Skip to main content

Choppies struggles to make its mark in tough SA conditions

The grocer has not found a suitable business model for SA as tough economic conditions bite

Botswana-based Choppies may be a well-established grocery retail chain in many parts of sub-Saharan Africa, but the company has found the going tough in SA.

Choppies expanded its footprint into the local market in early 2015 and listed on the JSE’s main board in May of that year.

The grocer was punted as one of the continent’s fastest-growing retailers and investor hopes were relatively high that it could forge its own path by offering a shopping experience different to that of Shoprite, Massmart or Pick n Pay.

But the intricacies of finding a business model that works for consumers in SA and the added challenge of an economy in a slump has meant that Choppies has struggled to find its footing.

While prospects for the company looked promising in its established regions, the picture remained murky for it in SA, Exotix equities analyst Anthea Alexander said.

"We are cautiously optimistic that indications of firmer commodity prices and better rainfall will contribute to slightly better growth in markets such as Zambia and Botswana," she said. "However, political and policy uncertainties remain a concern in SA and Zimbabwe and these economies are likely to endure another challenging year."

In the year to date, Choppies is down 7%, after falling 51% 
in 2016.

Shoprite has risen 20.2% in the same time frame, while Pick n Pay has dipped by 4%.

Massmart’s share price has declined by 14.05% in 2017, but rose 26.16% in 2016.

Shoprite, which has the largest network of stores in SA, released a disappointing full-year trading update earlier in 
the week.

The group described trading conditions in SA during the second half as "challenging".

In the year to July 2, Shoprite said its South African operations increased sales by 10.1%, or 6.9% on a like-for-like basis.

But if internal inflation of 5.9% was stripped out, the
increase was a marginal 1%.

Choppies will report its full-year results in September.

In March, its CEO, Ramachandran Ottapathu, said he was optimistic about the group’s prospects and expected its South African operations to break even in 2017.

Pin It

Related Articles

SPAR, the world’s largest food retail voluntary chain, has seen annual retail sales break the €40 billion mark for the first time, today reporting global sales revenue of €41.2 billion for the year ending December 31st, 2021. The figures represent...
Since the turn of the century and consistently for nearly a decade before the COVID-19 pandemic ravished global markets, Africa was home to the fastest growing economies. The shoots of positive growth it demonstrated afforded it the title of the “...
Last year’s Black Friday retail sales massively underperformed for many reasons, according to Marino Sigalas, Account Director at The MediaShop. He says that some consumers were not comfortable with the thought of being shoulder to shoulder with o...
Retailer Checkers says that customers using its Sixty60 home delivery service will now be able to benefit from its Xtra Savings rewards programme.
In the UK a government minister is calling for a new law to ban wet wipes that contain plastic. Labour minister Fleur Anderson argues that around 90% of the 11 billion wet wipes used in the UK per year contain some form of plastic that turns into ...