Checkers goes after Woolworths as it opens more high-end stores in South Africa

Shoprite has published its results for the 53 weeks to 4 July 2021, reporting an 8.1% increase in sales for the period.

Earnings before interest, tax, depreciation and amortisation (EBITDA) measured R15.1 billion, while group trading profit increased by 24.9% to R10.3 billion due to strong sales growth and gross margin expansion. The group’s trading margin improved from 5.3% to 6.1%.

Additional key financial information:

• The sale of merchandise increased by 8.1% to R168 billion;

• Diluted headline earnings per share from continuing operations increased by 20.1%;

• The board has declared a final dividend of 353 cents per share, resulting in a full-year dividend of 544 cents per share.

As a result of changed behaviour during the lockdown, customer visits for the year declined by 3.8%. However, the average basket spend increased by 13.6%, Shoprite said.

“Internal price inflation measured 3.8%, resulting from second-half inflation declining to 3.4% from the 4.3% reported for the first half.

“The full-year performance should be viewed in the context of a strong performance in the second half of the year on the back of a high base in the 2020 financial year, due to pantry loading experienced during the March 2020 period amid the South African Covid-19 lockdown regulations implemented from 27 March 2020.”

Chasing the premium market

Shoprite highlighted its recent success in the premium retail market – a segment typically dominated by companies such as Woolworths.

The group said that its strategy in South Africa of focusing on establishing a ‘fresh food theatre’ for its customer base continues to improve year on year.

“The success of the launch of the Xtra Savings Rewards Programme during the previous financial year in the Checkers chain has gained traction, and the 7.6 million Xtra Savings Rewards Programme customers as of 4 July 2021 contributed to the achievement of the record market share for the brands.”

Checkers, inclusive of Checkers Hyper, now operates from 268 stores in South Africa.

Key to Shoprite’s push into the premium food retail segment is the new Checkers FreshX store format.

Unlike traditional Checkers stores, the FreshX concept stores feature more upmarket furniture and signage, including benches and tables for customers to test samples.

Over the past year, Shoprite said the number of stores in the Checkers FreshX format has increased to 41 from 28 stores in the prior year. The group is targeting 80 of these stores.

The group has also seen success from its Checkers Sixty60 on-demand grocery delivery service.

“The service has outperformed all initial estimates and has been rolled out to 233 stores, an increase of 146 stores since the previous financial year. The service has won numerous accolades, disrupting the online grocery sales market in South Africa.”

https://businesstech.co.za/news/business/518880/checkers-goes-after-woolworths-as-it-opens-more-high-end-stores-in-south-africa/