News

Shoprite looks to be gaining market share

SHOPRITE, SA’s biggest supermarket owner, said yesterday that sales for the 12 months to June rose 13,6%, as new stores and aggressive marketing boosted sales growth.

Shoprite’s increase in turnover to R67,4bn suggests faster growth than the overall market is showing. While official figures for the year to June are not yet available, retail sales in May showed inflation-adjusted growth of 4,6%. In the same month, consumer price inflation rose 4,6%, giving a basic, nominal market growth of 9,2% for the month.

Shoprite’s sales growth was “very good in the circumstances”, Nedbank Securities analyst Syd Vianello said yesterday.

“It’s better than their competitors … definitely (better than) Pick n Pay and probably Spar as well.”

Over the 12 months, Shoprite said internal food price inflation fell to an average 2,2% from 15,8% before.

Shoprite had a “fantastic” recession as Shoprite and Usave firmed their low-cost reputation, and Checkers established itself as an upmarket rival to Pick n Pay and Woolworths, CEO Whitey Basson said in February. That trend seems to have continued as, in a time of recession, consumers chose cheap.

The figures are likely to keep alive the fight over market share gains between SA’s two largest grocers. In April, Pick n Pay said its market share for the year to February rose to 33,7% from 33,5%.

“They did not change their lifestyle or their supermarket,” Pick n Pay CEO Nick Badminton said of customers, mocking the Checkers advertising slogan.

Still, Shoprite was benefiting from marketing campaigns that entrenched the idea in shoppers’ minds that it was a cheaper place to buy, Mr Vianello said. “They won the battle on price perception at the bottom end of the market,” he said.

The 13,6% gain Shoprite reported compared turnover for a 53-week period with a 52-week period last year . On a 52-week comparison, the gain was 11,1%. On a like-for-like basis, excluding new stores opened, turnover grew 4,8%.

Shoprite’s success has seen its share price rise faster than that of rivals. Its shares have gained 49% over the past 12 months, double Pick n Pay’s 21%. Spar is up 41%.

At Shoprite’s South African supermarkets, which last year made up 78% of group revenue, sales rose 14,6% for the 53-week period.

Turnover growth in the second half slowed to 10,3% from 11,9% in the first half, the company said in its operational update. Internal food inflation fell to 0,2% in the second half from 4,2% in the first half.

UNI Commerce Global Union signed a Global Agreement with Shoprite Checkers 23 February 2010 in Cape Town:

http://www.uniglobalunion.org/Apps/iportal.nsf/pages/sec_20081016_gbguEn

Read Bussinessday's article online:

http://www.businessday.co.za/articles/Content.aspx?id=114960