degree, is the co-founder and executive chairwoman of Community Investment Holdings and was 1999’s South African Business Woman of the Year, nogal. Christo Wiese was hoping to have announced two female appointees by now, but he has other things on his mind at the moment. Until Ms Mokgokong’s arrival, Shoprite was just one of 27 JSE listed companies without a woman on the board. Across the retail sector, women are few in executive positions – one at SPAR, three at Pick n Pay, four at Woolies – a phenomenon some observers attribute to the fact that retail does not depend on government contracts or licences for a living.

Comment: So, a step in the right direction. For a total of about ten such steps across the entire industry. Come on okes.

Big up to the Big Red One who did proudly in the Sunday Times Top Brands 2012 Awards fest, whose logo this year looked oddly like a tin can bleeding into shark-infested water. Shoprite came in 10th in the Overall Favourite Consumer Brand category, the only retailer there with the support of 84.73% of the populace. They were, however, pipped into third by Pick n Pay in the Community Upliftment category. The Big Blue also made a respectable showing at 6th in the Most Desired Company to Work For category, with no other retailers getting a look in. In the Supermarket and Convenience category, which is of course the one that counts, the rankings went a little somethin’ like this:

Shoprite 84.73%
Pick n Pay 78.36%
SPAR 67.08%
Woolworths 64.85%
Checkers Hyper 63.81%
Massmart’s Makro came in at 6th with 57.09%

Comment: In the Women’s Beach Volleyball, it was of course Shoprite all the way.

Shoprite would be a pretty big player in online retail, if it was worth it. And they have the technology and capability to switch it on any time they like. But they believe that “few, if any” of those businesses offering online shopping are profitable. All this emerged in response to research by general internet busybody Arthur Goldstuck of World Wide Worx who believes that growth in online shopping is pretty much guaranteed for the rest of the decade, and that when Massmart come fully onstream they will offer stiff competition to Woolworths, Pick n Pay and whoever else may by then have decided that the water is worth having a toe in. He is also of the view that while Shoprite might believe that its mass-market shopper will not be interested in online shopping anytime soon, it is precisely in this demographic that internet use is starting to soar. The total spent on online retail in South Africa exceeded the R2billion mark for the first time in 2010 with growth maintaining at 30% in 2011, for a total of R2.636billion. Pick n Pay, who with Woolworths have pioneered online grocery retail here, have just announced that they’ve signed up with online payment service provider, PayU, which allows customers to store multiple credit card details for future purchases and speed through checkout. Goldstuck did mention, however, that food sales online are stagnant, with all the growth coming from durables.

Comment: No one will ever listen to their music off a little shiny disc.

What the heck has impelled Shoprite’s bold move into the fully-fledged, current, a-million-miles-away from recovering basket case DRC? Hmm, let’s see. Could it be the real 20% per capita income growth the place experienced between 2006 and 2011 as the world came alive to the possibilities buried beneath its rich red soil? Or just the irresistible lure of a good site? La Gombe, where Shoprite’s Kinshasa store is located, has a big population of  dollar-earning expats who are heartily sick of warm beer and yams. The competition? Which in this instance mainly comes from fridgeless pavement artists with no credit card facilities. It definitely isn’t the World Bank’s 2012 ease of doing business report, which places the DRC 178 out of 183 countries, mainly as a result of the endemic blackouts and general lack of infrastructure. It’s geographic advantage, as a springboard into the Republic of Congo, Gabon and Cameroon? Or Kinshasa’s own growth – 10 million souls now, 15 million by 2020, and the early indications of an emerging middle class.

Comment: All of the above, bar the obvious. Shoprite have built a great business on boldly going.

Our Uncle Sydney, and several other analysts besides, have expressed disappointment in last week’s Shoprite trading update, when the big Red One announced that they expected turnover to grow 14.4% to R82.7bn in the year to June, while growth on a like-store basis was 8.5%. This muted growth, they speculate, stretching things somewhat to fit a pre-determined Red vs Blue narrative, may indicate that Pick n Pay have arrested the decline of their market share and are making inroads into Shoprite’s value-conscious shopper base. Punters, buying the narrative in the absence of anything else to get exercised about, have sold some of their shares, which has declined in value to the tune of 11%.

Comment:

Imagine Shoprite’s embarrassment when one of the Woman of the Year winners was revealed as a man, a Mr Desmond Tutu of Bishopscourt, Cape Town. The Arch received the annual Shoprite Checkers Women of the Year Lifetime Achievement Award, joining on the podium Shéri Brynard (Youth Mover Award), Nyeleti Mushwana (Socio-Economic Business Developers), Margi Biggs (Good Neighbours Against Crime), Tina Botha (Health Care-Givers) and Marisa van der Merwe (Educators). Nice one, ladies. And clergymen.

Comment:

The Big Red one announced yesterday that it had grown turnover for the 12 months to June 2012 by 14.4% to about R82,7bn, with like store growth up 8.5%. The second half was particularly pleasing, with growth clipping along at 15.6% compared with 13.2% in the first. Sales from the 131 supermarkets beyond our shores was customarily stellar at 25.4%, while in the more mature, ahem South African market it was 12.9%. Of particular interest is internal food inflation, which averaged 4.9% for 2012 compared with -0.1% in 2011.

Comment: The full numbers are due out on 21 August, a day before Massmart’s.

According to the wild-eyed visionaries over at TNS, 12% of Shoprite’s market share – or R28billion per annum – comes from people who shop there for reasons of price or geography rather than a fierce and burning loyalty to the brand. For Pick n Pay, the number, still substantial, is around R12.7bilion. Brands like Woolworths and Food Lover’s Market enjoy vastly greater loyalty, according to TNS, whose spooky mathematics reveals that if shoppers shopped on preference alone, Woolworths would treble and Food Lover’s would double their respective market shares. Is Shoprite worried? They are currently not: with the scale of the operation and their geographic footprint, they will be winning on convenience and price for some time to come.

Comment: And once you’ve got the brass tacks in place, you can build a fancy papier-mâché palace on top of them any time you like.

We suspect that the big stories about Shoprite are all going to be coming to us via the crocodile-infested Limpopo for the forseeable future. With its strategies and its operations all nailed down and ticking over nicely back home, Africa is where it’s all happening for the Big Red One. Thus it was this week, with the Abuja store in Nigeria up and running, and locals commenting excitably that it has done wonders for both the commercial and social life of the old place already. And the opening of the first store by a South African retailer in the DRC – the store in Gombe, Kinshasa offers all the usual plus a bakery, a butchery with local meats, a full deli a large selection of wines and beers, and as an added attraction, employment for 200 local worthies. Finally, in the Namibian town of Otjiwarongo, which the hoary elders among you may recall featuring more ominously in news reports in the early 1980s, the Shoprite Centre has just been upgraded for a princely N$49million.

Comment: Rhodes himself would have been proud.

With all the “I am just a simple man from Brackenfell” and the bluff jousting with analysts come results time, one forgets that at the heart of the Shoprite operation is a big, shiny, cold steel calculator. And then, occasionally, one is reminded of it – at results time, obviously, then again this week when the Big Red One opened its bonds for trading. In March, you will recall, they raised an extra R8billion through the offer of shares and bonds in order to raise extra cash for growth (and presumably to hedge against the onset of Wakro), which you and I could purchase in ten grand bundles at an annual rate of interest of 6.5%. Then, at any stage, we could convert them to shares – unless after three years Shoprite decided that the shares were better traded on the open market, in which case, deal's off. Fair enough.

Comment: We're sure we have a couple of those Defence Force Bonus Bonds stashed under the mattress from 1983. Might be worth a couple of bob, eh?

Retail giant Shoprite, together with property behemoth Resilient, construction titan Group Five and financial services leviathan Standard Bank is throwing in the brobdingnagian sum of R1bielion ront for the construction of ten malls in West African colossus Nigeria. Sites for the malls, which will vary in size between 10,000m² – 15,000m² have been identified in and around Lagos and Abuja, and construction will take place over the next three years. Shoprite kicked off in Nigeria in 2005, and now owns four stores there, a relative drop in its ocean of 217 stores elsewhere on the continent excluding the Beloved Country. But according to the Resilient boys, Nigeria is where it’s all at right now. Back home, they report dolefully, the risks are up and the returns, down.

Comment: Dig we mention huge? Because that is something else that this is going to be.

In a quiet news week (unless you happen to be Walmart), and hot on the heels of the Pick n Pay results in which the Smart Shopper programme got a fair bit of exposure, Checkers has launched a PR blitz highlighting the R200million they claim to have saved shoppers so far this year. How’d they do that? Aggressive pricing, and by holding prices lower for longer across more products. And according to his Whiteness, there’s more: constantly improved business efficiencies, world class sourcing abilities, sophisticated information technology systems, centralised distribution with the biggest DCs in SA, which enable the suppression of those low prices for longer. And then, incidentally commenting on the possibility of a loyalty programme, Mr Basson mentioned that the costs of setting one up were significant, and he’d rather keep prices low (had he mentioned low prices?) rather than investing in one.

Comment: Aha! Ons het hulle nou!

Reckon that little outfit, watsitsname, Shoprite might be worth a flutter? Just ask a Mr C. Wiese, who we are told plans to fork out another R13.4m of his own (in fresh, crisp bills just out of the suitcase on the BA flight) on Shoprite stock.

Comment:

More action up north from the Big Red One. Shoprite, we are reliably informed by the Nigerian press, is part of a consortium which includes Walmart and Nigeria’s very own Topright Ventures, which will shell out $500million US for the construction of a mall in Owerri, the Imo state capital. It’s all tied up in politics, as far as we can tell, but not in a bad way, as far as we can tell. Ex-senator Annie Okonkwo (that’s a him) is a major stakeholder in Topright, and Imo Governor Rochas Okorocha has been abroad furiously canvassing for investment in the presumably once-beleagured region, whose new roads, schools and hospitals are now rendering it attractive to FDI.

Comment: Shoprite and Walmart, eh? In keeping, we suppose, with the old double whammy strategy where a Game and a Shoprite would anchor an African mall firmly to the rich red soil of the mother continent.

So it turns out that no-one has been “asking” ahem, “suggesting” or even “encouraging” pensioners collecting their monthly scrapings from various retailers to fork out any of it whatsoever in-store. As you will have heard, with the cessation of pension payments at places like the Post Office, the South African Social Security Agency (Sassa) has said that they are aware of “unscrupulous retailers”, including some belonging to the major chains, which have been requiring that the recipients of social grants spend 10% of their pension in the store where it has been collected. There’s also the suggestion that some retailers hike the price on the basics on pension day. Not so, say statements from Pick n Pay, Shoprite and SPAR.

Comment: In fairness, collecting in-store is probably the safest, most convenient way to get the job done. And some retailers, whose left hands tell not their right hands what they are doing, go out of their way to in fact provide value for anxious pensioners.

Shoprite has been informed by one Capital Group Companies that it (Capital) has acquired a beneficial interest in Shoprite’s securities, of which it now holds a fair old chunk representing 11.59% of the total. As far as we can tell, this means “a stake held by Capital on behalf of its investors.” Capital is a venerable US investment house which was founded in 1931 and has distinguished itself through offshore investments. Unlike the various bandits, pirate, swashbucklers, rogues and scallywags who have of late sought to bring the world economic order to its knees, Capital prides itself on a more conservative approach, packing in the research, taking a long-term view of its investments, and making sure that market sentiment as reflected in the share price is aligned with the actual value of the asset in question.

Comment: Which is why, presumably, they have taken so material an interest in The Big Red One.

In a bold and perhaps controversial move, the Big Red One has announced that it will be issuing around 27.2million new shares and offering for sale R4.5billion worth of convertible bonds in an effort to raise $US1billion for expansionary purposes and the beautification of its already attractive balance sheet, which is unblemished by any visible debt to speak of. Shoprite is issuing to a hungry market the equivalent of 5% of its total stock, at 127.50 rand per, which has caused the value of the now-diluted shares to “decline by 5%”, words not usually associated with anything to do with Shoprite right now. Shoprite is treating with some urgency the matter of its expansion into Africa, with 12 stores scheduled for opening on the rest of the continent by the end of June, including two more in Nigeria and its first in the DRC.

Comment: For these and other projects, including squaring up to a newly-ebullient Massmart, the new found lucre will presumably come in handy.

Weighing in on the Walmart discussion in Namibia last week were some of the country’s smaller retailers – and surprisingly, the target of their ire was not Walmart or Massmart, but the Namibian government, which, they feel, has offered them insufficient protection from other international retailers, namely our very own Shoprite, Pick n Pay and SPAR. The march of the majors has played merry hell with the little guy, apparently, with four chains – Punyu, Continental, Elago and Black – having gone out of business since the 90s, and others like Okalindi shrinking dramatically, having gone from 10 stores in Windhoek to just three. The issue, according to Chris Siririka, National Coordinator at the Indigenous People’s Business Forum (IPBF) is simply purchasing power. This has led the IPBF to look into a group purchasing scheme for retailers, and the government to consider an amendment to the Foreign Investment Act.

Comment: Anti-freemarket protectionism? Or the legitimate encouragement of the diversity which when nurtured can be a powerful engine for sustainable economic growth?

Shoprite’s interims, then, with trading profit up 16.7% to R2.164billion and operating profit 19.8% up to R2.188billion, on the back of 13.2% turnover growth to R41.054biljoens for the six months to the end of December, an improvement on 2011’s performance when growth dipped slightly. No surprises there, then, despite the erosive power of 25% unemployment in the Big Red One’s heartland. Within the overall rosy glow, there are of course several success stories – margin up by 0.2 percentage points to 5.3% as investments in supply chain and general efficiencies take a grip, the growth of Usave (14 new stores for a total of 204 and turnover up 20.9%), Africa (sales growth of 21.2%) and MEDI-Rite (25% more prescriptions filled for the period) to name but several. CEO J.W. Basson attributes the success to the efficiencies mentioned above, and to the Group’s expanding footprint which buffers it against hard times and tough competition.

Comment: With 174 stores planned for the next 18 months, the red tide seems unstemmable, although the pressure on top and bottom line growth off an increasingly high base will present a challenge to the Group.

Results season, like spring in Namaqualand, brings forth every semester its new flock of aphorisms* from SA’s best- loved CEO...

On Marriage: “I entertain nobody except my wife.”
On Succession Planning: “We never know who would be the next guy, he may be a rear gunner from World War II, we don’t know.”
On Single Exit Pricing, explained at last: “If you can convince government that they shouldn’t tie our one leg, the one that we can use to kick with, so that would be the right leg, then obviously we would be able to bring prices further down.”
On Anxiety: “I read too many newspapers, so it worries me that I read too many newspapers.”
On Executive Wellbeing: “We have a high output per person and a bunch of cheerful, well-liked guys, who earn little salaries … but it seems to work for us.”
On the Leisure Pursuits of Successful Men: “Thank goodness Lamberti has gone off to fly his helicopter and Sean Summers is driving his Ferrari too fast in Italy these days …”

*A pithy observation that contains a general truth

Comment:

A few months back we reported vaguely on some skullduggery in Zambia involving Shoprite shares. Turns out it is rather a serious matter, with The Big Red One laying charges of fraud, theft and maybe even money laundering against Lewis Nathan Advocates and its partners, over the alleged sale of Shoprite treasury shares outside its mandate and the subsequent pocketing of the proceeds, a not to be sniffed at R70million. You see, during Shoprite’s IPO in Zambia, only 479,000 shares were taken up – but Nathan’s apparently subsequently sold another 1.9million of them without forking out the cash to Shoprite. And there’s more: Nathan’s are under investigation by drug enforcement over the possible use of the transaction in the laundering of money – but, as Shoprite has pointed out, not drug money.

Comment: A little thickening with your plot sir? Coming right up.

How is the indigenisation programme in Zimbabwe affecting those South African retailers bold enough to operate in that bread basket case to the north? Let them speak for themselves:
SPAR: “All our outlets are owned by the locals. We only have a small stake in distribution of about 35 percent, which is not in retail. The impact is virtually nothing.”
Pick n Pay: “The group has approval for the company’s shareholding in TM Supermarkets from the Zimbabwe Investment Authority, Zimbabwe’s Reserve Bank, and Zimbabwe’s National Indigenisation and Economic Empowerment Board.”
Shoprite: “We have only one Shoprite store in Zimbabwe and we do not report on revenue contributions by country. Furthermore, Shoprite is currently in a closed period until the announcement of our mid-year financial results.”

Comment: So there you have it. Of interest is the fact that Zim is the one market where Shoprite lags PnP to any significant degree.

Say what you like about accountants, they’re not boring. Oh, wait, that’s marine biologists we’re thinking of, and firemen. But when accountants name a survey, they do it with a certain je ne sais quoi. Thus the Deloitte Global Powers of Retailing Survey, in which our big boys have done rather well this year: Shoprite in 92nd position globally, up from 95th last year, and still the biggest in Africa and the ME. Massmart coming strongly in at 126th globally and second in Africa, and Pick n Pay at number 133 and third respectively – having once been the indisputable biggest retailer in the RS of A. SPAR a handsome 179th and 4th, with Woolies in a suitably muted but pleasingly symmetrical 222nd. Africa was the world’s fastest growing region, with 15.4% growth compared with Latin America’s 14.8%, which augurs well for the future.

Comment: Take that, Captain Ackerman! Kerpow!

OK it’s probably not going to swing the shareprice one way or the other, but Shoprite in Zambia (where rival PnP has a significant toehold) are partnering with the Zambia Tourist Board in the marketing of that increasingly less basket-shaped case, notably through the sale, not for profit, of a ZTB calendar at some of its stores.

Comment:

And here’s a little illegal uncut gem from Malawi: “The ongoing industrial strike by Shoprite workers in Lilongwe took a dramatic turn on Wednesday when the protesting staff booed interviewees who were coming out of the premises.” If that’s what is considered drama in an industrial action, we’d like some of what they’re having.

Comment:

Hot on the heels of Massmart last week, Shoprite have weighed right in with a six-month trading update of their own, and once again our bloed is rooi, manne. Turnover up 13.2% to R41,1bn, or 8% on a like-store basis, with sales up 12.3% in their South African supermarkets where internal food inflation was ticking over at a comfortable 5% compared with the national figure of 9%. Outside South Africa, and somewhat buoyed by the poorliness of the dear old ZAR, sales grew at a continent-busting 21.2%, or 16.9% on a constant-currency basis. Our Uncle Sydney over at Nedcor Securities reckons The Big Red One’s strong performance in food was assisted somewhat by our recent belt-tightening tendencies, as we spent much of December cooking Checkers’ prizewinning boerie at home in the lapa rather than browsing off the SQ items at the local Ocean Basket.

Comment: Sometimes as an amusing intellectual exercise we try to come up with scenarios in which Shoprite’s trading updates wouldn’t be so bullish. For example – the entire population of South Africa gets brainwashed by a cheese-hating vegetarian cult.

As things in Nigeria turn nasty, with violent demonstrations over spiralling fuel prices and corruption, Shoprite has boldly announced to Nigerians its plans to open another two stores there in 2012, bringing its staff complement up from 700 to over the 1,000 mark, all of them locally sourced and trained. The Big Red One’s recently opened Ikeja branch has all the mod cons, including a state of the art bakery, fresh fish department, its signature embarrassment of cheeses from around the world and – a big win for Nigerians – a walk in fridge with all the booze you can drink. Another plus for denizens of that troubled West African giant is that Shoprite are doing a lot of sourcing from a total of 140 local businesses, ranging from mom and pop shops to the big boys.

Comment: Someone down in Brackenfell really, really likes cheese.

And it’s 55, do I hear 60, anyone, 60, the lady in the lilac Jackie O coat? 60, going once, the quiet gentleman in the bifocals at the back, no? 60 going twice and sold for 60 to the nice lady. Actually we weren’t there, so we don’t know, but we do know that Mr James W Basson of Shoprite stopped just shy of buying the Quoin Rock Winery and Manor Estate, previously property of dodgy geezer Dave King, on auction for R60million, stepping graciously aside to noted philanthropist Wendy Appelbaum, on the grounds that now wasn’t the right time. Another couple hundred bar in the package this year, then maybe?

Comment:

While not actually building roads and hospitals like that other red empire in Africa, Shoprite are nevertheless making their presence felt both commercially and socially in Nigeria. A year ago, they launched their Help-Change-A-Life CSR initiative in Lagos, where funds from the outreach are now channeled to ten institutions, most recently the Little Sisters of the Elderly Poor in Enugu. It’s a characteristically simple but ingenious scheme, whereby Shoprite provides a platform for its customers to contribute to the needs of the greater community by simply collecting change from any of its willing customers, who have currently forked out N2million to deserving homes for various needy groupings, including children and the handicapped.

Comment: An initiative for which it has received some deserved press in that giant west African <strike>hellhole</strike> country.

This story has big guys. It has little(ish) guys. It has Constitutional Court judges and an exotic coastal setting. Well, Virginia Circle in Durban, anyway. It has millions at stake. We refer, of course, to Everfresh’s Constitutional Court appeal – on the grounds of ubuntu nogal – against its eviction by Shoprite from a centre purchased on said circle by The Big Red One. At issue was a lease which Everfresh had negotiated with a previous owner, and which it felt it had a right to renew. But even a “promise to negotiate” – which apparently Shoprite had not made – is unenforceable, so Everfresh changed its tack, and went from the Pietermartizburg High to the Constitutional Court to argue that ubuntu – another word for niceness – should be embedded into our Constitution, and thus somehow in their lease agreement. To which the Constitutional Court said, nice try, and ordered costs.

Comment: It’s just not fair! It’s not, not, not!

After decades of safari suits and Lion Lager on the board, Shoprite has signalled its willingness to appoint die vroumens to the board of SA’s butchest retailer. Within months, it says, there will be two women (of some stature, they assure us) in the burgundy leather boardroom down in Brackenfell. And these women will not even be required to conceal their ankles in public. About time, we hear you mutter. Some of you, anyway. But the average punter has not been so vocal. This might be because, when it comes to just knuckling down and showing us the money, Shoprite has never stinted. And so it continues. For the three months ending September, real turnover was up by 7%, with sales in the South African arm up by 10.8% and Africa by 13.9%. This pleasing trend has caused the Big Red One to wax bullish about its festive prospects.

Comment: Nice work, gents. And of course ladies. At some point.

How many hours does Shoprite spend on training and development every year. Anyone? A mill… a mill… you at the back? Yes a million, well done. And of the people it devotes this time to, what percentage were previously? Anyone? Disadvantaged! Anyone? 95 per…? Per…? Anyone? Cent! This year, for instance, Shoprite’s Retail Management Development programme will train over 1,300 learners, around 1,200 of whom were previously unemployed. And of these, the more talented ones will be fast tracked into a curriculum which will feed them into the Group’s succession pipeline. In addition to the retail leadership qualification, the group also offers learnerships for meat technicians, bakers, truck drivers and even chartered accountants.

Comment: Any questions?

The Big Red One garnered, if that’s the word, and we have no real reason to suppose that it is, number one slot in the Supermarket and Hypermarket category in the Sunday Times/Sowetan Retail Awards. Second place, or runner-up, whichever they’d prefer, went to Pick n Pay, with SPAR zipping in in third. According to Shoprite Marketing Director Neil Schreuder, they aren’t chasing awards, but with customers and their needs in constant focus and the consistent delivery on the brand promise of “lower prices you can trust, always”, awards tend to chase them. According to one of the boffs over at TNS Research Surveys, Shoprite’s massive footprint across all LSMs didn’t hurt either, particularly with competitors like Pick n Pay being more strongly identified with the upper LSMs. The grocery boys also dominated the Retail Grand Prix, with Shoprite once again in first, PnP second (or runner up) and Woolies driving a black Aston Martin in third.

Comment: When it comes to consumer surveys like this one, perception is reality, and there’s not much point in disputing it.

Shoring up the Greek economy this month and doing their bit to save us all from global meltdown was none other than Shoprite’s OK franchise division, who held its annual conference in Athens, Greece. Appropriately, in the awards ceremony which lies at the heart of the matter, a fellow named Andreas Efstratiou of OK Foods Cambridge in East London was named as the leading retailer. Franchise is a growth area (and which area isn’t? Ed) for Shoprite at the mo – they’ve just bought Metcash’s franchise division, consisting of 150 odd stores, to add to the 269 they already have, and format-wise, have the market pretty well taped, from the Food stores which in their better manifestations are giving Woolies a run for their money, all the way up to their Megasave Wholesalers, best exemplified by Megasave Nylstroom, which claims to offer a range 200 times larger than the competition and which also received hon. mench. at the awards.

Comment: Hopa!

Shoprite has cut the red ribbon at the Shoprite Complex at the Polo Field Shopping Mall in Enugu, Nigeria in a simple but moving ceremony involving people with names like “Governor Sullivan Chime” and “Mr Sunday Onyebuchi”, which we simply couldn’t resist. The mall is the biggest of its type in Nigeria, whence Shoprite will be sourcing 75% of the merchandise sold. Shoprite have also opened their second and third stores (under the Kaddy Plus banner) in Port Louis and Tamarin, Mauritius, that Lichtenstein of the Indian Ocean.

Comment: By way of indicating that despite the hype of classily understated joint ventures here and wobbler-waving Frenchmen there, Africa is still painted fire-engine red.

What do you want to know? Turnover up 7.3% to R72.298bn or 9.7% if you disregard 2010’s extra week, turnover in Africa up 4.5% on a 52-week basis, and on rand terms, although a rosier picture at 12.8% if you’re counting in the various local currencies, new stores for the spanking new FY = 74, of which 16 will be elsewhere in Africa, and that also excludes Usaves which are breeding like extremely efficient, yellow breeding things. Canaries, perhaps? And don’t even get us started on the old bottom line. With trading margin holding steady at a brisk 5.5%, operating profit was up 15.4% to 3.9biljoens, in a year which brought its vagaries of fortune: foreign competition, low food inflation, crashing prices in GM, sarcastic tweets from internet whizzkid Grant Pattison and the small matter of R70million worth of Shoprite shares which disappeared into a regulatory black hole in Zambia.

Comment: And the big red lorry keeps rolling on.

As results season kicks off, one of its headier joys, to which we return like an epicure imbibing deeply of a rare, remembered vintage, is – ta-daaah! – the Wisdom of Whitey:

On linguistics: “The King Commission says I shouldn’t swear. In the supermarket business, that is very hard.”
On recognition for a job well done: “The only award we haven’t won is the nicest CEO in the retail trade.”
On international relations: “I am going to visit Vietnam, where the Vietnamese used bows and arrows against the Americans”.
On national reconciliation: “My tongue is sore from speaking so much English.”

Comment:

Hot on the heels of crack regiment Shoprite come Field Marshall Wiese’s foot soldiers of the Pep division, which, we are reliably informed, will be following The Big Red One into economies like Nigeria. Pepkor will be opening its first Nigerian store this year, and might spend as much as R100million in its first big push, which will see 50 of the cheerful blue and yellow signs popping up in the homeland of pet hyenas and dispossessed heirs with access to large email databases. Nor is onse Christo that bothered by the approach of Walmart, taking the view that there is plenty for everyone. According to Mr W, the synergies between Pep and Shoprite on the continent make it unlikely that either business will be sold separately – and with the increase of Wiese’s stake in Pepkor through Brait, he appears in that business at least for the long haul.

Comment: The rollout of Pep, while non-FMCG, will no doubt be smoothed by the network of relationships and access to property that Shoprite unlocked during the first big push.

In all the excitement last week … what? Oh, there’s always some excitement, of one form or another ... we completely and utterly neglected to report on the tempting item of newsicles that is the Sunday Times Top Brands Survey. So here, in order of meritocratic merit, is a relatively random sampling of categories:

Comment: Nice one, Unilever and Pick n Pay. And Shoprite.

Nothing groundbreaking here, just a general round up. Shoprite, it may please you to know, has gone from a R17.9billion rand business in South Africa in 2003 to a R53.4billion business in 2010. In the same period, its African business grew from R2.3billion to R7.2billion, with more to come by all accounts. This more than impressive growth has underpinned its delivery to grateful punters: the Shoprite share has been trading on an upward curve for absolute yonks – in November 2005, you could have had one of the little blighters for R16, if you’d had the nous; now you couldn’t lay your hands on one for under R100.

Comment: And don’t we wish we had.

A busy week for the Big Red One. Women of the Year being announced, mergers in the franchise division being given a tersely approving nod by the Competition Nazis, grand new Checkerses being announced in once-unfashionable shopping centres, the business soaring up the rankings in the Global Powers of Retailing Awards and we don’t know what all. Regarding women – the flower of our nation and a credit to each of the categories in which the five winners were nominated, with Dr Brigalia Bam receiving hon. mensh. for lifetime achievement. Regarding franchise – yes to the OK takeover of Metcash’s 7-Eleven (or is it the other way round?) etc. Regarding centres – that would be a big refurb of the Checkers in Durban’s newly spruced Overport City, and regarding Power – 95th this year, up from 130th in last year’s Deloitte-run survey.

Comment: Jislaaik mense. Crack yourselves a bottle of Klein Das Bosch if you can find one.

Not the sort of thing one has come to expect from the Big Red One but Shoprite has even the hoarier souls of the Young Analysts Sporting and Public Schools Club scratching their grizzled heads in puzzlement about the news that the numbers this time around are a touch shy of where they were meant to be. Total sales for the year to end June were up 7.3% to R72.3billion, where analysts had estimated they would be up around the mid 74s. Sales in the RS of A rose 7.2%, while elsewhere on the Mother Continent they edged up just 2.1% in rand currency terms. You will, however, be pleased to know that our Uncle Sydney believes this to be an “astonishingly good performance in a very tight, competitive environment”, characterised by deflation in some categories, which the retail boys hate.

Comment: Don’t get the boys from Brackenfell in a corner. Ooooooh! Ouch! We warned you!

Checkers, which was previously to be found net om die hoek, but is now pretty much everywhere, has had imposed on it by the Advertising Standards Authority one of the harshest possible sanctions – the submission of all future advertising, at its own cost, for scrutiny by the ASA, for three months. Has it falsely promised shoppers a free Tata Chery with every tin of Frisco purchased (while stocks last)? Undertaken mendaciously to reveal the true identity of Donald Trump’s hairdresser? No. Old nemesis Pick n Pay has objected to the use of the term “Unbeatable” as it relates to the popular Victorian-themed Heydays promotion, which we are assured is not only Unbeatable but also Big and Back. Fair enough says the ASA. However, it’s when Checkers promise “unbeatable deals for this week only” that things get sticky, because this implies you can’t get those prices elsewhere. Ahem, says Mr Badminton.

Comment: Break it up you two. For goodness sake.

Shoprite has embarked on an aggressive drive into franchise, as its recent acquisition of Metcash’s franchise stable indicates. An attractive vehicle for this growth is the OK Minimark format, aimed at independent retailers with stores of around 300m². Shoprite charges these chaps, or indeed ladies, a joining fee of R20 large, for which they get a plan for the layout of their new venture, and a monthly royalty on turnover of 1.75%, reduced to .75% for early payers. Franchisees get access to Shoprite’s mighty buying power, but are at liberty to negotiate independently with suppliers, and generally carry around 4,500 lines from 1,000 suppliers.

Comment: Franchise may turn out to be the only route to go for many in the beleaguered independent sector.

In Nigeria, The Big Red One is upping its game with the introduction of ecommerce for its suppliers, who will henceforth be able to indulge in the simple delights of online orders, remittance advice, electronic statements and online claims via Shoprite’s e-Commerce Exchange platform. This, say Shoprite, will iron out the difficulties of reconciliation at both ends, and allow suppliers a view of stock levels across the stores of its Nigerian operation. Shoprite is apparently spending a fair bit of time and energy getting its supplier base up to speed, running systems training workshops and generally getting them excited about the possibilities of growing with an expanding business, offering as it does a wider reach, more volume and a cheaper route to market.

Comment: There is a school of thought which argues that you haven’t really done Africa until you’ve opened shop in Lagos.

Shoprite’s share price fell 3.4% on the news (analysts speculate) of Walmart’s van-Riebeeck-like* arrival on these bleak and windswept shores. Given Shoprite’s performance in recent years this must surely be seen as a momentary knee-jerk reaction.

*Thank you Zapiro

Comment:

Checkers is required to present all of its advertising for the next three months to the Advertising Standards Authority (ASA). In January this year, you will remember, Shoprite was reprimanded, at the insistence of Pick n Pay of the lower fourth, for claiming that its annual Heydays promotion offered unbeatable prices to the discerning punter. Pick n Pay felt that the claim was unsubstantiated when it came to individual products, the Authority agreed and placed Shoprite on probation for six months, during which it would not be required to pre-clear its ads should no new complaint arise. In April, Pick n Pay once again lodged a complaint against Checkers’ unsubstantiated comparative pricing claims, and Bob’s your uncle.

Comment: Oh, for goodness sake. Whichever way you look at it.

Emphatic non-Englishman James Wellwood Basson is once again South Africa’s most handsomely remunerated man. While Shoprite ranks only 15th by market capitalisation on the Johannesburg Securities Exchange (JSE), Sir James took home R627.6million in salary (R32.1million) and share options (the rest) last year. According to Chairman of the board Christo Wiese, he is worth every farthing of it.

Comment:

A group of local businesses in the presumably arid little Namibian town of Eenhana (which, we are told, is Himba for “one horse”) are attempting to stop a Shoprite from opening there without some sort of BEE/JV-type approach. They are, apparently, motivated by a starry-eyed vision of how empowered retailers are in South Africa, and would like a piece of the (affirmative) action.

Comment:

In Zambia, some 3,000 workers at Shoprite stores and some Hungry Lions last week embarked on an illegal strike to secure payment of funds paid into an earlier pension scheme before the implementation of a new scheme. After dismissing 1,800 of these workers, Shoprite reinstated them and came to a snappy though complex arrangement for the payment of the monies when the government, in its oddly interventionist way, intervened on the workers’ behalf. Also in Zambia, The Big Red One has been cleared by competition authorities of threatening to blacklist suppliers who provided goods to Pick n Pay, who are currently dipping a toe into the tepid waters of the Zambesi. In Mozambique, sadly, a Shoprite store in Matola has been caught selling expired goods to the value of $6,500US – for which they are being fined around $20,000US.

Comment: Woah, there, big guy. Time to build some bridges as well as new stores.

Word from our sources is that Nataniël, for several years the face, as it were, of Shoprite boerewors, has been elected to the board of The Big Red One with immediate effect. He will be replacing Mr BR Weyers, who, it is understood, is to pursue a career in musical theatre.

Comment:

Whereas Mr Christo Wiese, Chairman of Shoprite and Pepkor, will be purchasing 33% of the equity in Brait Holdings, thusly becoming its anchor shareholder, and whereas Pepkor will itself be purchased by Brait to the tune of 24.5% of its equity, and notwithstanding the fact that Shoprite Holdings, the board of which whereon Mr Wiese is also chair, deals in items of foodstuffs and Pepkor trades in apparel, creating an island of collaborative opportunity in an ocean of hostility, and whereas Brait is to buy 49.9% of Premier Foods, which is a supplier to the aforementioned Shoprite, it really is all looking rather cosy right now. Brait, you will recall, already owns 20% of Pepkor and is intent on snaffling another 24.6% for R4.18biljoens, and will be forking out R1.1billion for its slice of Premier.

Comment: That’s how you do it.

Shoprite has (subject of course to approval by the Competition Commission) put in an offer to purchase all of Metcash’s franchise stores. Metcash has about 265 franchised stores trading in various formats including convenience and supermarkets under the Friendly, Seven Eleven and price Club Discount Supermarkets brands, while Shoprite has 273 members in its OK franchise division. For Shoprite, it’s getting some excellent locations and a dramatically expanded footprint in food, while Metcash will be getting a great (but undisclosed) pile of cash to reinvest in the heavily-geared business. According to Peter Dodson the move will help Metcash focus on its core business and proceed with the strategy of converting some existing stores into hybrids.

Comment: Unexpected and intriguing stuff which will give the bright fellers over at Massmart pause for thought.

And while we’re on the subject of Shoprite acquisitions, word on the street is that a certain KZN chain last mentioned in connection with Massmart, and with a name not dissimilar to that of one of Shoprite’s own trading brands, might be an acquisition target of The Big Red One, competition authorities permitting.

Comment:

OK Supermarkets, no relation, is this year’s retail super-brand winner, according to the Zimbabwean All Media Products Survey (ZAMPS), emerging as both the most preferred and most often visited outlet ahead of rivals SPAR, TM and the Chinese-owned Afro-Foods Supermarkets. You will recall that Investec recently bought a chunk of OK, denying at the time that it was doing so on behalf of anyone at all with offices in Brackenfell. TM, on the other hand, is very much related to SA’s own Pick n Pay, which owns a controlling chunk in the business, while Afro-Foods is simply another division of the Red Army. Massmart, in the meantime, has expressed nothing but relief at their recent exit from Zim, where its two Makro stores paid no dividends and were described by the Men in Black as having only “nuisance value”.

Comment: Although the rumblings we’re hearing from up north, Mugabe’s pre-election grab threats aside, are that the turnaround is in full and vibrant force.

You’ll be wanting to know about those interims. We ourselves had the privilege of attending the presentation, and it was a perhaps less exuberant affair than usual. But a solid performance, reported Dr Basson, in tough conditions. Retailers, he confessed, have had a heck of a time of it these last six months, with low inflation, havoc resulting from a stronger rand, particularly when it comes to trying to earn a crust in African currencies, and the big boys competing ever more aggressively on price. So turnover up 9.4% to R36.26billion year-on-year, despite internal price deflation of 1.2%, and trading profit up 11.9% to R1.85billion. Market share, which still counts for something down in Brackenfell, is calculated at 34.5% with the competition, variously, coming in at 29% (the blue stripe), 25% (the cheerful green one) and 12% (the elegant black line). Once again, Usave delivered a rocking performance, growing sales a blistering 20 something percent. And Africa remains the continent of opportunity, with Nigeria, Ghana and Angola the jewels in its crown, challenges notwithstanding.

Comment: On Walmart, we remain a little cagey, referring to it in terms of jobs lost and gained and food security compromised, although there was a veiled allusion to competing ruthlessly on the price of food.

On Beauty: “Have you got an airbrush? At my age, I don’t take ordinary photographs anymore.”
On Academe: “I think I was the first Afrikaner to get an honorary doctorate at an English University like Stellenbosch.”
On Technology: “I have an iPad. I can look up the time on it. And the date.”
On Financial Management: “Christo Wiese doesn’t like to pay anyone a salary.”
On Geopolitics: “We nearly went to Libya. I’m hell of a glad we didn’t.”
On Relationships: “Nataniël and Mendoza make an excellent pair.”
On Truth: “I think we lied about the 400 cheeses – it was 385.”

Comment:

Good news on the crime fighting front is the bust of a syndicate in and around Brits of 16 isigebengu’s, including Checkers staff, security guards, truck drivers and private wholesalers. The merry gang had been slicking stuff en route from Nampak to Shoprite and other destinations, like the University of Limpopo’s medical campus. And in a Carte Blanche twist to the sorry affair, the goods were found in the recently deceased company of two cats, a zebra, an antelope and a crocodile, which in other circumstances sounds like the title of a rather jolly children’s book, but in this instance were destined to become low-cost processed meat at an independent wholesaler. The Checkers employees were the lynchpin of the scam, signing for goods which were partially received, if at all.

Comment: Opportunism, corruption, poaching – it’s a classic SA crime story, but fortunately with a happy ending.

Nigerian SMEs have got nothing but love for Shoprite, if we’re to believe the free press of that awakening Sub Saharan giant (Nigeria, obviously, not Shoprite). Smaller businesses which supply products and services to Shoprite report gentlemanly behaviour from the chain, which sources everything from carrots to frozen prawns from an average of 140 Nigerian businesses every month. Shoprite, they say, insists on quality but has been active in supplier development, and refreshingly, never pays late. They are a little less enthusiastic when it comes to the performance of their own government, which, they believe, could be doing more about transportation and security.

Comment: Supplier/retailer relations appear to be cordial in the hinterland, coming, as they presumably do, off a low base.

Shoprite has begun construction work costing $12million US on a supermarket in Lubango, Angola, on a 6,000m² plot which will accommodate two banks, one of them a Standard Bank and will have parking for 120 cars, or 40 Ratels. Later on this year, The Big Red One will be adding a warehouse on the outskirts of town, and opening more supermarkets in Matala, Kuvango and Namibe province. They already have two supers in Luanda and one in Huambo, which is what we call hardcore. In Namibia, in the meantime, labour union Nafau is attacking Shoprite on a range of issues, notably that the retailer is spreading false information about the outcome of a case in which both parties were involved, and that it has implemented late salary increases for Nafau members.

Comment: Was it not Pliny the Elder who remarked: “<em>Ex Africa, semper aliquid novi</em>”, not Syd Kitchen who sang “Africa is not for Cissies”?

Staff at the Big Bay Checkers in Bloubergstrand have been instructed to come to work with a full set of front teeth or a letter from their dentist saying that new ones are on the way. And that’s all we have to say about that.

Comment:

No flies on the Big Red One as we start the year – turnover up a more than presentable 9.5% to R36.3biljoens over the past six months, especially December, when sales were up 11.9% year-on-year. Like-store sales were up 2.8%, against a backdrop of internal inflation running in the negative to the tune of 1.2%. Supermarket sales in the RS of A grew 8.4% for the period, with sales beyond our borders a less exciting 3.2%, adjusted to 3% in rand terms because of the ongoing strength of our troubled adolescent currency. 87 new stores were added for a total of 1015 locally and 151 abroad.

Comment: Good work there from the beefy brigadier-general of SA retail.

Shoprite chair Christo Wiese has engaged the services of Clare Montgomery, top UK legal-wallah and counsel to Shrien Diwani, to challenge the confiscation by British Customs and Excise of the R7million-odd in loose change he was transporting from an old shoe in London to its new home under a mattress in Luxembourg. We would be happy to furnish him and Mr Susman with the name of a chap we know in Nassau, who would be happy to lug the stuff around on their behalf, for a small consideration.

Comment:

In Nigeria Shoprite has received kudos in the press from a pair of suppliers who commend the Big Red One for its integrity, insistence on quality and supplier development. In Zambia, not so much – its Kabwe store got slapped with a K450 000 (R690.76) fine for sanitation and aircon issues. Which, reading between the lines is probably more a question of the municipality fishing where the kwacha are rather than any real lack of performance in these areas.

Comment:

In Zambia, we are told, the competition authorities are investigating Shoprite over claims that the company is threatening to delist suppliers who do business with Pick n Pay, which is busily establishing its African bridgehead there. Shoprite say they have no knowledge of any investigation. Should the Big Red One be found guilty, it faces fines of up to 10% of its Zambian turnover. Zambia is, formally speaking, one of the better-served African markets – while only 30-40% of punters avail themselves of modern retail, Spar has 6 stores there, Shoprite 19 and Pick n Pay has plans for an initial 5.

Comment: Sure Africa has a rising 2 billion potential consumers, but the informal trade has the lion’s share of this market. Competition can be expected to be, shall we say, robust.

The Sunday Times loves nothing better than to tot things up and then publish supplements jam-packed full of the results. The Top Ten Teapots Survey. The Best Hair in Advertising Report. And, of course, the Top Companies Survey, in which it reveals, in all its naked glory, and neatly ordered, the growth you could expect had you invested in this business or that. Our retailers do surprising well, with all of the big boys represented, as follows:

Shoprite (3); Clicks (5); Spar (18); Massmart (24); Woolworths (37) and Pick n Pay (94).

Had you decided to invest in manufacturing businesses, however, you would have had to do a little more homework. Of the hundreds of businesses available in FMCG, only 8 made the grade:

Illovo (31); Aspen (33); Oceana (38); Rainbow(64); Tongaat-Hulett (74); Astral Foods (76); Tiger Brands (77); SABMiller (81)

Comment: Salient here is that of the suppliers who made the grade, two are from the volatile sugar industry (although one of the two also does golf estates), and two from the embattled poultry sector.

After a sterling set of results, Shoprite’s turnover was up 9.7%for the first quarter, in a trading environment which like our Standard 8 mathematics results could do better. Supermarkets RSA, the catchy new title for the Group’s core division, grew turnover 8.5% for the period with internal food inflation spluttering below the surface at -1.5%. Nice work there big guy.

Comment:

The long-running imbroglio between our two biggest retailers and the Advertising Standards Authority grinds on, with the Authority this time supporting Shoprite in its complaint against Pick n Pay for claiming that it was “consistently cheaper” and/or “consistently cheaper every day.” Given the vast amount of advertising Pick n Pay does, and its promise to never make the same claim again, the sanction applied has been lenient.

Comment:

The Times/Sowetan Retail Awards results are out, and the big winner is Shoprite, who took gold in all five categories in the grocery section, viz: overall customer experience, supermarkets and hypermarkets, and stores used for daily, weekly and monthly shopping. Economies of scale did not hurt the Big Red One, which now claims 16 million individuals frequent the stores under the actual Shoprite brand. Second was of course Pick n Pay, third SPAR, forth Checkers, and in a very creditable fifth, Boxer Superstores. TOPS at SPAR won hands down in liquor, pipping Ultra and Pick n Pay for the honour, and claiming that the recession turned out not to apply to them at all. The Awards are run by TNS Research Surveys, who canvas a range of punters for their views on the subject.

Comment: Awards eh. Where would the PR ladies be without them. And the gents, of course.

Shoprite customers will think Christmas has come early thanks to its new free airtime deals. All shoppers have to do is buy the specially marked products, look out for the recharge number at the bottom of their till slip and they will get anywhere from 50c to R2 worth of airtime – absolutely free! – to chat with, or SMS with or MMS with or Mxit.... well, you get the idea.

Comment:

One lucky youngster presumably did not drive away in his brand new Toyota Hilux 2.7 Double Cab from the Shoprite Checkers Championship Boerewors Crown finals last weekend, on account of being only 13. That’s right mense, this year’s winner was a strip of a boy, Jaco Labuschagne by name, from Boksburg, who ran the gauntlet of 416 judges and 1,100 competitors to take the honours on the beach at Sun City. Mooi gedoen, jong.

Comment:

Had you put your little all into Shoprite some ten years ago, rather than MTN, say, or Naspers, which were Finweek’s traditional picks for leading South African growth shares, you would pretty much have done twice as well. Shoprite, you may remember from their recent results, has a market value of R52billion, grew revenue 13.6% for the year and earnings 15.6%, with operating margin of 5.2%, unprecedented for a retailer. This, on top of several years of similarly handsome growth, has proved to be good for the punters. There is some speculation that Shoprite might be disappointed at not having been Walmart’s date for the Matric dance. Indeed, Mr Basson was quoted as saying, cryptically – a little sadly, perhaps? – that Shoprite “will wave to them from the beaches.”

Comment: And then head once more for the green hills of Africa, where they will rack up even more shareholder value.

Founded in the depths of the recession, Shoprite’s Soup Kitchen project, a collaboration with Mars Africa’s Royco brand and other partners, is going strong, and has distributed 4.48million cups of soups to disadvantaged communities since it launched. Soup and bread are distributed via a series of trucks visiting schools, old age homes and other places of particular need.

Comment:

In more Clicks news, they’ve just reached the happy milestone of 250 instore pharmacies, which makes them the biggest pharmacy retailer in the country, with pharmaceutical turnover at R1.5billion last year. Distribution arm UPD is also the largest of its kind on these shores, growing turnover 14.9% last year and increasing market share. No time to relax, though: Shoprite is in the unusual position of snapping at Clicks’ heels, with 104 MEDI-Rite pharmacies in selected stores, dispensing 1.9million prescriptions in the year ended June 2010, and growing sales 60%. Pick n Pay with 18 stores and plans for 40, and SPAR who have just rolled out their pilot store at Shelly Beach, have also thrown their hats into the ring, although Woolworths has judiciously removed it with the closure of their three experimental outlets.

Comment: A hotly contested space, where the numbers are not huge but which certainly seems to bring the punters into the shop.

In Zambia, Shoprite has been summoned for an audience with the labour minister, who wishes to have a quiet word with them about casualisation. Shoprite employs 1000 casual staff in its 19 stores across the country, and is currently on a drive to bring its employment practices up to Zambian speed.

Comment:

A couple of neglected gems from Shoprite’s results last week. The Big Red One is in full cry in Nigeria, where it plans to open 20 new outlets in the next two years, and may be borrowing a heaping pile of cash to help it achieve this, through, inter alia, its investments in systems and logistics infrastructure among other necessary items. Shoprite intends opening a total of 85 stores in the current financial year, many of them Usaves. And then those sundry items, about which Messr’s Basson and Goosen were so coy at the presentation. These have increased from around R300 million in 2009 to R500 large in 2010. Mr Goosen flatly refused to talk about what might make up the increase when pressed, while Mr Basson made reference to “electronic items” with a twinkle in his canny eye.

Comment: There are whisperings abroad concerning a whole new approach to mobile-based CRM, and more. Let’s wait and see.

A barnstorming set of results this week from The Big Red One – turnover up 13.6% to R67.4biljoens, trading profit up 18.7% to R3.5billion, with trading margin up a tad to 5.18%. Market share, hm, tricky. The official number for the year is 32.6%, up 1.2% on ’09. But the number for June is an unofficial 34.4%, after Nielsen’s VAT mistake – adding for some retailers, not adding for others – has been taken into account. And all of this in a heck of a year, with nearly 800,000 jobs lost, and Group food inflation now in negatory territory. Africa, as usual has been quite a help, and the other big story is Usave, 1,400 rockbottom items per store and a new one opening almost every day now. The bad news is all circumstantial – shaky prospects for recovery, the hideous cost of electricity to retailers and consumers (and hence retailers), the strength of the rand, which elsewhere in the continent has been something of a bonus.

Comment: Excellent stuff, that beefy chap. Not you, Nataniël. The other one.

On education: “It is difficult to explain gross margin and operating profit to people who didn’t go to Stellenbosch University.”
On fashion: “They say that brokers have pin stripes in their suits in order to hold up their egos.”
On the importance of investing in The Brand: “Our ads look terrible. They look cheap, because they are cheap.”
On literature: “We’re not going to take The Sun off our shelves. I quite like that newspaper.”
On the beautiful game: “A lot of food money went into soccer, and it is now probably in the German Stock Exchange.”

Comment:

Shoprite, as you probably know, has brought back its prestigious Woman of the Year Award, and the winner is – well, in a refreshingly co-operative way, there were five winners, one of whom was style maven, if that’s the word, Lucilla Booyzen, founder of that great bi-annual flapping of hands known as Jo’burg Fashion Week, and various associated bits of good work, like the mentorship programme and the Fashion Fusion project which supports community crafters in all nine provinces. Other winners include Khanyisile Motsa who founded the Berea-Hillbrow Home of Hope and has helped over 8,000 street kids get their childhood back, and Lifetime Achiever Mamphele Ramphela, doctor, Dean and ex-Steve Biko flame.

Comment: A welcome return for SA’s most meaningful accolade.

Shoprite chair and ex diamond merchant Christo Wiese has described as a “bit of a joke” the seizure of 600 thou of his hard-earned Euros by the notoriously humourless customs officials of Heathrow in April 2009, and is quietly confident that the wedge will find its way back to him, as it generally seems to. He had apparently forgotten that it was in his wallet on the way to Luxembourg, where he was planning on having a little post-crash flutter on the markets.

Comment:

Amid rumours of a fresh outbreak in market share hostilities between The Big Red One and The Big Blue, Shoprite has announced that sales for the year to June rose 13.6% to R67.4biljoens, driven by aggressive (their word, not ours) marketing and new store openings, with like-for-like growth at a more pedestrian 4.8%. Taking inflation (4.6%) and retail sales (4.6% in May) into account, it would appear that the market is growing at around 9.2%, which would suggest that Shoprite is indeed doing rather well. The only fly in the ointment, it seems, is the grim spectre of Shoprite’s low internal food inflation, which dropped from 4.2% in the first six months to 0.2% in the second, although this might be mitigated by a 2.6% rise in volumes.

Comment: All of which suggest that further jostling on market share can be expected come results presentation time.

Shoprite’s punters are positively choking for mobile vouchers, say Mobilitrix, who happen to produce a natty line in, yes, mobile vouchers. 68% of participants in the survey said they would be keen to receive mobile vouchers, while 43% of them mentioned that they were already receiving in-store paper coupons and 18% that they were receiving coupons in the form of gift cards. Mobile is looking to be the next – if not the final – frontier of CRM, with the simplicity, the paperlessness, the convenience of it all trumping those flimsy bits of newsprint that flutter round our stores like aimless flocks of army moths. They’re a sinch to receive on the most basic of cellphones, and a breeze to redeem for anything from airtime to bicycles at the till. But don’t believe us. Just ask Mobilitrix.

Comment: Bye, bye coupon clearing guys.

Shoprite is expanding its operations of Botswana with the opening of a Usave in the large village of Serowe. There is already a Usave in the town of Kanye, and five Shoprites nationwide. The store – which will add 12 jobs to the local economy – will rely on local contractors for services and maintenance. The Botswanan press are calling it a franchise business – we’ll keep you posted on that one.

Comment:

Pick n Pay, Shoprite and Nielsen have agreed not to talk about market share any more, which is great news for us, because, um, because ... hey wait a minute! Last time anyone checked, Pick n Pay was still the biggest guy in town with 34% (or 33.7% without its now defunct Score stores) while Shoprite had grown 1% to 30%, SPAR was coming in a game third at 25% and Woolies an understated 10%. Together, interestingly, they own only 50% of the South African food market, the rest of which is owned by the independent and the informal sector, who are more concerned with making a living than beating their chests and haggling over percentages which may or may not mean anything.

Comment: But assuming they do, isn’t it in the interests of various stakeholders to know? And isn’t it anti-competitive to collude in the suppression of those numbers? Tweet us <a href="http://twitter.com/TradeTatler" target="_blank">here</a> if you have a view on this.

Clicks, you will recall, now has 224 in-store dispensaries in its 354 stores. Shoprite, next off the blocks, has 100 and counting, quite rapidly. Pick n Pay has 17 in its Hypers, and despite the fact that Pharmacy doesn’t offer anywhere near the margins but does offer twice the headaches of Liquor, they plan on rolling out another 40 in short order. SPAR is trialling a couple, something Woolworths has not done very well – despite their deal with Netcare who were going to be getting the licenses and running the dispensaries. In 2003 legislation was passed to the effect that pharmacies, once the preserve of actual pharmacists, could now be owned by anyone, which meant open season on the now-struggling independent pharmacy sector. Pharmacy licenses are still only issued by the Department of Health, who apparently do it seldom and at random, to the frustration of the big boys.

Comment: The one advantage privately-owned pharmacy has over the corporate dispensary, is of course the personal care and service on offer – something for which many South Africans still seem willing to pay.

Capitec, who do the back-end for retailers allowing punters to draw cash at the tillpoint, are waiving their R1 withdrawal fee at various retailers for the next three months, including Pick n Pay, Checkers, Shoprite, Pep, Boxer and various SPARs. This to encourage Mrs Shopper to draw cash at the safe, well-lit till rather than the shady ATM, where all manner of muggers and scammers are champing to relieve her of her hard-earned. The upside for retailers here is that they’re able to channel their cash overflows back to the consumer, rather than having loads of the tempting stuff on hand to be filched from them, either by robbers or the banks who charge exorbitant deposit fees.

Comment: A win-win situation, as the expression goes.

Aptly-named attorneys Bell Dewar have lodged a competitor complaint with the ASA on behalf of Pick n Pay, against a TV commercial flighted by Checkers. In the ad – which is, it must be said, superbly scripted – Checkers claims that 809,127 new shoppers have moved to Checkers, and that the retailer offers “the best lamb in South Africa”, “exotic new cheeses” and “finest wines” – all claims which Mr Pick n Pay requested Mr Checkers to prove were factually correct. Mr Checkers then withdrew the ad, claiming that it had run its course in any case, rather than having been hounded off the airways by Mr Pick n Pay and a bunch of lawyers named after fancy liquor.

Comment: We await a final word on the subject from Checkers’ attorneys, the grand old firm of Cohiba Montecristo.

A busy week for Shoprite, trading briskly in its brand new category of tickets to football games in Bloemfontein and Nelspruit, aimed at a newly-defined demographic, of People Who Should Have Got Their Act Together Earlier, a.k.a LSM 7.5. Despite the odd, inevitable Fifa-induced hiccup on day one, it was a well-run operation, highlighting the awesome commercial value of Money Market to the Big Red One, which gets the jump on everyone, all the time, these days. At the Tatler’s own local Checkers, a dark-trousered Fifa bloke gave us the run down in tactful conversational tones, and was followed by the store manager, who then told us what the drill really was, in a sergeant major’s bark that made us wish we could still sak vir tien.

Comment: See you in Bloem, then.

Last week we erroneously reported that Shoprite had 124 stores in total, which would make it one of these promising independent groups you read about these days. Don’t ask us how that happened. In fact, Shoprite has 1137 stores across the continent and 276 franchise members. Our huge apologies, that retail giant.

Comment:

It’s that time of year when the Walmart watchers dust off their gumboots, polish their binoculars, and set up their little green tents outside Shoprite head office in Brackenfell. Or the Massmart offices in Westmead or the Pick n Pay offices ... you get the picture. This year Absa twitcher-in-chief Chris Gilmour is fancying Shoprite, saying that with their 124 stores across the continent, The Big Red One would be a perfect fit for The Just Plain Big One. Everyone, it seems, has been buying dinner for the Yanks, just out of courtesy you understand, and everyone has been issuing their routine denials, Shoprite’s Mr Basson with a larger-than-usual Cheshire-cat grin. Why would they come here, he asks, when China has a billion untapped punters to our 40 million?

Comment: Where there’s smoke, there’s analysts, they say.

Ukash, the world’s biggest prepaid-cash issuing estate will now be selling its vouchers at Shoprite Money Market counters. These vouchers enable you to buy whatever you like on the web, from books at Amazon to Ukrainian brides, without having to reveal your identity or credit card details to anyone, which for almost any transaction you may want to consider in cyberspace is a bonus. Globally, you can get Ukash from over 420,000 issuing points. In Namibia, connoisseurs of late-night documentaries about crab fishermen will now also be able to pay for their DStv subscriptions at Money Market counters.

Comment: Marking Money Market’s inexorable march into every furthest recess of your wallet. If you want it to.

Business data boffs McGregor BFA have put together the collected thinking of all the gimlet-eyed analysts we love to meet over tiny little quiches at results presentations, and the sharp-nosed fellers don’t have a kind word to say about retail right now, unless they’re talking about Woolies, which broker consensus rates as a “buy”. Shoprite and Pick n Pay are rated as “sells”, while SPAR cracks the nod as a “hold”. Food retailers – a defensive stock in these treacherous times – are generally held to be overpriced at the Johannesburg Securities Exchange (JSE) where they trade at premium multiples of up to 18 times. However – and here’s the rub for Johnny Foreigner – they’re considered to be underpriced for adventurers relative to retail stocks from other developing countries, currently trading at a 25% discount.

Comment: Arcane stuff, but the lifeblood of this great creaking edifice we call capitalism.

The Big Red One has announced that its soup truck programme is to continue, with mobile kitchen units going out in 2010 to help to feed SA’s poor, especially children and old people, as well as the thousands of people affected by job losses. Since it was launched a year ago a total of more than 3 million cups of soup and bread have been served at schools, homes and community centres, or where disaster has struck – which in ’09 meant lots of flood relief work. Each mobile kitchen is manned by three Shoprite staff members and supported logistically by the Shoprite supermarket in the area in which it operates, and stocked through generous contributions by Royco.

Comment: Solid stuff – relevant, generous and visible, the perfect CSI initiative.

Shoprite’s sole outlet in India has been bought by a crowd called Future Group, for an undisclosed sum, and (barely) re-named it Foodrite, which does not meet the Tatler’s perhaps too-rigorous criteria for originality.

Comment:

...that Shoprite is baling from India like the Proteas before them, victim to the devilish slow bowling of protective legislation and price rules which made a single-store operation untenable. This from Sir James himself at last week’s interims presentation, where he also mentioned that trading profit lifted 17.5% to R1.6billion for the six months to December off turnover growth of 11.9% to R33.1biljons, which points to an iron fist when it comes to cost control. He also raised the tricky issue of market share, which Shoprite reportedly grew 1.2% to 29.8% for the period, and to 31.1% for the month of December, its highest level for nine years. Employment was also up for the period, with 5,000 jobs added in the group for a recession-busting total of 89,000, and 44 stores were added, bringing the South African number up to 637.

Comment: Way to go, that Big Red One.

Last year, market share, this year, margin. Outgoing PnP Chair Mr Ackerman, who formally retired yesterday, took the opportunity in his final media conference for a sly dig at Shoprite, who recently announced that their trading margin for the six months to December was 5%. "I would not, in today's climate, want to make a trading margin of 5%. I would knock it down," he said. Pick n Pay, which has long built its house on a foundation of avowed consumer championship, showed a trading margin of 2.4% in their last set of results. In his speech, he also advised his successor, a Mr Gareth Ackerman, that business principles never change. He confessed to regrets about the failed Australian adventure but expressed hope for Pick n Pay’s slow-burning Africa campaign.

Comment: A giant, the one true pioneer of the industry in SA, takes his deserved rest, while showing that the old mind is as sharp as ever was.

While Shoprite is actively pursuing growth in pharmacy, with 100 MEDI-Rites now open and pharmacy wholesaler Transfarm now safely under the belt with the Competition Commission’s all-too-rare blessing, certain gimlet-eyed analysts believe that this growth is not aimed at dramatic increases in revenue, in and of itself. Rather, the steely-gazed ones say, it is aimed at increasing convenience for the punters, and thus footfall, much like Money Market and Computicket before it.

Comment: What, one wonders, are the intentions for MEDI-Rite in Africa, where, we are given to understand, there is a shortage of the sort of muti on offer. Handy to have a DC in Pretoria should a continental rollout be on the cards.

According to the Economic Times of India, Shoprite are shutting shop in Mumbai, selling their only non-African operation, a 6 500m² store, to the Nirmal Lifestyle Group for conversion into a food store. Shoprite and Nirmal are both being cagey about the putative deal, however, and clarity on the issue is not yet forthcoming. While turnover at the shop grew 20% in the year to June 2009, Shoprite have been pessimistic regarding their further prospects on the subcontinent in the face of stiff government resistance to foreign devils making a buck on the sacred Hindustani soil.

Comment: How were those Dale Steyn wickets eh?

In India, there is apparently some superstition about buying products in the pain balm and antacid categories from the modern trade. Naturally, this is a concern for the likes of both GlaxoSmithKline, who are looking for an easier route to market, and Shoprite, who want in on two popular categories. Thus, they have put their clever heads together to come up with a channel strategy, where cross-category and checkout placements have been identified as the way to do it. These categories are now flying off the shelves at Shoprite – sales of antacids have grown six times there, while pain balms have doubled.

Comment: Which just goes to show what happens when creative suppliers and receptive retailers put their clever heads together.

Stay with us here, but Shoprite are testing a nitrogen-powered transport refrigeration system, which, get this, has no moving parts. The system, known as ecoFridge, is imported from the EU, where it is manufactured by Ukram Industries. It produces no harmful emissions, uses no CFCs and is absolutely silent. It also promotes moisture retention in food and thus reduces wastage. If successful, the system will be deployed in Shoprite’s fleet of over 500 trucks. Nitrogen is completely inert and harmless, although in its deadly frozen liquid form it may be used for the disposal of supervillains in action adventure movies.

Comment: The fools! They said it couldn’t be done! Now they will know my genius! Bwahahahahahaaaaah!

Shoprite’s sales grew 11.9% to R33.1 billion for the six months to December, with like stores gaining 6.4%. These numbers are apparently a little on the low side, brought there by weaker inflation and the effect of a stronger rand on revenues from foreign stores, where a lack of space is also becoming an issue. Performance in SA itself was strong, with total sales up 14.6% and like stores up 9.1%. Even furniture did OK, up 11.5% in an industry that was particularly badly hit in the downturn, as our ropy old TV couch will tell you. In other Shoprite news, Mr James W Basson exercised an option to buy 10 million shares late last year for just R6.51 each, and sold R3.7 million of the little chaps for a handsome R65.96 apiece.

Comment: Which is what we in the industry call “a result”.

Whitey Basson likes a little flutter as much as the next man. Which is part of the reason, no doubt, that he allocates a percentage of profits annually to risky projects – like moving to centralised distribution back in ’93, and into Africa (where growth continues at a brisk 40% per annum) at roughly the same time. More recently, there’s the repositioning of Checkers, from net om die hoek to something a little swankier. This productive risk-taking by a tight and disciplined management team goes a long way to explain the turnover growth of 24.5% in the last financial year, and Shoprite’s market capitalisation of R34.5buljons, almost R15 of the big chaps ahead of the nearest (ahem) rival.

Comment:

Shoprite has announced the acquisition of one of SA’s largest pharmaceutical wholesalers, Transfarm, in a move which will help it grow the already burgeoning MEDI-Rite arm of the business. MEDI-Rite currently has over 100 stores, and the plan is to open another 80 – 100 more in the next twelve months. The purchase of Transfarm, which turns over up to R200 million per month, will bring the benefits of centralised purchasing – like better availability and lower prices – to the Big Red One, according to Mr James W. Basson, CEO. It will also, no doubt, put the wind up competitors like Dis-Chem and Clicks, who purchased their own wholesaler, UPD, back in ’03. MEDI-Rite is now the second biggest pharmacy group in SA.

Comment: Aggressive stuff in a sector which is rapidly becoming as consolidated as the grocery sector, to the undoubted detriment of the little guy.

Checkers has entered into a partnership with the BBC Lifestyle Channel, where it will be sponsoring the stand in the programme Full on Food, which features such luminaries as Gordon Ramsay, Nigella Lawson, Jamie Oliver and Hester Blumenthal. It will also be the exclusive sponsor of the show’s recipe planner, an online application which allows punters to plan their weekly meal, print their grocery lists and access exclusive recipes featuring goodies you can buy at Checkers. Nice one Auntie Beeb.

Comment: We had some of that Boerie of the Year on our new Weber last weekend, and it was something else.

Last week, we reported in these pages that Shoprite would be importing some yankee apples, to the tune of 3 000 boxes out of a possible 8 million. Seems like Pick n Pay took the issue a little more seriously.

Comment:

Shoprite are buying some honest to jiminy, American-as-apple-pie, er apples, as it happens. For the first time ever, American apples will grace (if that’s the word) South African shelves, where we will be astounded by their redness, their full, fruity flavour, their heart-shaped perfection, these being the attributes of the Red Delicious, 8 000 cartons of which are winging their way hither as we speak. After two years of schlepping and pleading, Shoprite has wangled a permit from the Department of Agriculture to import the apples from Washington State, where they grow on trees. The apples should be here in time for Christmas, traditionally a lean time for red apples, which are generally harvested from February to April. To put things in perspective, the American apples will have little impact on local producers, from whom Shoprite acquires some 3 million cartons annually.

Comment: The arrival of the apples will be celebrated at Shoprite head office with a “hoedown”, which we understand is some kind of traditional American party.

Shoprite has lashed out, there seems no other expression for it, at the banks, for an intermittent fault at Interserv, the automated clearing house owned by the banks. The problem, it appears, is that money placed in a holding account when a punter buys something on her card never reaches the vendor. This results in the unhappy scenario where a couple of mournful beeps on the cellphone inform the shopper that she’s been relieved of R131.24, whereupon the teller tells her that her transaction has been declined. Nostrils flare and white spots appear on cheeks. The punter then goes to the bank, where, Shoprite informs us, unhelpful staff send them back to the supermarket for justice. Shoprite is taking the issue up with the Reserve Bank, on the grounds of lost revenue, consumer frustration, and apparent indifference on the part of the banks.

Comment: They’re bankers, this much we know. But are they a bunch of complete and utter bankers?

Massmart have become a sort of lightning rod for the toughness of the times, reporting sales growth of only 5% in the 14 weeks to 4 October, with like store sales just 0.7%. Compare this to Shoprite’s 15.9% growth in turnover for a similar period, and you can see why sweat might be beading on those youthful Massmart brows right now. The problem, it seems, is Massmart’s exposure to general merchandise relative to Shoprite’s more defensive positioning in food. Should the recession rage on, Massmart is expecting a decline in first-half profits for the 2010 financial year compared with the more buoyant first six months of 2009.

Comment: In fairness to Massmart, it’s been warning shareholders of this eventuality for close on a year now – the mark of a prudent and refreshingly realistic operation.

This grand old industry we call home was more than adequately represented in the Sunday Times Rich List, with Mnr Wiese of Shoprite inter alia and the Ackerman family pitching up at 4th and 5th respectively. Wiese is worth a few bob north of R5 billions, and the Ackermans a more dignified R3 billion odd. So far so loaded. But when it comes to the top earners index, an executive position in the consumer packaged goods industry (if that’s what we’re calling it) is not all that – our main man there is SABMiller’s Graham Mackay at 9th followed by Rainbow’s Miles Dally at 12th.

Comment: The tone of the list this year is censorious rather than congratulatory when it comes to executive remuneration, SA now having outstripped Brazil in income inequality, and chaps like Supergroup’s Larry Lipschitz giving the whole thing a bad name, by being ludicrously overcompensated for presiding over a train smash.

Shoprite is closing one of its underperforming stores in Dar es Salaam, despite an apparent commitment to growing in the tricky Tanzanian market, where it is difficult to achieve the critical mass necessary for profitability. Shoprite has closed four stores since entering Tanzania in 2001, two of them this year, and currently has only two stores in Dar es Salaam and one in Arusha, sparking (unconfirmed) fears in Tanzania that the Big Red One is in the process of winding up operations there. Last year, Shoprite had labour problems in Tanzania, and is battling with competition from purveyors of counterfeit goods, and shrinkage.

Comment: Shoprite is not the sort of retailer that would take declining profitability and a recalcitrant workforce lying down. At what point would a strategic retreat from this ungrateful adolescent of a country be in order?

It’s that time of year again, when all the little ones start rehearsing their nativity plays, and Pick n Pay and Shoprite dust off the old market share drama:

Scene: A Blasted Conference Venue
Enter Basson and Badminton, a pair of Chief Executives

Basson: Behold, gentlemen, my market share, for it is the finest in all the kingdom.
Badminton: You cad, Sir! Your market share is nothing but hogwash, hogwash I say! Mine is the true market share, vouchsafed me by the great wizard Nielsen, high in his mysterious Tower of Numbers.
Basson: That is indeed a large market share, but is it........profitable?
Badminton: This is too much! Your market share is just plain wrong...

A puff of smoke in a tasteful corporate blue.

The Great Wizard Nielsen: Enough! Enough I say! In my Tower of Numbers, I have divined that the market share of Badminton has ascended mightily this twelve-month to 33.3%, while the Pretender Basson is swift on its tail at 30.8%!

Comment: Of interest, of course, are the numbers for August and September:

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Last week, you will recall, Shoprite suspended its bid to buy into OK Zim, citing “socio-economic and political uncertainty”, with speculation suggesting that the freezing of the assets of Kingdom Meikles, which owns TM Supermarkets, may have rattled the generally imperturbable one. Another view is that the two parties could simply not agree on price. The freezing of the assets has its origins in a dispute between the Kingdom and Meikles factions of the business, and the two have agreed to split, more or less amicably, and relist separately, under pressure from none other than a Mr RG Mugabe, who is keen to now punt Zim as an investment destination, whence, presumably, the American and the British are no longer obliged to “go to hell”. Pick n Pay, in the meantime, is considering upping its stake in the Meikles-owned TM supermarkets from 25% into something a little more chunky.

Comment: Which would give le Grand Bleu the jump on Shoprite in Africa’s easiest-reached market.

Plucky outsider KFC won the Grand Prix in this year’s Sunday Times Top Retail Brands Survey, would you believe it, with Edgars next and Shoprite blustering home in third, and Clicks in fifth, after non-retailer Spur, narrowly pipping Pick n Pay in sixth. In the Overall Grocery Shopping experience, however, it was Pick n Pay in pole, with Shoprite, Checkers, Woolies, Spar and Game screaming up the straight in that order. Game (first), Makro (third) and DionWired (fifth) delivered the goods for Massmart in the Electronics category, while Woolies Food Stops came in at a creditable third in the forecourts division.

Comment: Oddly enough, Pick n Pay came nowhere in the Favourite Family Restaurants category.

Shoprite has bombed between R350-400 millions into the Democratic Republic of the Congo, where it intends opening stores in Kinshasa and Lubumbashi, but has suspended its bid to buy into OK in Zimbabwe – word is that it has been spooked by the de facto nationalisation of the Meikles Group, owner of OK rival TM Supermarkets. Also, the deal on the table would have given Shoprite minority share in OK, a position with which, how shall we put this, it is not traditionally associated. In India, in the meantime, Shoprite has no immediate plans to open any new stores, given the Indian government’s disinclination to open up wholeheartedly to foreign direct investment.

Comment: Shoprite’s move into the DRC has had certain hoary analysts scratching their grizzled curls and wondering how anyone could make a buck in that currently stable country.

And the winner of The Shoprite Checkers Championship Boerewors competition is housewife Mrs Elizabeth Lesley of Kuruman, who waltzes off with the prestigious title for her traditional sausage as well as a spanking new Toyota Hilux Double Cab, even though she is not a man.

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Shoprite and furniture manufacturer Steinhoff are looking at doing some sort of deal according to our shifty, unshaven colleagues in the financial press. And should this happen, it will be huge – Steinhoff is an employer of 45 000 people globally, and is invested in major markets such as China, Germany and the UK – where perhaps it might allow Shoprite a toehold. Steinhoff has been looking at owning a retail outlet back here in SA, something the boys in red would be able to provide, through OK Furniture – doing very nicely in an otherwise depressed market – and Checkers Hyper. And together, they have a market capitalisation of around R55 billion, of which Shoprite’s share is just over R33 billion. A share swap might see Mnr Wiese selling part or all of his stock for Steinhoff stock, although Mnr Wiese, understandably at this delicate stage of proceedings which may or may not be underway, is not saying. A caveat – there are some mutterings that Mr Basson is less than enamoured of the deal – and that it was his reluctance which saw the Massmart merger scuppered back in ’05.

Comment: A massive shakeup, potentially, and perhaps the beginning of the fulfillment of Shoprite’s dream of being a truly global player.

There’s a subtle war of words in the media between Clicks and the independent pharmacies with which it competes. Recently, we reported that USAP, a grouping of independent pharmacies, had released results of a survey which suggested that the punters are more interested in convenience and tender words when it came to their pharmaceutical requirements than they were in price. Now Clicks skipper David Kneale has come back with a raking broadside, suggesting that customers may be paying more on their dispensing fees and admin costs than they will at in-store pharmacies and by inference, Clicks itself. Clicks currently owns around 15% share of the prescription market and is facing stiff competition from all sorts – Shoprite, Pick n Pay, Dis-Chem, and the plucky independents themselves.

Comment: Don’t know about you, but we find there’s something unsavoury about the big boys circling the independent sector and licking their chops. Small businesses, even in retail, are the safety net of any economy.

Shoprite CEO Mr James Wellwood Basson received compensation to the tune of R24.1 large for the year to June after scraping by on R16.6 bar last year. This after playing no small part in Shoprite increasing sales by 25% for the year. It’s a tidy sort of sum – three times what Nick Badminton of Pick n Pay pockets, and 70% more than Standard Bank’s Jacko Maree.

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Shoprite has committed to opening two stores in the DRC, in the cities of Kinshasa and Lubumbashi respectively, and is planning on investing R400 million there, the sort of cash generally reserved for raising private armies in that neck of the woods. Bold moves from Africa’s biggest retailer.

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Men of the African soil Pick n Pay and Shoprite are sizing up for a showdown in the savannah as they eye the newborn Impala and sickly Wildebeest of the Zimbabwean grocery market. While Shoprite is painting Africa red, don’t discount the wily old lion that is Pick n Pay – they’ve been operating in Zim for ten years with a 25% holding in TM Supermarkets, the country’s largest chain with 37 outlets, and are keen to open more outlets under the Pick n Pay and Price Rite brands. And Shoprite, as you know, is going after OK Zim, the second largest chain with a value of US$241million. In the meantime, Morgan Tsvangirai has suggested that rugged South African Investors are the sort our wild and untamed continent needs.

Comment: Her green eyes blazed. “You are most arrogant man I’ve ever met,” she said. Taking her roughly by the wrist...

The Shoprite Checkers Championship Boerewors Crown competition is under way, menere. To date, 1100 wannabe sausage-manglers have been put through their paces by a panel of 342 judges who jointly have sampled the juicy goodness of 44 000 pieces of boerie. On 19 September, 87 of the best battled it out round the half barrels in the provincial rounds, and now we’re down to the last desperate ten, who just looking at names and surnames are a culturally homogenous grouping, although there are a couple of vroue in there too. We await the results with bated tastebuds.

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