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Checkers is printing money with Sixty60

| On the move

By: Bianke Neethling - MyBroadband

Since launching in 2019, Shoprite’s Checkers Sixty60 on-demand grocery delivery service has shown exceptional growth and generates an estimated R10 billion annually.

Shoprite – which owns brands such as Checkers, House & Home, OK, Uniq and Computicket — released its results for the 26 weeks ended 31 December 2023.

South Africa’s largest retailer delivered strong financial results, increasing sales by 13.9% to R121.1 billion.

This growth was primarily driven by the company’s core South African supermarket segment, which saw a 14.6% increase in sales to R97.5 billion.

In particular, Checkers and Checkers Hyper saw sales grow by 13.7% to R38.5 billion in the six-month period.

This number was boosted by the impressive growth of Checkers Sixty60, which grew sales by 63.1% over the six-month period.

However, Shoprite has been tight-lipped about Checkers Sixty60’s financial performance. It has never released revenue or profit numbers.

In the retailer’s interim results presentation, Shoprite CEO Pieter Engelbrecht said Checkers Sixty60 is “very profitable”. “I know there are people who don’t believe it, but believe me — it is very profitable,” he said.

Engelbrecht added that Checkers Sixty60 is currently the number one grocery app in South Africa, with over 4.5 million downloads.

It is available at 505 locations, has provided 9,903 jobs and its sales have increased over tenfold since the first half of 2021.

During the interim results webcast, Daily Investor asked Engelbrecht how much revenue Checkers Sixty60 generates. However, he did not answer the question.

It was time to use other ways to estimate how much money Checkers Sixty60 contributes to Shoprite’s topline.

Checkers Sixty60 revenue estimates

Daily Investor analysed Shoprite’s results to get an estimation of how much revenue Checkers Sixty60 makes.

First, we looked at Shoprite’s consolidated sale of merchandise in the 2023 financial year, which was R214.96 billion.

In its latest annual report, Shoprite said sales through Checkers Sixty60 constitute less than 5% of Shoprite’s consolidated sale of merchandise.

Assuming Checkers’ Sixty60’s sales make up exactly 5% of this total, the service makes at most R10.75 billion a year.

To check the accuracy of this number, Daily Investor analysed the figures given for Pingo, the logistics company behind Checkers Sixty60.

In 2022, Shoprite entered into an agreement with the RTT Group, the delivery partner for Checkers Sixty60.

In terms of this agreement, RTT’s on-demand business was transferred into a new company, Pingo Delivery, in which Shoprite Checkers (Pty) Ltd has a 50% shareholding.

In its 2023 results, Shoprite revealed that Pingo made R994 million in revenue.

Dividing this revenue by R35 – the amount Checkers Sixty60 charges for deliveries – means Pingo makes around 28.4 million deliveries.

Therefore, assuming the median size of a Checkers Sixty60 basket is around R481, the service makes around R13 billion in revenue.

However, while the largest part of Pingo’s business is Checkers Sixty60 deliveries, it does deliver for other companies. Therefore, Sixty60’s revenue would be less than R13 billion.

To triple-check the number, Daily Investor asked numerous Sixty60 drivers contracted to Pingo how many trips they do on average per day.

The driver feedback aligned with previous calculations. Pingo has around 4,000 drivers that complete, on average, an estimated 15 trips a day.

This means the company completes 60,000 deliveries a day. Based on a median basket size of R481, this would bring total daily sales to R28.86 million.

Thus, in a year, Pingo – and therefore Checkers Sixty60 – likely made around R10.53 billion in sales.

It is, therefore, fair to assume that Checkers Sixty60 generates around R10 billion per year. This excludes delivery fees, which are reported under Pingo.

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