Founder: Turnaround Talk
South Africa may have been a late adopter of the online shopping craze. However, key shifts in consumer behaviour – which started during Covid – are continuing to grow as South Africans focus on keeping their jobs and avoiding conventional grocery shopping.
During Covid, there was a serious race between South Africa’s major grocery brands to establish the best online shopping portal. According to many consumers, Checkers came out on top and is now building an unassailable lead against its fierce rivals.
Shift in customer behaviour
The Moneyweb article points out that the problem for both Pick n Pay and Woolies is that Checkers is entrenching a fundamental and permanent shift in behaviour among customers. Once you order groceries on Sixty60, you’re likely to do so again (and again and again). If Checkers succeeds in building this habit, it will likely see stronger customer loyalty and, ultimately, capture a greater portion of their grocery spend.
Shoprite says sales growth at Sixty60 was 81.5% in the year; it nearly doubled its turnover from the 2022 financial year.
The article adds that, last year, growth was 150%. Of course, rates will moderate as the base grows, but nearly 82% should not be sneezed at. This rapid growth helped propel Checkers’s overall turnover by 18%. Compared with the group’s overall growth of 17.8%, Shoprite’s of 15.6% and liquor growth of 30.8%, it is crystal clear that the advantage Checkers has built with Sixty60 will continue to deliver market share gains.
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But how big is Sixty60 in Checkers’s world?
The article points out that Woolworths offers a useful comparison (financial years line up almost exactly). It discloses the online proportion of sales across its various divisions. For the food business, this is at 3.8%, but it had a lengthy head start with a standard online shopping offer. Dash is the growth driver, but growth in online sales was just 19% to the end of June.
Checkers Sixty60 is growing four times quicker! Last year, Sixty60’s growth at Checkers was three times faster than Woolies online. The difference in growth is accelerating.
The article adds that simple maths shows that Woolies’ online sales are around R1.65 billion (3.8% of R43 billion). If sales at Checkers totalled R69.3 billion for the last year, what could its ‘online’ (Sixty60) participation be?
Dash is only live at about 70 to 80 Woolies Food stores. The standard online offer is across a much larger footprint. Sixty60 is live in 466 stores (including LiquorShops). At the 3.8% level of Woolies, Sixty60 would be generating sales of R2.6 billion a year. Surely, closer to the 5% level of sales via Sixty60 (including the ‘top up’ from liquor) seems more realistic? That’s R3.5 billion in sales. Or double Woolies. An interesting thought experiment.
As Sixty60 matures, Shoprite will disclose additional data points. But that doesn’t really matter to investors, as long as its growth and competitive advantage ensure Checkers roars ahead. All signs are that the group has built something that’s practically unassailable.
Taking the gap
While their delivery bike drivers have overtaken taxis as the biggest hazard on South Africa’s roads, the investment made by Checkers was smart at a time when the market was open and receptive to disruption.
Many companies in South Africa should take inspiration from Checkers and its approach to risk and disruption management. Now if only they could invest as much money in driver training…
