Shoprite sets its sights on Eastern Europe
By Palesa Vuyolwethu Tshandu - Aug 28th 2017, 08:31
On the drive to Shoprite's new distribution centre at Cilmor in Brackenfell, Cape Town, two Shoprite trucks are seen heading for Langa and Nyanga townships, two of the many emerging-market communities that form part of the group's largest market.
But as the group's expansion in previously disadvantaged communities becomes saturated, industry pundits are asking; "Where can they go to from here?"
And it seems that the answer may be ... Eastern Europe.
Newly appointed Shoprite CEO Pieter Engelbrecht, who has been in the job for about seven months, said on Wednesday that the next phase of growth for the group might be acquisitions of small businesses in Eastern Europe.
"We will always test the depth of the water with both feet. So we are not going to do a major acquisition and then put all our eggs in that basket, because if it fails then the company fails," he said.
"But we get a lot of proposals all across the world from smaller, family-owned companies of about 20 or 30 stores and those are attractive and we will consider those."
Engelbrecht, who recently went to Poland to meet property developers, said that country was just one of many Eastern European countries that Shoprite would consider expanding into.
The Shoprite Group, which has more than 2689 stores in 15 countries across Africa, has managed to buck the trend that is hurting many of its industry peers. This week it reported an 11.6% rise in trading profit to R8-billion, with turnover up 8.4% to R141-billion, for the 53 weeks ended July 2.
And to add salt to the wounds of its competitors, the group also reported that 6027 new positions had been filled in the past year, bringing the number of people it employs to 143802 - the largest private sector employer in South Africa.
Syd Vianello, an independent retail analyst, commenting on the group's interest in Eastern Europe, said: "If they are going to go there, they are not going to go on their own. They are not going to do like they did in India or Egypt - open a store from scratch and see how it goes."
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