The grocery retail environment in South Africa is extremely competitive with many retailers focusing on a price war, competing for prime store locations, training staff, modernising their stores with wider aisles and offering dedicated product category alcoves for easy navigation, according to Euromonitor International
Mixed retailers such as mass merchandiser Game and Makro, as two of the retail brands under Massmart Holdings, recently presented additional competition to grocery retailers by increasing their product lines to different types of fresh food. As a result, mixed retailers with a food component recorded increases in their customer flows. Massmart also introduced its perishable food brand Game Foodco in October 2013, as well as Makro Fresh brands and the Cambridge outlets.
Shoprite continues to command approximately 20 percent of the grocery retailer market share due to its expansive network across numerous channels such as supermarkets, discounters and hypermarkets. It has 14 distinct brands across all market segments. Shoprite is positioned as a low-priced retailer playing to the price sensitivity of consumers. Checkers caters to the upper-income customer, focusing strongly on fresh produce and offers a wide range of choice foods. U-Save focuses on the needs of the lower income. OK Franchise Division is a franchise business of supermarkets that provide independent retailers and entrepreneurs the opportunity to build successful businesses. Freshmark is the Group’s fruit and vegetable procurement, buying and distribution arm, and is a substantial business in its own right. It supplies fresh produce fruit and vegetables to Group stores within South Africa, and to most of its outlets in other parts of the continent.
Pick ‘n’ Pay ranked second in grocery retailers with 13 percent of the marketshare. Pick ‘n’ Pay had the largest market share between 2003 and 2007, but could not keep it up and continues to experience increasing competition from other retailers, high operational costs, outdated systems and a lack of investment in centralised distribution, according to Euromonitor International.
There is increased visibility of Food Lover’s Market Holdings and its group of businesses. The company’s market share in grocery retailers continues to increase and is 3 percent in the channel. Initially trading as a specialist retailer of fresh fruit and vegetables, Food Lover’s Market has continued to expand its presence within grocery retailers by rolling out more outlets across the country. The group has also entered into a partnership with Waitrose to offer both entry-level and premium products. As a result of this partnership, Food Lover’s Market now holds the exclusive rights for Waitrose in South Africa and other parts of the African continent.
SPAR’s independently owned and operated retailers – including SPAR, SUPERSPAR and KWIKSPAR - command 9.5 percent of the grocery retail market share in South Africa. SPAR is a group of independent retailers and wholesalers committed to sharing market knowledge and information under the SPAR Brand. SPAR Group Ltd operates 6 distribution centres, supplies goods and services to almost 800 SPAR stores in South Africa. SPAR has a presence in 12 African markets, which account for 17 percent of its global retail turnover.
Woolworths has 3.7 percent of the grocery retail market share in South Africa. It prides itself in consistently offering high-quality food. Woolworth’s Food business achieves a 20 percent share in national fresh produce sales in South Africa. It believes building customer loyalty by understanding and meeting their needs is critical. Woolworths expects to open fewer but larger food stores in the near future. It looks to expand its footprint of their existing stores as they find customers are willing to increase the content of their baskets within a larger store environment.
South Africa’s leading grocery retailers are expected to open more convenience stores in an effort to benefit from the growing demand for convenience. They are also expected to increase their digital presence by investing in internet retailing facilities, and websites that are mobile-friendly.
Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources
Price wars are expected to continue as retailers expand their footprints presenting an opportunity for the country’s leading grocery retailers to increase their private label product lines.