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Shoprite: South African Retailer’s

Growth Strategies
“We continue to benefit from our strategy to grow profitable market share. The closing of unprofitable
locations, repositioning of Checkers and sales growth from Africa have all contributed to our earnings
growth. Our footprint has grown across Africa and eastwards to India. We are well placed to apply our
proven business models in these higher growth markets.”1
– JW Basson, CEO, Shoprite Holdings Ltd
“Focused Strategy for Growth - Increased efficiencies, improved distribution and reduction in shrinkage
contributed to continued operating margin improvements.”2

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In the late 1970s, Shoprite Holdings Ltd (Shoprite group) [Exhibit 1] started off with a chain of eight supermarkets in

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Western Cape, South Africa. With strategic acquisitions of retail chains in South Africa and expansions across the African
continent, by 2004, the company was the largest food retailer in Africa3 with operations in 16 countries. Shoprite group runs
different retail formats under different brand names like Shoprite, Checkers, OK and Usave, which cater to customers from
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different income groups [Exhibit 2]. Shoprite has always aimed at providing high volume, high quality at low yet competitive
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prices to its customers. This strategy enables the Shoprite Group to attract 39 million customers per month. Despite
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bureaucratic hurdles, trade restrictions and inflation, by June 2004, Shoprite had 65,000 employees and more than 900
outlets in Africa [Exhibit 3] reaping revenue of R27.1 billion4 (R stands for South African currency Rand)- a massive growth
since its inception.

The Journey to Become Africa’s Largest Retailer

Originally established as Shoprite in 1967, this retailer became Shoprite Group (Shoprite) in 1979 with the acquisition
of eight supermarkets for R1 million5 in Cape Town, South Africa. The group then had a turnover of R10 million.6 Within four
years of its inception, Shoprite had 21 outlets with a 600%7 increase in turnover. In 1984, Shoprite made its first acquisition
by acquiring six food stores from Ackermans. In 1986, Shoprite was listed on the Johannesburg Stock Exchange (JSE) and
during the same year, the group opened a store in Bloemfontein, the capital of Free State.8 By the end of 1986, Shoprite had
33 outlets with a turnover of R126 million. Shoprite’s expansion continued throughout the late 1980s and in 1990, the group
increased its number of stores by acquiring 27 outlets of a Western Cape based chain of supermarkets - ‘Grand Bazaars’.
With this acquisition, Shoprite gained a national footprint across South Africa.

1
“Shoprite to expand African Presence”, www.bday.co.za
2
“Annual Report 2004”, www.shoprite.co.za
3
“About Us”, www.shoprite.co.za
4
Ibid.
5
“25 years in perspective, Annual Report 2004”, www.shoprite.co.za
6
Dave D. Weatherspoon and Thomas Reardon “The Rise of Supermarkets in Africa: Implications for Agrifood Systems and Rural poor”, www.msu.edu, May 21st 2003
7
“Annual Report 2004”,op.cit.
8
Free State, a province of South Africa is located at the centre of South Africa. The province with 30,000 farms is responsible for 70% of South Africa’s grain consumption. Before 1995, the
province was known as Orange Free State.

This case study was written by R Umashankar under the guidance of Sumit Kumar Chaudhuri, IBSCDC. It is intended to be used
as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The
case was compiled from published sources.

© 2005, IBSCDC.
No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever
without the permission of the copyright owner.

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 305-159-1

Shoprite: South African Retailer’s Growth Strategies

In 1991, Shoprite acquired a large yet ailing supermarket chain of 169 stores called ‘Checkers’, in South Africa for R55
million.9 Checkers’ catered to customers in the middle to high-income groups unlike Shoprite supermarkets, which catered
the low to middle-income groups. Checkers also provided a wide range of food items to its customers with its main focus on
fresh produce. With this acquisition, Shoprite widened its geographical presence as well as seized the opportunity to cater
to different segments of customers. After the acquisition, the Checkers brand name was retained and the supermarket chain
continued as ‘Shoprite-Checkers’. The acquisition of Checkers chain of supermarkets increased Shoprite’s outlets to 241.
To increase its distribution system, in 1995, Shoprite acquired ‘Sentra’, a central buying organization. This organization
was used by as many as 550 retail members to procure their products. With Sentra’s acquisition, Shoprite had access to
continuous stock of goods and this provided it a platform to enter into franchising business. The same year, Zambia’s
privatization programme enabled Shoprite to start its supermarket operations in that country [Annexure 1]. It acquired seven
government owned retail shops in Zambia.
Shoprite’s horizontal integration continued in the late 1990s. In 1997, Shoprite acquired ‘OK Bazaars Group’, a chain of
loss making [Annexure 2] supermarkets from South African Breweries (SAB).10 JW Basson, CEO of Shoprite, said that the
acquisition was “an opportunity to expand its influence in the supermarket industry.”11 Shoprite gained access to 157

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super- and hyper sized supermarkets and 146 furniture stores12 from the OK Group. Commenting on the sale of OK

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Bazaars, SAB stated, “the disposal relieved it of a loss-making investment that has required substantial cash resources and
management commitment over a number of years.”13 Shoprite restructured OK Bazaars and began to operate it as a
full-fledged franchisee operation. Commenting on the restructuring, JW Basson said, “We closed 29 stores, opened 20 new

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ones and converted another remaining 79 OK Bazaars stores into Shoprite stores – all in just over 18 months. We had to
refurbish stores, shut down, convert and rebuild. It’s more than painting a Shoprite sign over an OK sign.”14 Through this
restructuring, by August 1998, Shoprite was able to turnaround loss making OK bazaars and obtain cost savings worth
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R200 million.15 Due to continuous acquisitions, Shoprite also had the responsibility of managing its own as well as leased
properties. This was taken care by ‘Shoprite Checkers Properties Ltd’, which also looked after procurement and development
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of new sites for accommodating its new super markets. Shoprite also entered the ‘Quick Service Restaurant Market’ in the
late 1990s by opening its first fast food outlet ‘Hungry Lion’ in Stellenbosch, a town in Western Cape province of South Africa.
Since then, the fast food outlet has been on an expansion spree providing innovative products to its customers across Africa.
However, as Shoprite’s expansion in South Africa continued, there came a gradual decline in the formal retail sales16
in the country in the 1990s [Annexure 3] and Shoprite decided to concentrate on international expansions. JW Basson said,
“We have to accept that as far as future progress for the Company is concerned, geographical expansion is becoming
increasingly difficult as the market in South Africa is steadily reaching saturation point. We see that our newer and smaller
formats mainly will render future growth. The group is also set for further advancements in Africa which currently contributes
6.6% to group turnover.”17

International Expansion Strategies

“Shoprite’s decision to enter the African market was based on the fact that the group is well equipped for the Africa
continent not only understanding the market but also being better positioned than most international companies to handle
the difficulties of service and logistics specific to Africa.”18
– James Wellwood Basson, CEO Shoprite Holdings Ltd
In 2000, Shoprite established its first store in Bulawayo, the second largest city in Zimbabwe. Shoprite supplied
foodstuffs, household items through its retail mart at relatively low-prices, which were then in short supply in Zimbabwe.

9
Klein, Marcia “Shoprite plays role of knight in armour to struggling OK”, www.btimes.co.za, November 9th 1997
10
SAB is one of the world’s largest breweries South Africa with 98% market share. SAB was renamed to SAB Miller Plc in 2002
11
“Shoprite plays role of knight in armour to struggling OK”, op.cit.
12
“History”, www.shoprite.co.za
13
“Shoprite plays role of knight in armour to struggling OK”, op.cit.
14
Klein, Marcia “Huge theft tarnishes Basson’s Superman image”, www.btimes.co.za, August 29th 1999
15
Ibid.
16
South African retailing is majorly divided into two sectors: The Formal and the Informal. Formal Sector comprises of Hypermarkets, supermarkets and convenience chain stores. The Informal
sector consists of majorly hawkers and street vendors
17
“Financial Results For The Six Months To End December 2000”, www.shoprite.co.za, February 21st 2001
18
“CE of Shoprite Holdings Ltd discusses opportunities to expand operations in Africa and India”, www.twst.com, May28th 2003

2
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Shoprite: South African Retailer’s Growth Strategies

However, Shoprite’s expansion in the country did not progress further due to tough competition from Zimbabwean retailers
and unstable political conditions that discouraged foreign investments.
In November 2000, Shoprite extended its supermarket chain to Kampala, Uganda. With Shoprite’s entry in the Ugandan
market, even the most upmarket groceries had to change their marketing strategy for food items. Shoprite lured the local
consumers by providing neatly packed food items (particularly beef) in transparent polythene. Shoprite also provided SIM
cards to its consumers who possessed cellular phones. Shoprite’s products were also cheaper than those available at other
supermarkets in Uganda. For example, a kilogram of icecream at Shoprite would cost only $3, while the same was sold at
$1119 elsewhere in Kampala. JW Basson said, “Our presence has given Uganda consumers access to local and imported
products at the lowest prices and will create jobs and contribute to Uganda’s economy.”20
In 2001, Shoprite entered the North African Market. Shoprite opened its supermarket in Cairo, Egypt. Shoprite entered
Egypt through joint ventures with Egyptian firms. Instead of competing with retailers like Metro and Alfa Markets, Shoprite
competed with Egyptian wholesalers. Shoprite’s procurement of goods for the Egyptian market was through direct imports
from SouthAfrica, Singapore and Italy. This strategy enabled Shoprite to provide goods at competitive prices. By mid-2001,
Shoprite had more than 60 outlets in nine African countries outside South Africa.

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As Shoprite’s international expansion continued, it became pertinent for the group to refocus its marketing strategy in its

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domestic market as the conventional supermarkets had reached a saturation point in South Africa. As a part of this strategic
planning, in 2001, Shoprite decided to reposition its Checkers brand, which had been, till then, under the brand name

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‘Shoprite Checkers’. Checkers brand was separated from Shoprite and was positioned for more affluent clients. “Consumers
have widely welcomed the new positioning of Checkers, its more attractive appearance and wider range of products.”21
To increase its operations outsideAfrica, in 2002 Shoprite acquired the ‘Champion supermarket Group’ of Madagascar,
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an island in the Indian Ocean. Shoprite also acquired four supermarkets and one distribution center in Antananarivo and
Tamatave respectively. During 2002, Shoprite increased its number of stores in Uganda and Egypt. In November 2002,
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Shoprite entered Mauritius by establishing Shoprite Hyper at Trianon, the first of its kind beyond South Africa. By the end of
first day of trading, Shoprite had achieved the highest turnover ever in a single day. Brian Weyers, General Manager -
Marketing, Shoprite Group, said, “Our 8000 m² Hyper store in Trianon, the largest on the island, will offer local consumers
a comprehensive range of groceries, household items and fresh food products. What sets Shoprite apart from other food
retailers in Mauritius is the fact that we can offer consumers lower prices due to our well-established distribution system
throughout the African continent and the Group’s buying power.”22
Further, by the end of 2002, Shoprite also acquired three supermarkets and one-distribution center in Tanzania from
Score supermarkets, a subsidiary of ‘Pick n Pay’.23 Shoprite Checkers Deputy Managing Director, Carel Goosen, said,
“We already operate two stores in the country and believe that this purchase will further serve to consolidate our presence
in Tanzania particularly and Africa generally.”24
By 2002, Shoprite’s operations outside South Africa had contributed 10.8%25 to the total turnover of Shoprite’s
supermarket division. Shoprite believed that its expansion across Africa contributed significantly towards the ‘African
Renaissance’, which focused on the upliftment of the African people by providing them with jobs and developing their skills.
The group provided employment to more than 8000 people26 through its non-South African operations. With expansions
and acquisitions, Shoprite’s turnover, by December 2002, had reached R12, 694 billion.27 The increase in turnover was
also attributed to the rise in food price inflation in South Africa.
In 2003, to further strengthen its market leader position in the food-retailing sector in Africa, Shoprite entered Ghana in
West Africa. In Ghana, the company established another retail format – the ‘Usave supermarkets’ that targeted customers in
the low-income group. Shoprite opened its outlets in three different centers, including the capital city of Accra and also a
distribution center in Temba Harbour. Shoprite provided over 600 brands to its customers at relatively low prices when
19
Obbo-Onyango, Charles “With Nothing To Steal, Thieves Take A Break”, www.africanews.com, Jan 8-14th 2001
20
Odeu, Steven and Abbey, Yunusu “Museveni Opens Giant Store in Lugogo” 24th June, 2004, http://www.government.go.ug
21
“Shoprite Continues Its Sound Growth”, www.shoprite.co.za, February 17th 2003
22
“Shoprite Expanding to Mauritius”, www.shoprite.co.za, November 19th 2002
23
Established in 1967, Pick n Pay is one of Africa’s largest retailers of food, apparel and general merchandise and an arch rival of Shoprite
24
Bolin, Lynn “Shoprite increases African stake”, www.inet.co.za, December 4th 2002
25
“Shoprite Continues Its Sound Growth”, www.shoprite.co.za, February 17th 2003
26
“History”, www.shoprite.co.za
27
“Shoprite Continues Its Sound Growth”, op.cit.

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Shoprite: South African Retailer’s Growth Strategies

compared to its competitors which was due to its bulk and direct purchases from its manufacturers. By June 2003, Shoprite
Group reported a 13% increase in its revenue that reached R25 million28 [Annexure 4] from its operations in 14 countries.
In early 2004, Shoprite aimed to increase its number of franchise operations. Together with Khula Enterprise Finance
Limited, a credit agency of the Department of Trade and Industry in South Africa, Shoprite started a long-term association to
encourage entrepreneurs in retail trade. Under this agreement, Shoprite planned to provide the necessary stock to
prospective entrepreneurs on concessional terms to establish OK Franchise. Khula, on the other hand, granted loan facility
to people in order to establish retail stores. In 2004, Shoprite had to encounter low inflation and a subsequent fall in food
prices in addition to strikes from its employees. Still, Shoprite’s operating profit exceeded R700 million by June 30th 2004. JW
Basson said, “Although all retail sectors had to grapple with low inflation and falling prices, this was nowhere as marked as
in food sales at the lower end of the market. The biggest price reductions were in staples and, in the case of Shoprite, which
operates 316 of the group’s 705 outlets, negative internal inflation impacted on 19.2% of its total food sales.”29 Total sales of
the group in 16 countries increased from R 24,825 billion in 2003 to R 26,641 billion.30 It was opined that the growth was
due to substantial and equivalent sales in Checkers, Usave and Shoprite brands and a buoyant business in its furniture
division, whose turnover had increased by 20%.

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By June 2004, number of Shoprite’s customers grew by 6.1%. In the second half of 2004, the group further expanded

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into Angola and also in Nigeria, the biggest market in Africa with 120 million people. Shoprite felt that limited number of
supermarkets in Nigeria provided a big expansion opportunity. In December 2004, Shoprite’s expansion proceeded
towards the Asian countries and it opened its first hyper store as well as a distribution center in Mumbai, India. Shoprite

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entered the Indian market through a joint venture with Nirmal Lifestyle Group to cater to the diverse consumer tastes in India
through a variety of product mix. Ram Harishankar, Executive Director, Shoprite Group, said, “The hypermarket will store
about 30,000 SKUs (stock keeping units) and will sell everything from toys to kitchen products, clothing and toiletries.”31 With
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Mumbai alone representing a bigger market than the entire South Africa, Shoprite expects “tremendous opportunities”
from the Indian market. However, the group is also aware of the threats that it would encounter through expansion.
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It stated - “Shoprite is entering the market with a small initial investment, as landlords exist and all international suppliers are
already operating in the country.”32

The Risks and The Prospects

Besides competition, Shoprite also faces the risks of corruption, lack of infrastructural facilities and political instability in
majority of the African countries. These issues, coupled with restrictions on import permits, act as major hurdles
[Annexure 5] in Shoprite’s further growth. Shoprite had to wait for two years to enter Nigeria due to the restrictions on foreign
nationals to invest in the country. JW Basson said, “Nigeria’s been a very difficult market in the sense that there are lots of
legislations there, there was political unrest, there were a lot of areas that just stopped us from going to Nigeria.”33 Shoprite
also faces difficulties due to certain macro economic conditions like high inflation, which reduces consumer spending, thereby
reducing Shoprite’s sales. Despite such hindrances, Shoprite has plans laid out for further expansion.
To drive its future growth, Shoprite plans to invest R800 million for establishing new stores. By the end of 2005, Shoprite
aims to open 34-new generation Checkers stores and 60 Usave outlets for the communities where the conventional
supermarkets have limited reach. Shoprite is planning to widen its presence in Angola and Ghana by opening four and five
stores respectively in the 2004-2005 financial year. Through such expansions, Shoprite plans to achieve more than 50%34
of its operating income from non-South African countries. JW Basson states, “The Group’s objective for Africa is to gain a
foothold in the most lucrative markets as soon as possible.” 35

28
“Shoprite Improves Profitable Market Share With Strong Growth In Operational Earnings”, www.shoprite.co.za, August 19th 2003
29
“Shoprite grows headline earnings by 39%”, www.shoprite.co.za, August 24th 2004
30
Ibid.
31
Peter, Anna “African retailer Shoprite set to open first shop in Mumbai”, www.thehindubusinessline.com, December14th 2004
32
“S African Shoprite to open branches in Ghana, Angola”, www.africast.com, August 19th 2004
33
Hogg, Alec “Whitey Basson : CEO Shoprite”, m1.mny.co.za, August 24th 2004
34
“Shoprite to expand African Presence”,op.cit.
35
Ibid.

4
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Shoprite: South African Retailer’s Growth Strategies

Exhibit 1
Group Structure of Shoprite Holdings Ltd

Shoprite Hyperama Meat

OK Furniture OK Franchise
Checkers House and Home Division Market
Shoprite Rainbow
Hunary Lion Chockers
Finances Freshmark
Properties

• OK Foods
• OK Grocer
• Sentra
Supermarkets
• OK MiniMark

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Superettes
• Megasave
Wholesale

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Group
• Volue Stores

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Source: “Group Structure”, http://www.okfd.com/index_ie.html
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Copyright encoded A76HM-JUJ9K-PJMN9I
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5
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Shoprite: South African Retailer’s Growth Strategies

Exhibit 2
Shoprite Group’s Composition
Positioning Company Target customer Shopping experience

The Shoprite chain is the original It draws its Its market positioning has
business of the Group and its main customers from the remained unchanged: to
brand. It is by far the biggest middle to lower- provide millions of
business unit. It is also the brand income consumers customers with everyday
used predominantly outside the in the living low prices while offering the
borders of South Africa s t a n d a r d s lowest prices on
spearheading the Group’s growth measurement 3 to 8. basic foods.
into new markets.

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Acquired in 1991, Checkers is the The brand has Checkers has become a

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major brand after Shoprite. It recently been preferred shopping
operates stores through -out South repositioned to cater destination for time-pressed
Africa and in some neighbouring for customers in the consumers. It has strongly

Purchased for use on the SPEB, at Lagos Business School.

countries. It focuses more strongly upper-income developed lifestyle
on fresh produce and offers a wider groups and targets departments such as for
range of choice food items to a more living standards wine, cheese and meat.
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measurement7to10.
Copyright encoded A76HM-JUJ9K-PJMN9I

affluentclientele.
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Located in areas with high Its target customer is These stores offer the
population densities, the positioning the same as for consumer low prices on a
of the large-format Checkers Hyper Checkers: living wide range of foods and
stores is very similar to that of the s t a n d a r d s non-food products in a
main Checkers brand. However, measurement 7 to pleasant environment.
they carry a much larger product 10.
range, especially non-foods, and
encourage bulk rather than
convenience shopping.

Usave is a no-frills discounter offering Living standards A limited range of essential

a strict selection of just 700 basic lines. measurement 1 to 5. fast-moving products
Not only is it an ideal vehicle for the offered in a functional
Group’s expansion into Africa but also environment at the lowest
allows far greater penetration of the possible prices.
lower end of the market within the
borders of the country.

The chain, with its wide geographic Living standards The focus is on essential
spread of stores, offers a range of measurement 5 to 8. products offered in a
furniture, electrical appliances and standardised in-store
home entertainment products at environment on easy
discounted prices, for cash or on payment conditions.
credit. Customers can also buy
online, selecting from an
extensive catalogue.
Contd...

6
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Shoprite: South African Retailer’s Growth Strategies

Contd...
It offers a larger selection of Living standards A highly amenable
contemporary quality furniture, white measurement shopping environment with
goods and home entertainment 7 to 10. well displayed products.
products for more affluent consumers.

Through OK Franchise the Group Every franchise Conveniently located

gained a foothold in smaller, store aims at stores offering timesaving
convenienceorientated markets. The satisfying the needs shopping at competitive
OK brand, awarded only to outlets of the community in prices.
meeting certain requirements, which it is located.
encompasses three formats – OK
Grocer, OK Foods and OK MiniMark.

Source: “Annual Report 2004”, www.shoprite.co.za

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Exhibit 3
Type and number Shoprite Holdings in SA, South African Development Community

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(SADC) and other African Countries
(By July 2004)
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Country Shoprite Hungry Checkers OK Other* Total % in each

Copyright encoded A76HM-JUJ9K-PJMN9I

(Supermarkets) Lion (supermarkets) Foods country

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(Fast food
restaurant)

Zambia 18 7 0 0 0 25 2.6
Namibia 8 2 2 3 48 63 6.2
Botswana 3 2 0 0 4 9 0.9
RSA 245 31 88+19** = 107 29 447 847 86.3
Lesotho 2 2 0 0 8 12 1.2
Swaziland 2 1 0 0 4 7 0.7
Tanzania 1 1 0 0 0 2 0.2
Mozambique 3 3 0 0 0 6 0.6
Malawi 2 2 0 0 0 4 0.4
Zimbabwe 1 0 0 0 0 1 0.1
Egypt 3 0 0 0 0 3 0.3
Uganda 1 1 0 0 0 2 0.2

Source: Shoprite Holdings Limited (2002) and Planet Retail (2004)

Other* includes: OK Furniture, OK Grocer, Sentra, Value, Megasave, House and Home (SA), 8’Till
late, OK Minimarket and buying partners
** Checkers Hyper

Source: Louw,André and Emongor A. Rosemary “REGOVERNING MARKETS: Securing Small Producer Participation
in Restructured National and RegionalAgri-food Systems”, www.regoverningmarkets.com, July 2004

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Shoprite: South African Retailer’s Growth Strategies

Annexure 1
Zambia Shoprite: Operations

Name Number of Stores Retail Sales Sales Area

(USD mil) (sq.m.)
2002 2003 2004 2002 2003 2002 2003

Supermarkets
Shoprite 18 18 18 32 30 36,000 36,000
Total Food retailing 18 18 18 32 30 36,000 36,000
Fast food outlets
Hungry Lion 7 7 7 2 2 700 700
Total Foodservice 7 7 7 2 2 700 700

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Grand Total 34 33

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Source : Louw,André and Emongor A. Rosemary “REGOVERNING MARKETS: Securing Small Producer Participation

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in Restructured National and RegionalAgri-food Systems”, www.regoverningmarkets.com, July 2004
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Annexure 2
Copyright encoded A76HM-JUJ9K-PJMN9I
Order reference F352906

OK BAZAARS’ LOSSES
R- m
20

-20

-40

-60

-80
93 93 94 95 96 97

Source : Klein, Marcia “Shoprite plays role of knight in armour to struggling OK”, www.btimes.co.za, November 9th 1997

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Shoprite: South African Retailer’s Growth Strategies

Annexure 3
South Africa’s Declining Retail Sales in the 1990s
Year Formal Retail Sales as % Formal retail sales as %
Potential Sales Consumption Expenditure
1990 75 38.3
1991 72 37.1
1992 69 36.1
1993 68 35.1
1994 68 35.1
1995 69 34.9
1996 68 33.9
1997 66 33
1998 64.5 32.1

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1999 64.1 31.1
2000 64.3 30.5

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2001 64.8 30.4

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Compiled by ICFAI Business School Case Development Center
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Annexure 4
Copyright encoded A76HM-JUJ9K-PJMN9I

Shoprite’s Financials
Order reference F352906

Shoprite Holdings Limited and its Subsidiaries

30 June 30 June 30 June 30 June 30 June
2003 2002 2001 2000 1999
R'000 12 months 12 months 12 months 12 months 12moths
INCOME STATEMENT
Revenue 24 971 333 22 109 797 19 596 729 18 430 568 17 349 078
Operating profit before
603 305 497 843 403 140 326 359 147 704
exchange gains / (losses)
Exchange gains / (losses) (132 945) 24 314 3 598 (7 707) (28 222)
Operating profit before
470 360 522 157 406 738 318 652 119 482
exceptional items
Exceptional items 132 868 39 288 (74 658) 46 412 55 288
Operating profit after
603 228 561 445 332 080 365 064 174 770
exceptional items
Investment income 63 076 34 061 29 537 84 891 116 422
Finance costs 63 340 47 465 25 003 65 192 102 641
Profit before tax 602 964 548 041 336 614 384 763 188 551
Tax 180 585 151 294 99 735 88 578 76 943
Profit after tax 422 379 396 747 236 879 296 185 111 608
Minority interest 2 317 (8 148) 3 196 7 370 4 416
Net profit for the year 420 062 404 895 233 683 288 815 107 192

Source: “Annual Report 2003”, www.shoprite.co.za

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Shoprite: South African Retailer’s Growth Strategies

Annexure 5
Risks and Restrictions for Retailers in the South African Development Community Market
Market problem SADC Worst Case

Politicalinstability Land invasions in Zimbabwe

“Unfair” elections according to observers in Malawi and Zimbabwe
Continued armed conflict in the DRC
Macroeconomic instability Inflation rates of 150% Angola (2003), Zimbabwe 550% (2004)
Insecure tenure rights Land reform in Zimbabwe and Namibia
Land claims South Africa
Market size Income concentrated in the hands of a few hence despite the high
population figures, demand levels remain depressed.

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Slow economic growth rates SADC as compared to the rest of world.

Taught by Olawale Ajai, from 26-Apr-2019 to 26-Oct-2019. Order ref F352906.

Overvaluation and unstable real Due to a tendency to peg currencies to avoid fluctuations caused by a
currencies combination of the other shocks
Poor tax structures and high tax rates In an effort to boost revenue, according to the World Bank (2000) tax rates

Purchased for use on the SPEB, at Lagos Business School.

are ironically higher on imports of agricultural and agro industrial exports
Unreliable legal and regulatory Inability to rely on the legal system to enforce contracts
Educational material supplied by The Case Centre

environment Corruptible police and court officials

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Poor basic infrastructure Communication, roads, railroads, transportation, electricity are either
Order reference F352906

unreliable or non existent in most areas of SADC except for the major
capitalcities
Hence high transportation costs, narrow marketing margins, and
ultimately low profitability
Poor financial markets Poor microfinancing
Inability of the majority to meet creditworthiness criteria
Crime and corruption After Colombia, SouthAfrica is the second “most murderous” country globally.
High corruption indices for most SADC countries
Labour market Low level of skills development
Gaps in important fields such as health, and engineering
Brain drain as skilled labour seeks better remuneration in the first world
HIV/AIDS pandemic Consistently high infection and prevalence rates
Orphan problem
Increased dependency ratios
Over stretching of the public sector (including health, social welfare)
Insurance claims
Early retirement

Source : Louw,André and Emongor A. Rosemary “REGOVERNING MARKETS: Securing Small Producer Participation
in Restructured National and RegionalAgri-food Systems”, www.regoverningmarkets.com, July 2004

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