How Africa's biggest retailer succeeded by backing the middle class
Shoprite started in South Africa’s Cape 38 years ago and now boasts 2,214 stores in countries across Africa a growth led by CEO James Wellwood Basson.
He believes the group’s competitors “took too long to realise the continent’s retail potential, or just used the wrong strategy,” according to an article published on QZ.com.
The CEO known everywhere as Whitey (a childhood nickname on account of his pale blond, now gray hair, that has stuck despite South Africa’s racial issues).
QZ focuses on Freedom Park, south of Johannesburg, which changed from shanty town to a lower middle class neighborhood with electricity, piped water, and tarred roads and saw a new Shoprite store open in November.
It says that this strategy to seek out Africa’s growing middle class consumers, in places its competitors have yet dared to venture, has helped drive Shoprite’s rapid expansion in the last decade. The food retailer has expanded from eight poorly performing stores worth 1 million rand in 1979 (around $1.2 million then), to become Africa’s largest retail chain, worth 113.7 billion rand ($8.5 billion) today.
Basson is set to step down after nearly four decades and his successor will be Pieter Engelbrecht, a 20-year Shoprite veteran who was once Basson’s assistant.
The low-cost grocer’s slogan promises “low prices for you,” and it has been able to keep that promise in South Africa where other retailers are struggling. It diversified its customer base by launching the less expensive USave format store, described by the group as an “ideal vehicle for the group’s expansion into Africa and allows far greater penetration into previously under-served communities in South Africa.” Then there’s also the higher-brow Checkers, aimed at upwardly mobile customers interested in ready-to-eat meals and a good wine selection.
Outside of South Africa, Shoprite and its affiliate stores are not necessarily low-cost, but they do offer a variety and an aspirational sophistication that local retailers and informal street markets simply can’t compete with, especially on shelf life. Among Africa’s growing middle class, going to Shoprite has become something of an outing for young families climbing the economic ladder in cities like Lagos or Accra. Heading to Shoprite doesn’t just mean filling your trolley with the month’s groceries, it’s going to the mall to grab a pizza or see a movie, giving consumers a reason to choose the South African brand over local rivals.