Ban on liquor sales during lockdown dents Shoprite’s growth
Africa’s largest retailer Shoprite says lockdown restrictions on liquor trade cut sales growth in its core SA market by more than half in the three months to September, partially masking the effects of market share gains.
In a trading update released in conjunction with the group’s AGM, Shoprite said sales growth in the quarter for its SA stores was up 3.3% year on year, but excluding liquor sales, it saw 7.2% growth. It said it had gained market share and it attributed local growth to increased sales at its mid-level and upmarket Checkers stores.
This suggests its strategy to open upmarket Checkers stores, under the FreshX brand, is working.
Nielsen does not publicly release market share data, meaning the media must rely on companies reporting on market share gains.
The owner of the Checkers and Usave brands welcomed President Cyril Ramaphosa's decision last week to lift all restrictions on bottle store trade, including ending the weekend sales ban.
“This is a meaningful change for the group and comes at a significant time as we begin our important festive season period” the group said in a statement.
The group's furniture businesses, OK Furniture and House and Home, grew 20.6% year on year, most likely due to pent-up consumer demand after stores were closed in April and May in the lockdown. Shoprite closed nine furniture stores and opened two.
Shoprite announced in August it was selling its Nigerian operations, as it reassess its Africa portfolio of stores. It said sale negotiations were ongoing and it hoped to finalise the sale by the March financial year-end.
It continues to face challenges trading in Africa, specifically in Angola, whose economy is linked to the oil price.
Shoprite said that even where there was good trade in the local currency, such as in Zambia, the gains were largely “eroded by currency devaluation which has negatively impacted translation into our reporting currency, the rand”.
Weak African currencies resulted in sales of merchandise in African operations falling 8.4%.
The group now has 12-million reward card members making it one of the largest loyalty programmes in the country. It launched its Checkers reward programme exactly a year ago and launched its Shoprite reward programme in October.
This attracted more than six-million new members in five weeks. It aims to be the country's largest reward programme with a target of 19-million members and use personalised discounts to increase customer loyalty.
In morning trade on Monday, Shoprite’s share was down 5.33% R136.63, on track for its worst day in six months.