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Shoprite number one retailer in Africa

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Shoprite Holdings was named the number one retailer in Africa followed by Massmart and Pick n Pay, according to the Deloitte African Powers of Retailing report 2015.

Spar Group claimed fourth place and Woolworths coming in at number five. Twenty of the top 25 retailers are South African.  

Shoprite achieved the top spot because for the group it is all about price and footprint, Johan Scholtz, an associate director of Deloitte in Southern Africa, told Fin24 at the World Retail Congress Africa.

"Shoprite always finds excellent locations which are conveniently located for consumers and it offers a good customer experience for its target market," explained Scholtz.

As for the report's number two retailer in Africa, Massmart, it has been struggling in SA since the Wall-Mart take-over in 2011, according to Jon Copestake, chief retail and consumer goods analyst at The Economist Intelligence Unit. Wal-Mart Stores spent $2.4bn on a stake in Massmart five years ago.

In Copestake's view the Wal-Mart takeover was in any event more to get a foothold in the other high-growth markets in sub-Saharan Africa where Massmart already had a foothold, than about the South African market.

Fin24 reported in June that Massmart has added fewer than 10 stores to the existing 25 outside its home market since 2010, while Shoprite doubled its outlets to 300.

For a quick store roll-out phase, Shoprite, for instance, started setting up warehouses and partnering with developers to build shopping centres.

South African retailers dominated the Africa region in Deloitte report, accounting for all ten of the continent’s top 10 retailers that qualified for inclusion in the list of the largest retailers.

Retail companies based in Africa and listed on the continent were included in the report, based on their non-auto retail revenue for fiscal year to the end of June 2014.

African-listed subsidiaries of large global retailers are included as individual entities in this report.

“The more mature South African retail market has performed strongly from a continental perspective, which is one of the reasons international retailers eager to establish a footprint on the African continent have tended to enter via South Africa," said Dylan Piatti, Africa Consumer Business chief of staff at Deloitte.

"However, there is an emerging shift in the regional focus of entry, as well as key players looking beyond African borders for expansion opportunities in Asia and the UK."

In his view it is also testament to the ability of SA’s retailers to compete in the very tough operating environment.

He explained that, while South African retailers have aggressively expanded within sub-Saharan Africa, the shortage of retail locations and high transportation costs have led them to target expansion outside Africa.

Because the Southern African market is relatively more mature and sophisticated - and therefore more saturated - than those in West and East Africa, companies are looking at the more exciting opportunities available in the latter regions, according to Claire Hoy, Deloitte Consumer Business risk advisory and Western Cape regional leader.

Companies are, therefore, looking to expand specifically into countries such as Rwanda, Ethiopia, Tanzania, Kenya, Nigeria and Ghana.

The report found that the top 25 listed retailers in Africa have a presence in 21 countries and collectively earned retail revenue of $44.3bn in the fiscal year 2013, contributing approximately 5.4% to the total African retail market size of $823.2bn.

Food and beverage accounts for 52.5% of total retail sales of the top 25 retailers. It was also the fastest growing retail sector with a 12.9% compound annual revenue growth, followed by clothing and accessories (10.2%).

Ten of the top 25 leading retailers come from countries outside the traditionally dominant South African market - three Zimbabwean retailers, two from Botswana and one each from Kenya, Morocco, Tunisia, Nigeria and Zambia.      
Botswana’s Choppies was the fastest growing retailer of the top 25 African retailers of 2015, recording 24.4% year-on-year growth for fiscal year 2013 over 2012. It was followed by Zambia’s Zambeef with 23% and Tunisia’s Société Magasin Général at 11.3%. The fastest growing SA retailer was Mr Price.

It is still a challenge to do retail business in Africa, Scholtz told Fin24.

"Retailers must, therefore, move from mere efficiency to a focus on agility. They also need to do smart planning and 'demand sensing' and get the fundamentals of the role of digital right," he said.



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