Due to its effective retail strategy and the success of its Sixty60 grocery delivery app, Checkers has been steadily capturing market share from Woolworths Food.

Woolworths recently released its full-year financial results for 2024, which showed a modest turnover growth of 4.3% from R72.3 billion to R76.5 billion. The retailer's profits took a significant hit, declining by 49% from R5.1 billion to R2.6 billion. The group's operational costs rose by 11.2%, largely due to a substantial increase in store-related expenses. The best-performing segment of the group is Woolworths Food, which has experienced an average revenue growth of 7.9% over the past 5 years.

During the 2024 financial year, Shoprite/Checkers, announced robust performance with a 12% increase in revenue. The company saw a 11.7% growth in trading profit, reaching R13.40 billion, while its annual profit also increased by 4% to R6.22 billion.

Checkers and its counterpart Checkers Hyper experienced a 12.3% increase in sales, introduced 26 additional stores, and completed renovations on 12 existing locations.

According to Pieter Engelbrecht, CEO of Shoprite, the increase in sales reflects a substantial increase in spending from our primary South African supermarket customers, totalling R21.4 billion.

He expressed that this was the ultimate recognition for our hard work, stemming from our exceptional execution, originality, and unchanging commitment to serve.

The match between Checkers and Woolworths Food.

During the past ten years, Shoprite has made it a priority to expand its presence in the high LSM market (The Living Standards Measure, used in South Africa to classify standard of living. Utilising both its traditional Checkers outlets and the newer Checkers FreshX stores, the retailer has appealed to affluent South Africans with upscale offerings.

The success of the retailer's Sixty60 grocery delivery app has also aided in securing a portion of the market share in the upscale segment. According to Daily Investor's calculations, Checkers Sixty60 generates approximately R10 billion in annual sales and is also a highly profitable platform.

Over the last five years, Woolworths Food has seen a decline in market share compared to Checkers, decreasing from 43.1% in 2019 to 37.8% in 2024.

Learning from Shoprite

One factor contributing to Woolworths Food's decline in market share is its parent company's diversification into Australian retail venture.  Time and resources were spent in resolving this issue. In 2014, Woolworths acquired David Jones for R21.4 billion, only to later sell it for a mere R1.1 billion after eight years. This decision is widely considered to be a major misstep.

According to Wayne McCurrie of FNB Wealth and Investments, Woolworths could benefit from following Shoprite's example and divesting themselves of unprofitable business units. Shoprite has entered into an agreement to sell its furniture business, which includes the OK Furniture and House & Home brands. The furniture sector did not substantially benefit the Shoprite Group and was drawing focus away from its primary operations.

Shoprite, the parent company of Checkers and Usave, primarily operates in the realm of food retailing. It boasts extensive knowledge and experience in this industry, with the majority of its profits stemming from food sales.

According to McCurrie, Woolworths can take a lesson from Shoprite's approach. He noted that instead of struggling with furniture sales, Shoprite has chosen to divest from that aspect of their business and focus on their strengths.

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