Shoprite is eating its rivals’ lunch
Shoprite is emerging as one of the biggest winners from the cost-of-living crisis, reporting an almost one-fifth jump in quarterly sales as budget-conscious consumers flock to its flagship discount chain of the same name.
Its operational update for the three months to the end of September comes at a time when surging food and energy prices are causing one of the biggest squeezes on SA household finances, prompting some activists, labour leaders and politicians to call on President Cyril Ramaphosa to come up with relief packages.
For Shoprite, which has also launched an onslaught on the upper- and middle-income market cornered for years by Woolworths, hard-pressed consumers may be reacting to the crisis by switching to its network of discount chains, which includes USave.
It said its market share gains during the review period measured 1.4% compared with the same period a year ago, extending the period of “uninterrupted market share gains in our core SA supermarket business to 43 months”.
Shoprite — which also runs Checkers, Checkers Hyper and LiquorShop — said sales jumped 18.6% year on year, with prices rising 8.2%.
“These are a very solid set of numbers,” said Nick Kunze, portfolio manager at Sanlam Private Wealth. “Shoprite is spreading the risks by appealing to both lower- and high-end consumers.”
In reaction, Shoprite shares jumped 7.78% to close at
R254.90 on the JSE on Monday, adding more than R11bn to the market valuation.
However, it was not all good news, with cost increases jumping, notably in fuel and diesel.
“The approximate 56% yearon-year increase in the fuel price continues to impact our cost of supply chain and general operations but more so as a result of unprecedented periods and stages of load-shedding in SA during the first quarter, our diesel expense has considerably increased as well,” the group said.
Stage 5 and 6 load-shedding requires more diesel to run generators, which the retailer estimates will add R100m a month to its monthly diesel bill.
Supermarket sales in SA, including LiquorShop, were up 19.9% year on year.
However, the latest reporting is being compared with a period
HOWEVER, IT WAS NOT ALL GOOD NEWS, WITH COST INCREASES JUMPING, NOTABLY IN FUEL AND DIESEL
that included the social unrest in Gauteng and KwaZulu-Natal in July 2021, which resulted in 231 Shoprite stores being looted and damaged. Of these, 23 stores remain closed.
Also, LiquorShop could not trade for 48 of the 91 days of the same period last year because of Covid-19 restrictions.
Referring to its grocery delivery service, it said: “Checkers Sixty60 has continued to experience notably strong growth in sales during the first quarter, despite its incredible growth trajectory built up over the almost three years since its launch.”
Supermarket sales outside SA soared 18.8%, driven by an increase in customers who bought and spent more.
The retailer opened 46 stores in SA during the latest quarter. These included one Checkers Hyper, one Checkers Outdoor, two Shoprite, three Checkers Little Me, four Petshop Science, seven Checkers, 10 Usave and 18 LiquorShop outlets.
SUPERMARKET SALES OUTSIDE SA SOARED 18.8%, DRIVEN BY AN INCREASE IN CUSTOMERS WHO BOUGHT AND SPENT MORE