Checkers Sixty60, Shoprite Holdings’ on-demand grocery delivery service, grew sales by 81% year on year in the 52 weeks ended 2 July 2023, underscoring just how much South Africans have warmed to the concept.
“[This underscores] the continued growth of our Checkers omnichannel customer initiative and validates our strategy in terms of our investment in digital and data-led decision making,” Shoprite Holdings CEO Pieter Engelbrecht said in a statement alongside the results.
Launched in 2019, the growth of the Sixty60 platform coincided with the Covid-19 pandemic and associated lockdowns as well as increased levels of load shedding in South Africa.
However, higher sales growth of 150% in the previous year suggests the growth trend for the on-demand service may be normalising somewhat.
Although Checkers Sixty60 extended its reach to 466 stores offering the service, up from 300 in 2022, in-app purchases still make up “less than 5% of the group’s consolidated sale of merchandise”. When considered alongside the fact that Shoprite Holdings added a record 340 new physical stores in the latest 52-week reporting period, it is evident that South African consumers still overwhelmingly prefer to shop in person for their groceries.
Shoprite said it plans to spend about R8.5-billion to increase supply-chain capacity, add stores and strengthen its digital capabilities.
The retailer has been swallowing market share from rivals Pick n Pay and Spar, while pushing into the higher-margin upmarket niche dominated by Woolworths.
Read: Checkers opens its first ‘dark store’ as online shopping booms
But rivals have been innovating and expanding capacity in a fiercely competitive grocery market, forcing Shoprite to step up a turf war for both budget and affluent shoppers.
Checkers Sixty60
The company is adding 200 000sq m in new distribution centres over the next two years to support growth at its over 2 100 South African supermarket stores and additional 314 new stores planned in its new financial year, which started on 3 July.
With Sixty60 dominating the on-demand grocery delivery market, the company will launch an Amazon Prime-style R99/month subscription model, a first for grocery retailers, to help snatch more than the 15% market share currently held by its affluent Checkers brand.
“The fact that there is currently no economic growth … doesn’t mean we can stop investing. Because if you stop investing, to start again in the future is a slower start,” Engelbrecht told investors on Tuesday.
Read: Takealot testing one-hour deliveries as Amazon launch nears
Shoppers flocked to its stores for bargains, with customer visits up 13.2% in the year, while volume grew by 4.9%. This boosted Shoprite’s market share growth by 1.4% and contributed to overall sales growth of 16.9% at R215-billion.
Its headline earnings per share from continuing operations grew to 1 166.2c in the period even as it spent R1.3-billion on diesel for backup power generation, as state utility Eskom struggles to keep the lights on.
The company’s share price fell 5.7% by 2.17pm.
“When investor expectations are too high, as was the case with (Shoprite), some level of disappointment creeps into the price once the CEO starts talking,” said Casparus Treurnicht, portfolio manager at Gryphon Asset Management.
“This was a classic example of the share getting ahead of itself,” he added. – © 2023 NewsCentral Media, with additional reporting by Tannur Anders, © 2023 Reuters