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Shoprite targets 1,000 Usave stores

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Full-year HEPS up 7.2%

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Co to buy remaining 50% stake in Pingo

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By Nqobile Dludla

JOHANNESBURG, Sept 3 (Reuters) - Supermarket group

Shoprite plans to have a total of 1,000 Usave discount

stores over the next five years, stepping up a turf war for

South Africa's low-income shoppers, it said on Tuesday as it

reported a 7.2% rise in annual headline earnings.

Facing fierce competition from rivals Pick n Pay

and Woolworths, the country's biggest supermarket group

is pushing hard to expand its footprint into previously

unserviced non-urban areas through its Usave brand and also in

affluent areas through its upmarket Checkers business.

Shoprite's Usave, which has limited assortment at lower

prices, has 463 stores.

"Certainly I believe that there's room for at least a 1,000

of these stores in South Africa over the next five years,"

Shoprite Group CEO Pieter Engelbrecht told investors.

He added that his store expansion strategy is to expand into

areas where the retailer is underrepresented, including in

townships, where Usave has been recently expanding.

"The tougher it gets out there, the less disposable income

out there, the more relevant Usave becomes."

Pick n Pay wants to add 200 new discount grocery Boxer

stores by 2026. It currently has 477 stores, while SPAR Group

has plans to enter the discount grocery space.

According to data cited by Pick n Pay from Institute of

Grocery Distribution, discounter penetration of the grocery

market is only 7% in South Africa, well below many other

countries, providing an opportunity for retailers to grow in

this space.

Shoprite, with 3,638 stores in South Africa and nine African

countries, is also trying to appeal to the affluent income

customers, announcing that it was in advanced discussions to

purchase the remaining 50% stake in its last-mile logistics

provider Pingo.

Pingo supports its upmarket grocery delivery business

Checkers Sixty60, which has benefited from increased online

demand since the pandemic. In the 52 weeks to June 30, it grew

sales by 58.1%.

Engelbrecht said that the retailer wants to own the end to

end customer experience.

Earlier, Shoprite reported headline earnings per share from

continuing operations of 12.50 rand, with group sales rising by

12% to 240.7 billion rand, boosted by both its upmarket and

discount grocery brands.