(Bloomberg) — Shoprite Holdings Ltd. is seeing more customers return to stores and shoppers increasing the amount they put in their trolleys during each visit.
Africa’s largest grocer is benefiting from an easing in South Africa’s Covid-19 restrictions and the introduction of further convenience foods through its home-grown specialty ranges, Chief Executive Officer Pieter Engelbrecht said.
“Some of these products are really unique,” Engelbrecht said in an interview on Tuesday. “We decided that we didn’t want a private label that was just more of the same.”
The Cape Town-based owner of chains including Checkers and U-Save reported improved first-half profit and margin after further narrowing its focus to its home market. The group has seen continued momentum in its core local supermarket business in the second half, supported by the return to normal back-to-school trade and unrestricted liquor trading.
The stock rose for a second day in Johannesburg, bringing its gain since releasing results on Tuesday to 3% and its rise this year to 12%. That compares with a 3.3% drop year-to-date in the FTSE/JSE Personal Care, Drug and Grocery Stores index.
The Checkers Sixty60 one-hour grocery delivery app, which is now offered from 266 outlets, has also attracted new customers, Engelbrecht said. About a third of those using Sixty60 are people who have not shopped with the retailer before.
Woolworths Holdings Ltd., South Africa’s long-standing up-market leader which is rolling out an on-demand delivery service to challenge Sixty60, is struggling to find a one-hour food delivery model that is profitable.
“If you are converting your physical in-store customer to an online on-demand delivery customer, then you’re going to lose money for sure,” Engelbrecht said. “But if you are gaining new customers and incremental sales, then your fixed cost has already been covered and it’s profitable.”
(Updates with share price gain in fifth paragraph)
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