Checkers takes aim at Woolies’ convenience market
By Hilton Tarrant - Feb 27th 2017, 11:43
Shoprite wants to beat the market leader at its own game.
Checkers, part of the country’s largest supermarket group Shoprite Holdings, has mounted an onslaught on Woolworths’ lead in the convenience food market. Its mission is deceptively simple: “Match [the] taste and quality of [the] market leader at better value”. Until recently, this segment had effectively been ceded by all competitors to Woolies, which built a R2 billion-a-year business on it.
Shoprite notes that there is a “trend towards fresh, convenience and added-value foods”. What it doesn’t mention explicitly is that this is a global phenomenon. Pick n Pay attempted an entry into the ‘ready meal’ about five years back and has recently make a second run at it. Spar, due to largely structural distribution reasons, is relatively limited in what it’s able to do. It has had some success with its Freshline range.
In the latter half of last year, Checkers has made a decisive and aggressive entry into this segment of the market. It launched 135 new ‘convenience’ products in 2016. These range from ready-to-bake pizza, salads and sandwiches, typical ‘microwave meals’ like pastas, to soups and prepared veggies. In this range, it launched a number of ‘Ready-to-Braai’ prepared meats and side dishes.
Competing with Woolworths in the upper segment of the market is not only about convenience, however. But it’s a noticeable offering to be missing. Woolies came at this from the other direction and realised that it needed a more complete supermarket offering. This is why, five years ago, it started building (and expanding into) bigger supermarkets with larger ranges where customers can complete their shop.
Generally, of course, we still shop at more than one store. So, you’ll find people shopping at both Woolworths and Checkers or Woolworths and Pick n Pay or Woolworths and Spar (or even three or four of these).
One of Shoprite Holdings’ six stated “strategic focus areas” is to continue to grow its share of wallet amongst so-called “LSM 8-10” shoppers. It argues that Checkers has seen the “largest gain in LSM 8-10 [shoppers] since 2011”. According to the All Media Products Survey (Amps), Woolworths serves 67.1% of this market, while Checkers is at “only” 44.7%.
Nearly 2 million (1.9 million) shoppers in the LSM 8-10 bracket who shop at Woolworths, Pick n Pay and Spar (labelled ‘Competitors “A”, “B” and “C” in Shoprite’s results presentation) also shop at Checkers. This is most pronounced in the Woolies base, where roughly six out of 10 also shop at Checkers.
Getting convenience done right is not easy. This effectively has to be reverse-engineered into a supply chain that’s been optimised to deliver groceries. This speed with which Shoprite managed to do this is notable, given that it has approximately 200 Checkers and nearly 50 Checkers Hyper stores across South Africa.
On the plus side, it’s gotten convenience products into stores and “now sells more in a day than [it] sold in a month”. Its prepared meat and braai products seem, anecdotally at least, to have been very well received. Beyond the 135 products already in stores, it says it has a pipeline of “110 new products currently in development”. Presuming these hit shelves and fridges this year (with no doubt more to come), it’ll have effectively doubled its range!
Entry into this segment hasn’t been without hitches. Stocking and ranging varies widely from store to store and in certain outlets, the ranges aren’t working as well as in others. Here, it’s been shrewd and marks down products that have reached their ‘sell-by’ dates (on the day they do) by 50%. This cuts back on wastage and incentivises customers to try products that likely wouldn’t have.
It’s not clear at this stage whether or not Checkers is producing all of these products in-house (it owns fresh produce giant Freshmark and it launched a food services business serving the hospitality and catering industry in 2011, which is useful). Woolworths, for example, contracts out production to a number of suppliers, including (listed entities) RCL Foods and Rhodes Food Group.
Can it get its share of the LSM 8-10 market to over 50%? Almost certainly. But closer to 60%? That’ll be far tougher. Its next generation stores (like Mall of Africa) are truly world-class but it’s about refurbishing and upgrading the remainder of its real estate which look a lot more like Shoprite stores than flagship, brand new Checkers Hypers. Pick n Pay has not been sleeping either, with new-look, refurbished stores popping up all over the place. And Woolies is, well, Woolies.
Checkers’ in-store offering is, largely, sound. Its staked out a claim in the cheese space and its butcheries and seafood counters are strong. The bakery, however, needs a little more work. But, price (and price perception) trumps almost everything, especially in a moribund economy. There, Checkers has done the hard work. Copyright © 2017 Moneyweb Holdings Ltd. All Rights Reserved.
Checkers brings world-class retail to Constantia with new flagship store
27/11/2019 - 13:01
Checkers has opened the doors to its state-of-the-art 2 330 m² flagship supermarket at the Constantia Emporium as the retailer continues to take innovation to new heights.
Woolworths carves out market share in SA
27/11/2019 - 10:11
In Australia, David Jones's sales declined 2.1%, with the company saying a store refurbishment contributed to the decline.
Push and pull strategies work together to keep consumers coming back for more
26/11/2019 - 10:20
The retail sector is under increasing pressure as consumers have shrinking disposable income in a strained economy. Maintaining share of wallet is critical. Relying solely on a push route to market strategy from manufacturers into retailers is not enough to get consumers buying products. A pull strategy needs to coexist with the push to drive brand consumption. Integrating these strategies requires intelligent and insightful decision-making. This, in turn, requires data generated through smart technology which provides line of sight across the value chain from manufacturer to distribution, retailer to the consumer.
Exclusive leases must fall: Commission cracks whip on Shoprite, Pick n pay, Spar, Woolies
26/11/2019 - 09:57
The Competition Commission Inquiry into Grocery Retail, published on Monday, called for an end to the exclusive leases negotiated by national retail chains in all shopping malls across the country in a bid to open up access to markets for smaller players.
Today’s customers are loyal to speed and convenience, not brands
25/11/2019 - 11:15
Consumer expectations are rapidly shifting as technologies such as mobile, geolocation, social media and increasingly, Internet of Things devices and wearables, connect people to a world of easily accessible information and convenient services. With the ability to browse, compare and order with a few swipes and taps, consumers are becoming trained to value convenience and service above nearly anything else.