Advertise with fastmoving.co.za
 
 

SHOPRITE HOLDINGS LTD

RETAILERS SOUTH AFRICA

Turnover: R 145.300bnTrading Profit: R 8.100bnTrading Margin: 5.57%
Stores: 2,843Employees: 147,478
Listed: YesEBITDA: R 10.100bnHEPS: 5.40 cents
 
Shoprite Holdings Ltd

INTRODUCTION

Shoprite Holdings Limited is an investment holding company whose combined subsidiaries constitute the largest fast moving consumer goods (FMCG) retail operation on the African continent. We operate a total of 2 301 corporate (owned) and 388 franchise stores and 19 trusted brands. We provide employment to 143 802 people across our operations in 15 countries from Cape Town to Accra and the Indian Ocean islands.

While the Group’s primary business is food retailing, our offering extends to a broad range of goods and services including household products, furniture, pharmaceuticals and financial services, amongst others. At the heart of our offering is an unwavering dedication to providing the lowest prices to people of all income levels across Africa.

We achieve this by pursuing efficiency in everything we do. Our advanced distribution centres and sophisticated supply line infrastructure give us greater control over our operations. This empowers us to overcome economic challenges without compromising on quality.

By setting the conditions for enduring success, we can continue to provide affordable food to our communities invest in social upliftment and contribute to the African economy − all while creating value for all our stakeholders.

 

STRATEGY

Delivering the lowest prices through increased efficiency

We pursue efficiency in everything that we do. By streamlining our supply chain, upgrading our
operations and driving down costs, we are better able to deliver the lowest prices in a first-world shopping environment to consumers across Africa.

Our advanced supply chain

Shoprite improved its competitive advantage and sustainability by taking control of its supply chain in line with international best practices in retail and today not only commands a leadership position in the industry but has also become the African continent’s largest distributor of grocery products. Our state-of-the-art distribution centres and supply line infrastructure give us greater control over our inventory across 15 African countries. This empowers us to introduce a number of cost-saving efficiencies without decreasing margins or compromising on quality.

Fully-owned fleet

Our large fleet of trucks and trailers operates 24 hours a day, seven days a week to ensure maximum availability of goods that are delivered on a time schedule. Sophisticated transport route planning and scheduling software optimises store deliveries and reduces the number of trucks on the road, thereby reducing congestion, lowering our carbon footprint and saving costs.
This efficient supply chain infrastructure also empowers small-to-medium sized suppliers to deliver merchandise directly to our centres and avoid the need to invest in either warehousing or vehicles. Our trading partners are a vital link in our supply chain and we work closely with them to create mutually beneficial relationships that go beyond simple supply and demand management. We have been pioneering reverse logistics initiatives that enhance our sustainability and environmental position, in line with international best practices. Our focus is on re-use, recycle and the reduction of waste to landfill.

Retail storage, availability and information technology

Our advanced supply chain also presents the opportunity to re-engineer our retail stores and optimise the use of retail space by dedicating the minimum area to storage and the maximum area to trading space. Our technological platforms are continuously being refreshed to keep us abreast of technological developments. A new ERP system and investments in digital transformation have led to increased efficiencies, more collaboration and better innovation across our businesses. Continuous investment in customer science and big data allows for improved decision making in terms of promotions, products, store layouts and pricing.

Centralised distribution

The Group has invested in an extended centralised distribution network that enables us to seamlessly manage the supply of products to our stores across the continent. As the first South African retailer to receive the renowned ISO 9001 accreditation for import and export handling, we continue to pursue our strategic lead in supply chain management. Our International Trade Department sources products from anywhere in the world with extreme efficiency, assuring our customers of choice, availability of products and value for money. We have invested substantially to create a network of advanced distribution centres. Their accompanying transport operations are supported by sophisticated information management systems. A substantial portion of the investment in information technology and logistics infrastructure has been devoted to upgrading and expanding our distribution network.
 

CEO REPORT

At the Shoprite Group, we no longer consider poor trading environments as exceptional and accept that volatile and difficult trading conditions are, in fact, the prevailing milieu. We choose to focus on serving our customers, remaining resilient, advancing our business, and creating growth opportunities. The Group’s financial and operational performance for the year to 2 July 2017 illustrates how our unique positioning and drive for excellence has enabled us to produce an industry-leading performance, notwithstanding economic headwinds.

We have gained market share in a contracting economic environment, indicating growing customer trust in our products and services; and

Our multi-brand strategy and geographic diversity has enabled us to achieve sales growth of 8.4% to R141 billion. Our resilience is built on the energy, commitment, focus and determination of our 143 802 colleagues across all our businesses and 2 689 stores in 15 countries. We remain convinced that through customer service excellence, focusing on and being committed to our employees, working hard for our shareholders, and serving our communities, we will continue to grow.

Customers

Everything that we do is, first and foremost, geared towards improving our service to our customers. This focus has made us Africa’s most trusted retailer. Off a high base of regular customers, which is more than double our nearest competitor, we were still able to grow market share in South Africa by 0.45 percentage points to 31.9%. Over the past year, 2.4% more customers voted with their feet and wallets to buy at our stores and we processed over 1 billion transactions or 100 per second. This proves that we are giving our customers what they need at prices they can afford. Our efforts over many years have ensured that they trust us to provide for their households. Initiatives including our bread and food subsidies, R5 Deli meals and unflagging efforts to keep prices low are helping financially-stretched customers to survive.
Various fresh and convenience food initiatives and store upgrades have resulted in a significant increase in LSM 8 – 10 shoppers. We have more upmarket customers than ever before putting their trust in Checkers, and we have worked hard to gain that trust.

Employees

We are South Africa’s largest private employer and one of only a few institutions that are still creating jobs in a recessionary environment with an unacceptable level of unemployment.
We created over 6 000 new jobs in the financial year and provided various job opportunities through an investment of over R130 million in bursaries since 1995. We ensure that team members are given every opportunity to progress through training interventions in-house and at academic institutions, and implemented 713 103 training interventions over the year. We are striving for racial and gender equality; 65% of our employees are women and 97% of our employees are from designated groups. We are doing everything we can to bring promising black and female colleagues up through the ranks.

Shareholders

We truly appreciate the support from our loyal shareholders and we have worked hard to achieve relatively strong top-line growth across regions. We are particularly pleased with our trading margin which is exceptional, relative to the industry, both nationally and globally. We have delivered margin improvement consistently over many years through strict cost control, improved planning, supply line efficiencies and increased innovation.

These and other achievements highlighted in the financial review have been acknowledged in
the share price, which has increased 20% in the financial year against an almost flat performance of the JSE All Share index. We remain a high growth company and continue to look for growth opportunities in the markets where we operate and further afield. We are considering the next leap we need to make to continue our growth trajectory.

Society

Our extensive work in and commitment to the communities in which we operate is a critical element in sustaining our business. We strive to be a respected corporate citizen, to serve communities and plant a legacy. Under the banner #ActForChange, we aim to help to alleviate hunger through a number of initiatives. These include our Mobile Soup Kitchens subsidised bread and food and R5 Deli meals. We donated R310 million of surplus food over the past three years to hundreds of verified non-profit organisations for distribution to the underprivileged.

We help set up sustainable food gardens for schools, are active in disaster relief and respond to the needs of our communities, including recruiting staff from the communities where we establish stores. We work to empower women in small business and identify opportunities for them to become suppliers. We continue to reduce energy consumption at our stores, reduced food waste by R250 million over two years, actively recycle at all of our distribution centres, and aim for zero waste to landfill. We are determined to reduce plastic waste and aim to have all shopping bags made from 100% recycled materials within a year. Checkers, which introduced the recyclable bag in 2013, has diverted an estimated 7 350 tonnes of plastic waste from landfill.
The Group has embarked on a sustainable seafood programme, joined regulatory bodies monitoring sustainable supply of product, and disclosed our carbon emission. We believe that
reporting transparently and responsibly increases consumer and community trust in us
as responsible corporate citizens.

Suppliers

We continue to enjoy a professional relationship with our more than 23 000 suppliers and supplier satisfaction remains at high levels as we continue to deliver positive volume growth in a weak market. We are tough but professional, and do everything we can to ensure the success of our suppliers, to the extent that we work with over 1 000 growers, encourage empowerment of women and promote entrepreneurial businesses and SMEs in our quest to deliver our ultimate promise of sustainable prices to the consumer. We are sharing more statistical customer data with suppliers to the benefit of customers frequenting our stores. We source products from 43 countries to supplement choice but prioritise local procurement and source 90% of all products locally. Imports are, as much as possible, skewed towards African suppliers, from whom we source flowers, fish, fruit and vegetables.

Innovation

We run an efficient business but continue to modernise and have invested in a new technology platform to improve our agility. In this process, we expect better collaboration, information sharing and productivity increases. Our selected product suite will give us world-class functionality, lower costs, reduce risk, and improve security and disaster recovery. Continued investment in our central distribution network, including the R1.6 billion, 123 000 square metre Cilmor facility adjacent to our home office in Cape Town, enables us to further improve stock availability and bring additional benefits to small suppliers. We continue to innovate with new private label products, convenience food, fresh food and healthy ranges.

The future
The Group’s diversified portfolio enables us to maximise business performance during bad times. We believe that no matter the environment, our unique structure and strategy means there is always more than one lever to pull. There is no doubt, however, that momentum in the rest of Africa has slowed as economies, including the fast-growing Nigeria and Angola, have come under some strain. Currencies in the countries in which we operate devalued sharply against the rand. We stand firm on our investment in Africa, with a population which is expected to double by 2050 and become increasingly urbanised, and we continue to invest where others won’t.

We are not restricting internationalisation to Africa alone, and other emerging markets outside the continent are under investigation. The implementation of our six drivers of growth – a customer first culture, growing LSM 8 – 10 share of wallet, developing private label, a stronger franchise offering, strategic footprint expansion and leveraging our African advantage – is gaining momentum. Within six months we have seen palpable progress on all fronts, proving that with effort and innovation, there is still significant room for growth.

Acknowledgement

My energy and enthusiasm have been driven and inspired by how each and every member of the Shoprite team has responded to the call for all of us to ensure that every single customer leaves our stores happy. We continue to empower everyone in the company for the benefit of our customers and I would like to thank every one of our committed staff for rising to the challenge and living up to my very high expectations. I am most grateful to our suppliers and stakeholders who continue to have trust in our business. At the Shoprite Group, we first and foremost owe immense gratitude to our customers for trusting our brands and relying on us to provide for their families. We will continue to do everything we can to retain and grow that trust.
Read more

CHAIRMAN'S REPORT

Our trading environment

There is little doubt that the absence of growth in the economy is putting South African consumers under enormous pressure. In the course of our work in the communities in which we operate, we are constantly aware of heightened levels of financial distress. South Africans have recently had some cause to contemplate what has gone wrong in our society and economy to have resulted in this dismal outcome. Government’s new Inclusive Growth Action Plan and the South African Reserve Bank’s decision to start cutting interest rates reflect a recognition by the state and regulators of the need to stimulate economic growth following the economy’s descent into recession. But with a GDP growth outlook of less than 1% at best, and with our foreign currency debt downgraded to junk, these steps are widely acknowledged as palliative in a situation where intensive care is required, coupled with innovative thinking. At the heart of South Africa’s challenges is widening income disparity caused by rampant unemployment and poor education. The unemployment rate for the first quarter of 2017 was 27.7%, the highest it has been in 14 years. Of more concern is an unemployment rate among 15 to 34-year-olds of 38.6%. Various local and international organisations estimate South Africa’s youth unemployment at over 50%. Attempts to find practical solutions to our social and economic challenges have been futile simply because the wrong questions have been asked. There is nothing structurally wrong with South Africa. The issue is that we are not following the policies that could so easily make life so much better for all South Africans. The right question is not: “What do our people want?” Nor is it: “What do our people need?” The right question is: “What can our people not do without?” The answer is self-evident – our people need jobs. Once we arrive at that answer, then everything else falls into place. Everything our government does should be determined by whether it creates or destroys jobs.

If guided by this test, we will arrive at the right solutions and focus on implementing policies and actions which bring more people into the economy. In our Group, we constantly ask ourselves if what we are about to do will be good for our customers, employees, suppliers, shareholders and the communities in which we operate. In doing so, we can continue to operate a successful business which is able to create jobs. The Shoprite Group is the country’s largest private sector employer, employing over 143 000 people and creating between 5 000 and 12 000 new jobs a year. We walk the talk. It is part of our DNA to play a very active role in society beyond creating jobs and advancing careers. Our wide-ranging initiatives to support the communities we operate within are discussed in detail in this report.

Beyond South Africa

We are doing this, increasingly, across the continent. As the continent’s largest food retailer, our commitment to African expansion and the provision of food and household goods at low prices remain our priorities. In the bulk of the commodity-linked countries in which we trade, economies have experienced a downturn. Yet they are still among the highest growth regions in the world, and there is no reason at all to turn negative on what Africa has to offer. Anyone taking note of demographic projections knows that Africa will be the world’s most populous region by the turn of the century. We remain committed to being a leading player in this huge market. South Africa and the broader African region are going through a relatively tough time. But we have been through tougher times before, and it will get better. Our continued faith in the future of this continent is borne out by the opening of a net 138 new stores in the past year. Including ancillary outlets, we are getting close to our aspiration of opening one outlet a day.

The future

As a Group, we expect continued growth in the next year and in years to come. Simple arithmetic will tell you that to grow a R100 billion company by 10%, we must create additional turnover equal to more than the market capitalisation or turnovers of a large percentage of the companies on the JSE. This is the scale of the Shoprite Group, yet off this high base, we do continue to grow and to look for and exploit further growth opportunities.

Management changes

Whitey Basson has retired as Chief Executive after 39 years with the Group, leaving a wonderful legacy. It is worth repeating that he started out his leadership role with a net R1 million of shareholders’ funds and left a Group with a market capitalisation of over R98 billion. This is, without doubt, one of South Africa’s greatest business achievements, and I am proud to be associated with him. He built a young management team very ably led by Pieter Engelbrecht, who will no doubt leave his imprint in years to come. We are in transition into a whole new era of doing business and I am confident that we have built up a talented team within the business to deal with it.

Two esteemed board members, Messrs Brian Weyers and Aubrey Karp, who joined the Group in 1980 and 1990 respectively, also retired during the year. Brian Weyers served as a director of Shoprite Holdings since 1997 and Aubrey Karp was appointed to the board in 2005. We also thank them for their valuable contribution over the years.

Acknowledgement

In what can only be described as an exceptionally challenging year, I would like to recognise and extend my deepest gratitude to Shoprite’s management and staff, my fellow board members, our shareholders, our suppliers and our customers who put their trust in us every day.


Read more

SUMMARY

Our banners / stores

Checkers

Checkers


General Supermarkets
209 Stores
Checkers Hyper

Checkers Hyper


Large Format Hypers
37 Stores
House & Home

House & Home


Homeware, Appliances & Electronics
37 Stores
Hungry Lion

Hungry Lion


General Supermarkets
197 Stores
Liquor Shop

Liquor Shop


Liquor
390 Stores
MediRite

MediRite


Pharmacies
162 Stores
OK Franchise

OK Franchise


Convenience Stores
388 Stores
OK Furniture

OK Furniture


Homeware, Appliances & Electronics
388 Stores
OK Power Express

OK Power Express


Homeware, Appliances & Electronics
388 Stores
Shoprite

Shoprite


General Supermarkets
613 Stores
USave

USave


Hard Discounters
367 Stores

Related News

LiquorShop extends its low price promise to customers with the opening of its 500th store
23/08/2019 - 08:58
LiquorShop, the Shoprite Group’s chain of stand-alone liquor outlets, marked a major milestone with the opening of its 500th store at the Philippi Plaza Shopping Centre in Cape Town.

Shoprite-supported school garden feeds young minds and stomachs
22/08/2019 - 10:04
The Johan Hus Primary School is a small school situated at the foot of the picturesque Tsitsikamma Mountains in Humansdorp in the Eastern Cape. Here learners not only learn about the environment in a hands-on manner, but the crops they grow are also used in the school kitchen to feed all the pupils.

Shoprite's debt shocker
22/08/2019 - 08:57
Debt-leery investors, spooked by one local corporate car crash after another, have found another share to dump: mighty Shoprite.

The race for reach is on - Shoprite Group CEO
21/08/2019 - 09:43
The race for reach is on, according to Shoprite Group CEO Pieter Engelbrecht.

Shoprite earnings take knock on non-SA operations
20/08/2019 - 10:39
Shoprite’s shares fell to their worst level in more than three years after Africa’s largest food retailer reported a 20% drop in earnings and said it saw no immediate prospects of its troublesome non-SA operations returning to profitability.

Shoprite basks in sales glory
02/08/2019 - 10:19
The Shoprite Holdings share price surged more than 10 percent after Africa's biggest retailer reported a strong half performance in sales for the 52 weeks to end June, mainly driven by its core market, the Supermarkets RSA.

Checkers' refurbished computers find a new home at local school
02/08/2019 - 09:35
A new school in Brackenfell is benefiting from a donation of refurbished computers from Checkers and Just PCs.

Shoprite is k’necting its tech-savvy customers
01/08/2019 - 11:19
The Shoprite Group is making it easier for its customers to access services such as global money transfers, cellphone purchases, bill payments, tickets and insurance with the launch of its new k’nect stores across the country.

Shoprite rallies, jumps most since 1997
31/07/2019 - 10:25
Shoprite rallied the most in 22 years after Africa's largest food retailer said second-half sales climbed as it took market share.

Shoprite’s shares leap 15% on Tuesday despite lower earnings
30/07/2019 - 09:56
Grocery retailer Shoprite, whose chains include Checkers and OK Furniture, says earnings declined by up to a fifth in the year to June because of trading losses in the rest of Africa and higher costs in SA.