Retail giants get set to slug it out

Having long held sway in the top end of South Africa’s food retail market, Woolworths is finally facing a serious challenge to its dominance. It comes from none other than Shoprite’s Checkers retail brand, which has traditionally targeted sales at a lower end of the customer scale, the ‘IMM Journal of Strategic Marketing’ reports in its latest issue.

It is shaping up to be an absorbing battle in a market that Woolworths has dominated for many years. “We want more of their customers and to dismantle their monopoly in the premium food sector,” says a determined Shoprite CEO, Pieter Engelbrecht.

Through its massive national footprint, Checkers is targeting Woolworths’ core market sector: consumers in the upper income LSM 8-10 categories.

“Consumers in these categories are able to continue spending at the same rate, even when times are tough,” explains Engelbrecht. “A LSM 8 to 10 customer spends four times more on a shopping basket than our average customer. Increasing our share of that segment will make us more resilient.”

According to figures supplied to the magazine by Shoprite, Woolworths attracts 67,1% of LSM 8-10 segment consumers into its 327 South African food stores. Primarily through Checkers outlets, Shoprite attracts only 44,7% of the segment.

Woolworths has enjoyed incredible success since taking the decision in 2011 to significantly broaden its range of offerings to include branded products. It has seen sales of branded product sales rise from near zero to 30%, which has boosted market share significantly. “We have grown our market share every year for the past five years,” Woolworths CEO Ian Moir said at a presentation of annual results to June 2017.

Also in the latest edition of the magazine, Issue 4 2017, is a special feature on the Radio industry in South Africa and an analysis of how best to utilise Online Sales Channels.

The ‘IMM Journal of Strategic Marketing’ is published by the IMM Graduate School and is read by professional marketers, business executives and IMM Graduate School students.