South Africa has the only shop in the world that sells a packet of biscuits for R1

Shoprite’s immense scale, efficiency, and superior supply chain enable it to offer products at price points its competitors cannot match. 

This is best exemplified by the retailer’s Usave brand, which primarily focuses on growing Shoprite’s presence in townships and ‘forgotten’ towns in rural parts of South Africa. 

Famously, this brand is now offering various packets of its private-label biscuits for only R1, alongside a 250g tub of chicken livers or 400g of frozen chicken livers for R10. 

This showcases Shoprite’s ability to consistently offer low prices while remaining profitable, with CEO Pieter Engelbrecht explaining that this is all down to its supply chain and scale. 

Shoprite’s interim results for the 26 weeks ended 28 December 2025 revealed that the retailer is holding onto lower prices in an attempt to win market share. 

Its first-half gross margin declined slightly, reflecting low selling-price inflation and even deflation towards the end of the period. 

This is all part of its push to grow customer numbers and sales volumes through price cuts, which creates a flywheel for the retailer. 

By offering lower prices for its products, Shoprite increases its sales volumes, which, in turn, gives it greater negotiating power with suppliers to then push prices even lower. 

US retailer Walmart famously calls this a “Productivity Loop”, which ensures that its prices are consistently lower than its competitors. 

Shoprite is leveraging the benefits of this loop in South Africa. However, it is often forgotten how it is that a retailer can enter this loop. 

“One answer is efficiencies and a superior supply chain. If I give you a very short answer,” CEO Pieter Engelbrecht told Business Day TV following the retailer’s interim results presentation.

“I pride myself on the fact that the people of Shoprite ensure a superior execution in terms of what we do and are always focused on the customer.” 

Engelbrecht explained that the retailer obsessively focuses on the customer and works backwards from there, consistently asking how it can make things cheaper. 

“One example would be the products we sell for R1. Shoprite is the only retailer in the world that I know sells a product for R1, that is six US cents,” Engelbrecht said. 

“At Usave, we sell a packet of biscuits with 18 biscuits in it for R1, and you see the smile on the face of that kid who buys that? That is what we do.” 

The Usave juggernaut

Shoprite’s approach to low prices and scale has ensured that Usave has become a juggernaut in its own right, with over 500 stores across South Africa. 

By store count, it is also the group’s fastest-growing brand, with it opening 42 stores over the past 12 months as it continues to expand into township retail. 

While it is difficult to unpack the financial performance of Usave as a standalone brand, with Shoprite reporting its performance together with its flagship brand, it has become a major driver of the retailer’s growth. 

It is also one of the areas in which Shoprite faces intense competition, from spaza shop owners, traders, and Pick n Pay’s Boxer. 

Through the Usave brand, Shoprite has looked to mimic some of the natural competitive advantages that spaza shop owners have in this retail battle. 

Camissa Asset Management associate analyst Katlego Dinake explained that spaza shops benefit from their ability to win customers over through extreme proximity to their home, place of work, or major travel hubs. 

Informal traders can penetrate deep into townships or informal settlements, where traditional retailers cannot open fully-fledged stores. 

Shoprite has aimed to solve this challenge through its Usave eKasi stores, which are extremely small format and require little infrastructure to support. 

As these areas are not conducive to a fully-fledged Shoprite store, these eKasi outlets, which are made of shipping containers, are the only way for the retailer to reach their customers in townships and informal settlements. 

Furthermore, these stores work in conjunction with Shoprite’s traditional stores, with consumers tending to travel to a fully-fledged supermarket at the end of the month while frequenting Usave stores during the month when money is tight. 

To tap into this growing market, particularly the informal economy, Shoprite aims to double the number of Usave stores it currently has. 

Engelbrecth said there is space in South Africa for 1,000 Usave stores, which will make its competition with Boxer increasingly intense. 

Boxer has some competitive advantages over Shoprite and Usave stores, with it offering 3,000 stock units compared to a full Shoprite store’s 11,000. 

This gives it a core offering built around shelf-stable essentials such as maize meal, rice, oil, and beans. 

These products can be stored at ambient temperatures, negating the need for complex and costly cold-chain logistics. 

This narrower product range also enables Boxer to place larger order sizes from suppliers, boosting its purchasing power and keeping a lid on price increases.

However, in recent years, the rapid rollout of Shoprite’s smaller-format Usave stores has encroached on Boxer’s sphere of dominance. 

These smaller stores from Shoprite focus even more intensely than Boxer, having only 1,900 stock units and a very high private-label penetration. This gives Shoprite close control over the price of goods in these stores.