Shoprite reports strong performance in challenging environment

Shoprite, the country's largest retailer, has once again demonstrated strong performance despite challenging market conditions. The company recently reported an 8.1 per cent increase in sales for the period, with trading margins up to 6.1 per cent. Shoprite's Chief Executive Officer, Pieter Engelbrecht, shared insights into the company's success in a recent interview with CNBC Africa. Engelbrecht attributed the company's success to hard work, an excellent team of 140,000 employees, and a focus on innovation. He emphasized Shoprite's commitment to becoming the most accessible, affordable, and innovative retailer on the African continent, noting the positive momentum in the business. One of the key highlights from the interview was the company's continued market share gains. While Engelbrecht did not specify the exact source of the market share gains, he noted that Shoprite, Checkers, and Checkers Hyper were all experiencing growth. The company reported a significant market share gain of 9.3 billion across all brands, reflecting the strength of its operations. In terms of earnings growth, Engelbrecht highlighted several key areas driving the company's performance. Shoprite plans to open an additional 133 stores this year, with a recent acquisition expected to contribute approximately 10 billion to its revenue. The company's investment in digital initiatives, such as the 6060 rewards program, has also been successful, with over 21 million customers enrolled. The interview also touched on consumer behavior, with Engelbrecht noting a decrease in store visits but an increase in basket spend. Shoprite has seen a 14% rise in average basket spend, driven by volume growth rather than price increases. Engelbrecht attributed this growth to strong performance across the business, with both affluent and lower LSM customers contributing to the increase. Looking ahead, Engelbrecht expressed optimism about the company's future prospects. He anticipates a potential increase in foot traffic, particularly in the liquor business, once COVID-19 restrictions are lifted. Shoprite's focus on food retail has enabled it to weather the challenges of the pandemic, and Engelbrecht believes the company will continue to attract customers as normalcy returns. Addressing concerns about the company's Africa strategy, Engelbrecht clarified Shoprite's decision to exit certain markets was a strategic move to focus on core countries. By re-evaluating its operating model and improving profitability in key markets, Shoprite has positioned itself for sustainable growth. While the company remains cautious about expanding into new African markets, Engelbrecht did not rule out the possibility of future expansion with a revised operating model. Overall, Shoprite's robust performance reflects its resilience and strategic focus in navigating a challenging market environment. The company's commitment to innovation, operational excellence, and customer-centric approach has contributed to its success and positions it well for future growth.