Big changes for Shoprite in South Africa
South African retailers have observed a significant shift in consumer behaviour, prompting them to adapt in order to stay competitive.
The country’s biggest retailer, Shoprite, said that it has had to evolve to meet the changing needs and wants of consumers and has shared some ambitious plans for future growth.
These include expanding its premium stores, introducing new value-added concepts, developing more private label products, growing its on-demand delivery services, expanding its affordable essentials range, and venturing into mobile services and financial offerings.
Speaking to BusinessTech, the group said that some of the most notable recent changes that they have noticed include “consumers stretching their budgets, and how they shop for food and essentials has changed.”
They say that this is evident in:
- More customers seeking promotions;
- Customers buying more combo deals and often opting for collective buying;
- More customers changing brands and switching to private labels, with 96% of all customers now buying at least one private label product.
This strategy has trickled into its balance sheets.
According to its annual reports, the group has increased its annual revenue from R24.8 billion in 2003 to R215 billion in 2023, and has grown from having 1,581 stores in 2014, to 3,543 in 2023 – employing well over 153,000 people.
Group-wide rewards systems
Before looking at the changes in individual stores, their introduction of a rewards programme nearly five years ago has seen it skyrocket to one of the biggest rewards programmes in the country – a move that the group said has yielded significant results and plans to take further.
Launched back in 2019, Xtra Savings rewards program, encompassing Checkers and Shoprite Xtra Savings, now boasts over 29 million customers.
Customers have seen “a combined R8.4 billion in instant cash savings at Shoprite and Checkers supermarkets in the last six months,” said the group.
Strategies implemented by Checkers
The Shoprite group said it has observed that middle-to-higher-income customers are increasingly seeking value without compromising on quality and freshness.
In response, the group has expanded its premium stores (Checkers FreshX), introduced new value-added concept stores, developing a private label portfolio, and launching an on-demand grocery delivery service.
A notable success is their Checkers Sixty60 service, which offers one-hour delivery from over 505 locations.
On-demand delivery services have garnered significant traction over recent years globally. Launched in November 2019, the Sixty60 app has been downloaded more than 4.5 million times, making it the largest on-demand grocery retailer in South Africa.
Recently, Checkers announced that it will be beta testing a new and improved version of its Sixty60 app.
This will expand its item listing to over 10,000 larger Hyper products in hopes of being fierce competitors to likes of other online retailers offering similar larger items, like Takealot and Amazon.
Since April 2016, Checkers has increased its premium FreshX store count to over 87 and has introduced new private label brands such as Simple Truth and Forage & Feast, enhancing its product range.
The group said that it is looking to expand these stores and the product range to meet the evolving needs and wants of consumers.
Some of these abovementioned changes have significantly increased the group’s annual revenue – growing from R147.5 billion in the year of Checkers Sixty60 launch (2019) to R215 billion in 2023, as per an analysis by The Outlier.
Strategies implemented by Shoprite
The group’s other store, Shoprite, has been looking to become South Africa’s go-to low price grocery store.
“As the cost-of-living crisis intensifies, Shoprite has intensified its efforts to ensure customers can put affordable food on the table,” said the group.
One of their responses to this is their “R5 initiative”, which they are eying to expand the product range of through using largely local suppliers.
The R5 initiative, launched in April 2016, currently offers in-house bakery bread, deli meals like liver burgers, chicken hotdogs, and sandwiches, and locally made sanitary pads for R5 each.
“While many have come to disregard the R5 coin’s purchasing power, Shoprite supermarkets continue to sell food and other essentials that require just a single coin,” said the group.
Additionally, the group said that Shoprite is aiming “further accommodate cash-strapped consumers’ budgets” by offering R99 essential food combos and running a monthly basic food subsidy on individual products with over 1,500 items priced below R10.
Other ventures include introducing a mobile network called K’nect mobile, promising to offer lower data prices. Additionally, Shoprite has launched financial services, including the Money Market Account, which “offers customers a convinient, one-stop full-service offering,” said the group.
Read: The biggest retailers in South Africa: Shoprite vs Woolworths vs Spar vs Pick n Pay
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