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No recession blues for Shoprite as sales surge

By unknown | Feb 19, 2009 | COMMENTS [ 0 ]

Adele Shevel

Adele Shevel

Shoprite again defied the economic downturn to deliver results at the upper end of forecasts and has grown market share at the expense of some of its competitors.

Africa's largest supermarket chain has edged up its local market share from 28,2percent to 29,8percent and entrenched itself as a price-conscious brand, with more consumers shopping at this group than any other supermarket chain.

Higher turnover and stronger trading profit in the six months ended in December was achieved because of the group's low price-positioning across the income spectrum, and managing its cost base efficiently.

To ensure that the group wins market share it subsidised prices to the value of nearly R180million in the six months ended in December. Gross margins decreased as margins were cut on basic foods to alleviate the impact of high food inflation on consumers, resulting in high sales volumes.

Shoprite has been one of the biggest beneficiaries of government grants over the past few years and this looks set to continue with an increase in social grants worth more than R13billion over the next six months.

Whitey Basson, chief executive of Shoprite Holdings, said Shoprite would sacrifice profits to remain the cheapest supermarket in South Africa "because that's our brand and we can't afford to let that slip".

Of its three supermarket brands, the Checkers brand is gaining at the top end of the market, and losing consumers at the bottom end.

As for the local forecasts, Basson said: "I haven't seen any doom and gloom in January and February that says there are dark clouds ahead.

"Let the 'depression' happen in someone else's store," said Basson.


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