Shoprite ‘stocks up’ amid low investment in South Africa

Shoprite is responding to low South African production investment, coupled with the country falling out of favour with international companies, by ensuring Africa’s largest supermarket chain keeps more stock.

It took Shoprite about 10 weeks to get the right product in stores ahead of Black Friday sales, CEO Pieter Engelbrecht said in an interview from Cape Town after the company announced first-half earnings on Tuesday.

“This gives you an idea of how constrained the supply chain is,” he said. “There’s very little investment in production capacity in South Africa amongst the manufacturers, and the multinationals have completely stopped.”

This is putting pressure on local retailers. In the last three years, Shoprite has kept stock at stores higher than 98% while also carrying much more in its distribution centres, he said.

The Cape Town-based company is building three new distribution centres.

Keeping shelves full with the items consumers want to buy is not only helping Shoprite sell more, it’s building customer loyalty, Engelbrecht said.

That’s because it avoids frustrating already embattled shoppers by not being able to get what they need when they need it – as well as the additional fuel costs of having to return for some products. 

The company has more than 29 million South Africans using its loyalty program, with more than 5,000 data points on each customer, which “gives us an edge in terms determining what it is that we think the consumer is looking for at a specific time,” he said.