Shoprite is expanding in specialist clothing, baby, outdoor and pet stores in South Africa after closing its main grocery business in several other countries across the continent.
The move allows Africa’s largest supermarket group to broaden its offering and add to floor space in its home country, which accounts for more than 80% of sales through almost 2,000 stores.
“We’ve seen that people are shopping those categories differently – they enjoy shopping at a specialized destination,” Chief Executive Officer Pieter Engelbrecht said in an interview Tuesday. “There is a gap in the market.”
Two decades after unveiling ambitious plans to expand across Africa, Shoprite – partly owned by South African billionaire Christo Wiese — has largely retreated after struggling with supply-chain issues and difficulty repatriating funds from certain countries.
The Cape Town-based company sold its business in Nigeria, the continent’s most populous nation, in 2021 and has completed its exit from Kenya, Tanzania, Uganda, Mauritius and Madagascar.
Shoprite joins other South African retailers in diversifying its offering to boost profits. Pepkor, Africa’s largest clothing retailer, is expanding rapidly in the sale of affordable mobile phones.
Clothing vs Food
Of the 217 outlets Shoprite plans to open in South Africa in the six months through June, about 20 will be dedicated to these type of stores, Engelbrecht said. Each new segment will also be available online.
“We have removed most of the clothing from our hypermarkets because I’m of the opinion that people have, what I call premiumized, the purchases of clothing,” he said.
“They’re not comfortable, or don’t enjoy, buying clothing with their food and would prefer to do it in a specialist store.”
Shoprite will open its first clothing store in Cape Town with “a very niche proposition” later this month, followed by ten more elsewhere in the country that will be adapted to how different seasons affect other areas, Engelbrecht said.
South Africa’s chronic electricity shortages mean retailers are having to install alternative power options in their stores to ensure power during regular rolling blackouts.
The extra costs eroded margins in Shoprite’s core South African supermarket business in the six months through 1 January.