You can read the transcript of the interview below, or listen to the podcast on iono.fm .

JIMMY MOYAHA: Bright and early at eight o’clock this morning, Africa’s largest retailer – not just South Africa’s largest – Africa’s largest grocery retailer in the form of the Shoprite Group released an update on their . If the numbers are anything to go by, this is going to be a very interesting conversation.

Revenue figures topped the R250 billion mark. Alongside this, more than R16 billion in savings was returned to customers.

The 500^th Usave store opened in South Africa alone. Those are just some of the figures that we’re going to get into with the chief executive officer of the Shoprite Group, Pieter Engelbrecht.

He joins me now to take a look at the performance of the business and see what we make of it. Oom Peter, always lovely catching up… It seems every time we have this conversation, there’s always something new and there’s always something that surprises me in the numbers.

Let’s start with your thoughts around the performance of the business over the last year, and then we’ll get into some of those numbers that I found quite surprising.

PIETER ENGELBRECHT: Okay, Jimmy, thanks a lot. The summary of it is 8.9% sales growth for the group. Of course, RSA supermarkets did much better at 9.5%. So top-line growth at a very, very low inflation – we must not forget that. Inflation came down to as low as 1.9%. One must be careful when you compare percentages, because a little more than a year ago, inflation was at 13%. Then, of course, you report maybe numbers in the twenties.

So, if you look at the number of 9% sales growth, you say, ‘Oh, are they slowing down or what?’ That’s not the case. We must always remember that.

Then if we go to the second line, which I’m very proud of, it’s the fact that gross profit has grown by 10.6%. We’ve increased our percentage by 40 bps [basis points], yet remain the cheapest supermarket in South Africa, giving the best value.

You mentioned the number of R16.5 billion to consumers in savings at till point. And then, we jump to the bottom line, 16.6% growth in trading profit in the macro environment where we are. I don’t have to explain that to you. I think it summarises an outstanding performance from Team Shoprite, of which I’m very proud.

JIMMY MOYAHA: Following our last conversation, Oom Pieter, we’ve spoken about the fact that Shoprite is ticking along as a global grocery retailer at this point – with the margins, with the numbers, with the metrics. By every standard, we are no longer comparing Shoprite to some of the local grocery companies you compete with, even though that is still primarily the landscape that you compete with. But at least when I look at the volumes of the amount of goods that the Shoprite business has been able to move in the past year, the numbers suggest that you are one of the best retailers in the world, not just in South Africa.

Now that’s a very telling statistic, especially if we think about the global landscape that we find ourselves in. How is Shoprite able to stay this competitive and this ahead of the game?

PIETER ENGELBRECHT: Right. Number one, we are absolutely customer-obsessed. I know all companies say, ‘customer focused, customer focused’, but we really live and breathe it.

I’ll give you one example. We’ve got the policy here that the sun doesn’t set on a customer complaint. What do we mean by that? Every single customer complaint that we get in a day is resolved on the same day. We don’t go to bed before it gets done. That’s why I can say we are really customer-obsessed.

With that comes the innovation that is needed for us to bring consumers value so that they can improve their lives.

This journey started a couple of years ago. We separated the brands very clearly [of] Shoprite and Checkers, and then we started to invest behind that.

From a technical or technological point of view, we have laid the foundation of the �鶹ԭ�� system that gave us line-item profitability and gave us a real view of stock across the supply chain. And then, we started investing in things like price-optimisation tools, personalisation tools, Rainmaker Media, a lot of digital AI data scientists. They started to write algorithms for us, to understand things better and make precise data-[based] decisions, not gut feeling – ‘I feel like this’.

Maybe you’ll like this example. We had a situation where one of the regions was losing pie sales. So what does the normal retailer instinct do, or tell you to do? It’s to say, ‘What about two for the price of one?’ That’s until we looked at the data and the data said no, people don’t buy two pies. They usually buy a pie and a muffin. Oh, so you make a deal for a price – a pie and a muffin.

That’s a simplistic way of explaining how you are making data-driven decisions compared to what you think and what your gut feel is.

And those products and all those investments we’ve made are starting to mature now. We’re starting to see the return on investment from those. And we’ve been investing quite a bit in capital. For the last three years almost every year we’ve invested R8 billion in capital. Okay – a lot of that went into new stores as well, but a lot of that went into technology.

I’ll give you another last example – I’ll now be giving you two long-winded answers. But there are over 900 software upgrades on the Sixty60 platform in a year, meaning enhancements to make the experience better, faster, all those things. That alone tells you a story of what goes into the innovation part.

JIMMY MOYAHA: Oom Pieter, I want to take a look at the other side of the business around the expansion – opening a net 281 stores. We touched on the fact that one of those was the opening of the 500^th Usave store in South Africa. The business has been growing.

Alongside that, the business has been continuing to create jobs within that space, adding more than 8 700 jobs in this particular financial year.

I saw something interesting that came out of the team at Just Share around the average minimum wage that’s being paid by Top 40 companies. Now, Shoprite didn’t rank highest on that list, but Shoprite does employ more than 150 000 individuals across the business. How do you sustain all of these employees, and how do you take the approach to looking after them the same way you look after your customers?

PIETER ENGELBRECHT: Yes, I do think that’s a one-sided comparison. But it’s not. It’s the emotional argument and not one that you can win. So let’s stick to the facts – Shoprite employees.

On our payroll, we have 168 000 people. One must not forget that there are a lot of indirect jobs that are not accounted for here. I’m talking about trolley collectors, merchandisers at store level, security personnel.

If you add all of that, we’re talking a number of probably closer to 230 000-odd people that Shoprite almost directly employs.

We are extremely proud of the 8 700 direct jobs we’ve created. Now, what is the thing about minimum wage and then the CEO’s salary? Somewhere I have to start. The second question when you apply for a job that you get asked is ‘What’s the relevant experience?’ Now, where am I going to get the relevant experience if there’s no employment in the country? So we make a special effort to give people a chance. It’s a starting point only, and you don’t stay at that level where you start, the day you start right at the lowest level or at the minimum wage.

Employment efforts

In the past year, we specifically selected unemployed youth. We spent R130 million training them to give them some form of experience to equip them better to find employment.

Secondly, we have internally had over 18 000 internal promotions – in other words people who were promoted internally. So they obviously are now moving away and further away from the minimum wage, so to speak.

Then what everybody forgets is that very few, if any other, South African companies have an Employee Trust. Our Employee Trust already has paid over a billion rand to our employees.

The only requirement to qualify is you must have two years of employment history with us, of course. You must have been employed by us for two years or more.

Those are not salaries or bonuses and that. It’s easy to forget all of these and the fact that we’ve spent over R1 billion in this year on training of these 170 000 people, equipping them even better to improve or get a promotion – or even, for that matter, to go into business on their own.

I think any person who has been at Shoprite for five years or so can do anything. They would be so well equipped in terms of a general [understanding of] how business is conducted – from reading financial statements to customer service. We have to look at this holistically and then say what we really do.

JIMMY MOYAHA: Holistically, it’s certainly an important thing. And for context, that 168 000 people that Shoprite does employ makes them the largest private-sector employer in South Africa by number of people on their payroll.

Oom Pieter, let’s wrap things up with the other billion-rand conversation, the billion rand in buybacks that you’ve been able to conduct in this financial year alone, bringing the total share buybacks of this particular endeavour to just over R2.6 billion. That’s returning value to the other client of yours – and that’s of course the shareholder.

PIETER ENGELBRECHT: Definitely. And this year, I’d love to add to that. Obviously we look at our cash, the free cash flow that we generate; we generate roughly R23 billion in cash in a year. We spend R8 billion on capex. We pay tax. We pay dividends. And then we make sure we maintain roughly around $10 billion in free cash flow.

That was part of a plan. We still have a mandate to do more buybacks. But that always comes when we think that is a better option of return to the shareholder than any other investment.

Then, on top of that, don’t forget we have not skipped paying a dividend any year – through Covid-19 and all of those things. The dividend is up this year 9.7% – R8.71 is the final dividend for the full-year dividend. The return on equity on the share for the shareholders is currently at 26% – actually 27% – and the Roic [return on invested capital] this year moved from 16% to 19.6%

I think as a general myself, a shareholder, I am content with that performance.

JIMMY MOYAHA: Contentment from the largest retailer on the African continent after a stellar year of performance. The business continues to grow in every metric, including the online business that has reached just shy of R19 billion in sales through the Sixty60 business.

But we’re going to have to leave this conversation on that note. We are unfortunately out of time. Thank you so much to the chief executive officer of the Shoprite Group, Pieter Engelbrecht, for taking us through the performance of the business and some of the big milestones the business has been able to achieve.

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The Group maintained a trading margin of 5.6% with sales having increased by 12% to R240.7 billion, an annual increase of R25.8 billion. Its core business, Supermarkets RSA which houses its trading brands Shoprite, Usave, Checkers, Checkers Hyper and LiquorShop, achieved sales growth of 12.3% and contributing 81% to Group sales off the back of a 4.5% annual increase in customer visits.

“We saw impressive growth at both ends of our targeted market segments,” commented CEO, Pieter Engelbrecht. “Checkers remains the fastest-growing premium grocer in the country for a third consecutive year, with sales growth this year of 12.3%. Online sales from our industry-leading on-demand delivery platform, Checkers Sixty60, grew by 58.1%; it is continuing to disrupt South Africa’s retail market as it expands beyond groceries to include general merchandise delivered by our new fleet of Checkers Hyper delivery vans.”

The Shoprite and Usave brands increased sales by 10.7%, expanding the Group’s reach into underserved communities through its low-cost Usave discount stores and Usave eKasi container stores.

“Despite these sales growth rates, we fell just short of our own internal targets for 2024. This speaks to the culture of our business: we set a very high bar and believe that we can always improve and always do better. Despite operating under markedly different circumstances to many of our global counterparts, Shoprite has continued to demonstrate global competitiveness with consistent market share growth and sector-leading execution which allows us to fulfil our customer promise. We are the largest �鶹ԭ�� retail customer by number of transactions in the world and one of the top retailers globally in terms of the volume of product moved. Our performance this year demonstrates our ability to deliver under challenging conditions,” he said.

Across the Group, net 292 stores opened during the period including 63 new format specialist stores in adjacent categories as well as 73 Ok Franchise stores, bringing its total footprint to 3 639 stores across the ten countries it operates in.

Checkers Sixty60 is now available in 539 stores, an increase of 73 stores year-on-year. The omnichannel retailer also saw impressive growth in its Xtra Savings rewards programme with more than 31 million members and 2 500 swipes per minute. The Group also launched Xtra Savings Plus during the year, SA’s first grocery subscription plan.

With its 82 rooftop solar systems installed across 77 of its sites (73 in SA and four in Namibia with a capacity of 36 172 kW), the Group obtained 6.5% of its electricity from renewable sources (FY2023: 5.5%), surpassing its target. It consumed 125 567 MWh of renewable energy (FY2023: 103 234 MWh) which reduced its emissions by 123 684 tCO2 e (FY 2023: 106 141 tCO2 e).

Its Board declared a final dividend of 445 cents per share, resulting in a full-year dividend of 712 cents per share and representing a 7.4% year-on-year growth in dividend per share.

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This follows the success of its Checkers Sixty60 platform, which dominates on-demand grocery deliveries in the country.

The company’s latest interim results revealed that the on-demand grocery delivery service recorded  during the first half of the 2023/24 financial year.

Checkers Sixty60 helped drive Shoprite’s half-year sales, which saw growth of about R121 billion, representing a 13.9% year-on-year increase.

Shoprite recently launched an online on-demand delivery service designed to support spaza shops and small retailers through its .

The fully automated online shopping system lets these customers browse and purchase a wide range of goods in bulk.

It says the service offers competitive pricing and complimentary delivery within a radius of 50km.

Shoprite Group head of B2B business e-commerce, Mark Cotton, said the service will help support small businesses and spaza shops facing high transport costs and challenges meeting demand.

“We are committed to supporting small businesses by providing innovative solutions to the specific problems these enterprises face,” he said.

Cotton added that the new service eliminates the need for businesses to hold excess inventory, freeing up cash flow and time for business owners.

Shoprite said the new system also streamlined the purchase and fulfilment store for Cash & Carry in-store traders.

Traders can access customer and product information, build and fulfil orders, and save orders for repeated use in future.

Customers using the platform can pay via credit and debit card, electronic funds transfer, store credit, cash on collection, and Shoprite Money Market Accounts.

They can also benefit further with savings and promotional offers through the Xtra savings loyalty programme.

Shoprite and Checkers launched Sixty60 in November 2019 during the height of the Covid–19 pandemic.

Initially only available in select Sandton, Johannesburg, and Cape Town locations, it had accumulated more than 3.1 million downloads by March 2023 and expanded to 466 by September that same year.

While many believed its popularity was due to the lockdowns implemented during the pandemic, the service continued to grow at an immense pace when they were lifted.

The company behind Zulzi — one of the country’s first successful fast-moving consumer goods apps — developed the customer-facing app for Checkers Sixty60.

Checkers Sixty60 launched a loyalty programme, Xtra Savings Plus, in September 2023.

The R99 monthly subscription offers customers unlimited Sixty60 grocery deliveries, additional in-store deals, and personalised promotions.

Checkers Xtra Savings Plus subscribers get the following benefits:

• Unlimited free Sixty60 deliveries, provided they spend a minimum of R350 (non-subscribers pay R35 for delivery)
• A 10% discount on in-store purchases up to a maximum of R200 in savings
• Double personalised offers in-app and in-store
• No long-term commitments, with subscribers able to pause or cancel their subscription at any time with a money-back guarantee

Around the same time, the company partnered with Discovery Vitality to .

“The addition of Checkers as a partner promises an even greater health impact,” said Dinesh Govender, CEO of Discovery Vitality.

Shoprite chief strategy and innovation officer Neil Schreuder said the move would help Checkers and Sixty60 customers make healthier food choices.

Shoprite credits much of its success over the past five years to its rollout of �鶹ԭ��’s Enterprise Resource Planning (ERP) software.

“When you walk into a Shoprite or Checkers supermarket and see a full range of products stocked, displayed, priced and with promotions clearly marked, that is what the ERP system does for us,” it told MyBroadbad.

It added that �鶹ԭ�� also helped make Sixty60 successful.

“�鶹ԭ�� Retail is the source of the stock ledger and real-time sales, which are essential for accurate fulfilment of customer orders,” Shoprite stated.

“The ERP also provides promotional information, prices and article data to Sixty60, which ensures that the prices on Sixty60 are the same as the prices in-store.”

Implementing the software wasn’t all smooth sailing, with Shoprite partly blaming delays in the rollout for a shocking earnings report in 2019.

However, in January 2019, it assured stakeholders that the upgrades were complete and had already observed improvements.

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In this episode, David shares the journey of his life in IT, from humble beginnings to his current role as a tech leader. From reflecting on his early days in the industry to sharing his predictions about the future of AI, David opens up about the lessons he’s learned along the way.

Some highlights from the episode:
David’s career journey and the evolution of IT
His take on the impact of AI on our daily lives
Words of wisdom for young professionals looking to make a mark in the industry

Don’t miss this chance to gain valuable insights from a seasoned tech expert. Tune in now to Pearls of Wisdom and discover the pearls of wisdom shared by David Cohn!

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The beta app will continue to offer same-day delivery scheduled within a 60-minute time slot but will boast a much wider range of products.

In addition to groceries, customers will be able to shop for camping and outdoor gear, small appliances, baby products, toys, kitchen and home electronics, gardening supplies, and pool equipment.

The new Sixty60 app is already available to customers who live in certain parts of Cape Town, with Checkers planning a phased national rollout after beta testing.

Shoprite said that this strategy would help ensure a seamless user experience. During the beta testing period, deliveries on the new app will be free.

The supported areas in Cape Town include the following:

• Bellville
• Blouberg
• Brackenfell
• Camps Bay
• Century City
• Durbanville
• Edgemead
• Gardens
• Goodwood
• Kuils River
• Milnerton
• Observatory
• Parklands
• Rondebosch
• Table View
• Sea Point

Shoprite strategy and innovation chief said the company was confident the next iteration of Sixty60 will again disrupt online retail in South Africa.

“Our precision delivery promise means no more waiting at home all day for your general merchandise order to arrive,” Schreuder said.

“Customers can now choose the 60-minute time slot in which they’d like their Hyper delivery to arrive, with the same to-the-minute driver tracking they’ve become accustomed to on their grocery orders.”

The rollout comes after Shoprite CEO briefly spoke about the platform’s  during an earnings call on the company’s interim results for the 26 weeks ended 31 December 2023.

“In terms of further development. Yes, we consistently will continue to develop Sixty60,” he said. “We are currently busy rewriting the platform.”

Engelbrecht said ’s approach to logistics management set it apart from competitors — including Amazon and Takealot.

He added that it is one of the primary reasons the online delivery service was “very profitable”.

“We have this very large footprint of stores that we use as micro fulfilment centres as opposed to a very expensive single dark distribution centre,” said Engelbrecht. “I know there are people who don’t believe it, but believe me — it is very profitable.”

The software behind Checkers Sixty60 — — also significantly contributes to the service’s success.

Shoprite previously told MyBroadband that �鶹ԭ��’s Retail platform provides stock ledger and real-time sales data, which is critical for accurately fulfilling customer orders.

“The ERP also provides promotional information, prices and article data to Sixty60, which ensures that the prices on Sixty60 are the same as the prices in-store,” Shoprite said.

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Shoprite’s online shopping platform and same-day delivery service helped lead the charge in a half-year that saw the company’s sales grow about R121 billion — a 13.9% year-on-year increase.

This is slightly down from the 17.5% half-year sales growth Shoprite reported for the same period last year.

Checkers and Checkers Hyper reported sales growth of 13.7%, Shoprite and Usave recorded a 13.1% increase, and LiquorShop sales increased by 25.2%.

“Sustained high level of execution and continued customer momentum together with record Black Friday and festive season trade has extended the period of uninterrupted market share gains achieved by our core South African supermarket brands to 58 months,” Shoprite stated.

 in November 2019, accumulated over 3.1 million downloads by March 2023, and expanded to 466 stores by September 2023.

As South Africa went into lockdown during the Covid–19 pandemic, Sixty60 was available in selected Sandton, Johannesburg, and Cape Town locations.

However, it rapidly expanded as the success of its formula became evident.

Even as lockdowns ended, Sixty60 kept growing at an incredible pace.

The customer-facing app was developed by , which launched one of South Africa’s first successful fast-moving consumer goods apps in 2016.

Shoprite also credits its success over the past five years to its rollout of �鶹ԭ��’s Enterprise Resource Planning (ERP) software.

“When you walk into a Shoprite or Checkers supermarket and see a full range of products stocked, displayed, priced and with promotions clearly marked, that is what the ERP system does for us,” Shoprite told MyBroadband.

Checkers also told MyBroadband last year that �鶹ԭ�� helped make Sixty60 successful.

“�鶹ԭ�� Retail is the source of the stock ledger and real-time sales, which are essential for accurate fulfilment of customer orders,” Shoprite stated.

“The ERP also provides promotional information, prices and article data to Sixty60, which ensures that the prices on Sixty60 are the same as the prices in-store.”

However, it wasn’t always smooth sailing.

In 2019, Shoprite released a shocker of an earnings report, partly blaming delays in its �鶹ԭ�� rollout for causing a drop in earnings.

“Supply constraints stemming from industrial action and the deployment of a new ERP IT system resulted in lost sales in the period,” it said at the time.

However, it also assured investors in January 2019 that the upgrades had been completed and that its operations were already improving.

Spar is , saying the project cost R1.6 billion in lost turnover.

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Despite major electricity challenges and consumer spending pressure during the period, South Africa’s biggest grocery retailer has seen its sales and net profit grow by annual average rates of 7.4% and 4.1%, respectively.

The latter might not seem particularly outstanding, but it is impressive compared to Shoprite’s closest rival, Pick n Pay, which only saw its profit grow by an average of 0.6% over the same period.

The Shoprite Holdings share price on the JSE has reflected significant investor confidence in the company’s trajectory.

From R194.26 per share on 9 November 2018, the price had climbed to R248.04 per share on 8 November 2023, an increase of about 28.5%.

Shoprite’s most recent integrated report specifically acknowledged �鶹ԭ�� ERP’s role in achieving its operational efficiencies.

“Our considerable base of 2,791 corporate-owned and managed stores, combined with our enterprise-wide IT system (�鶹ԭ�� ERP), provides us with a proximity and platform advantage when it comes to executing our daily operations and delivering on strategic plans,” Shoprite said.

The retailer started using �鶹ԭ��’s human resource and finance software in the late 1990s.

Its rollout of �鶹ԭ�� Retail — an integrated ERP system for retailers — was completed at all its stores and distribution centres in 2018.

This initiative saw the highest number of stores of any �鶹ԭ�� customers in Europe, the Middle East, and Africa go live with the software within a year.

“1,819 stores, 30,355 users and nine distribution centres moved onto �鶹ԭ�� within 12 months,” Shoprite said.

There are roughly 16,000 Shoprite employees on �鶹ԭ�� ERP at any given time.

Shoprite told MyBroadband that �鶹ԭ�� ERP provided an accurate and complete view of its business to drive strategic decision-making.

“It supports many aspects of our business — from supply chain to store,” Shoprite said.

“[It also] enables legislative governance and compliance across borders, as well as enabling our online and e-commerce offerings.”

In addition, the retailer said that �鶹ԭ�� ERP was core to business processes such as listing, pricing, ordering, and ensuring that Shoprite’s inventory was well managed.

“When you walk into a Shoprite or Checkers supermarket and see a full range of products stocked, displayed, priced and with promotions clearly marked, that is what the ERP system does for us,” Shoprite said.

Some of the specific areas in which �鶹ԭ�� ERP supported Shoprite’s efficiencies include:

• Production forecasting in the Fresh department.
• Receiving of goods, where 3-way matching of invoices allows us to identify claims and shortages immediately.
• Managing article master data, prices and assortments per store.
• Centralised ordering of stock and document/data sharing with suppliers.
• Ensuring on-shelf availability through real-time sales and stock visibility.
• Enabling complex bonus buys and promotion structures for Xtra Savings customers.
• Giving customers a view of their total lifetime savings on their Xtra Savings card.
• Exception management enabled by mobile technology.

The retailer added that �鶹ԭ�� ERP also enforced a consistency of processes across all of its stores, simplifying operations and providing a reliable customer experience.

With a single source of data and reporting, there are no disputes arising from different sources of information.

“The whole business works off the same set of authoritative reports and KPI dashboards, which eliminates noise and supports strategic and operational decision-making,” Shoprite said.

Shoprite also explained how one of its major successes over the past few years — its on-demand delivery service Checkers Sixty60 — benefitted from �鶹ԭ�� ERP.

“�鶹ԭ�� Retail is the source of the stock ledger and real-time sales, which are essential for accurate fulfilment of customer orders,” Shoprite stated.

“The ERP also provides promotional information, prices and article data to Sixty60, which ensures that the prices on Sixty60 are the same as the prices in-store.”

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Despite depressed consumer confidence levels, rising inflation and the increasing cost of living that could have had a severely negative effect on the sector, the latest BER Retail Survey found .

The recently concluded Black Friday promotion period is another ray of optimism for the sector. , Black Friday sales are expected to again surpass Christmas sales in South Africa this year.

The consumer research company found that the 2021 Black Friday week surpassed the biggest festive season sales week, with sales of fast-moving consumer goods baskets 23% higher than the average of all other month-end weeks in 2021.

Smart adoption of tech driving retail innovation

While bargain-hunting by cash-strapped consumers certainly contributed to the retail success of Black Friday and other promotional periods, there are larger forces at play. The retail sector’s resilience in the face of severe disruption can also be ascribed to its accelerated adoption of digital technologies that has unlocked new innovations.

For example, the Shoprite Group’s omni-channel retail offerings saw a rapid release of its on-demand delivery service Sixty60 across South Africa. Despite only launching in 2020, Sixty60 Its appeal to the always-on Gen Z consumers entering the customer pool has helped establish Sixty60 as the dominant force in on-demand grocery services, beating out more established competitors.

The fulfilment of online grocery purchases could see retailers introduce their own delivery services, as Sixty60 has done. But other retailers have pursued partnerships to avoid having to invest in new processes and infrastructure. Retailers can provide an excellent customer experience by establishing smart partnerships with expert fulfilment partners.

Africa’s largest e-commerce retailer Jumia with instant delivery service Zipline to employ the use of drones to enable quick on-demand deliveries.

German drone delivery service Wingcopter also in Africa to aid delivery.

The blending of physical and online retail is also giving rise to new customer experiences. South African retailer Woolworths recently piloted a new service where customers can virtually try on clothes or makeup to see how they’d look before they make a purchase.

As adoption of online commerce accelerates over the coming years, customers can expect to see more innovation in how retailers leverage technology to deliver great customer experiences.

Beating retail adversity

It’s not all good news for retailers though. Most retailers face severe disruptions to their supply chains. A recent survey among US business leaders found that ongoing supply chain issues are causing widespread challenges, including a decrease in revenue (58%), inability to pay employees (50%), and the need for new financing measures such as business loans (54%).

Supply chain gridlocks stemming from lockdown pressures in China means retailers can’t always ensure products are on the shelf. This is giving rise to retailers increasing their stock thresholds just in case supply chain issues cause  product shortages .

Many retailers are also pushing into new product and service categories. For example, Shoprite’s money market account, designed for cost-sensitive consumers and launched in 2020, .

The appeal of the service is two-fold: there are almost no account fees aside from a R5 withdrawal fee, and customers can do their banking while in-store  grocery shopping.

3 priorities for retail success in 2023

Retailers can continue their golden run in the year ahead by focusing on a small handful of key priorities.

Firstly, retailers can enhance their use of big data and analytics to guide the development of new services and innovation. Many retailers have a wealth of customer purchase data that can be mined for insight into personalised products, offers and experiences.

Whether purchasing online or in-store, customers seek personalised shopping experiences tailored to their needs and preferences. This can take the form of personalised marketing offers, discounts or rewards, and ensuring product suggestions and sales items are relevant to each customer.

Clothing retailers can take it a step further by tracking customer purchases to understand what styles and types of clothing a customer prefers, and offer similar products or even offer to tailor-make clothing items based on the customer’s preferences, body type, and more.

Secondly, retailers could develop tailored subscription services for certain types of customers.

For example, a pharmacy retailer could use loyalty data to better understand which customers are purchasing baby products. Because of the repeatable nature of purchases such as nappies and baby formula, a smart retailer could introduce a subscription service to qualifying customers that ensures a regular delivery of key baby items.

This would ensure repeat business for the retailer while giving new parents a positive customer experience by removing the need to constantly go to the shop to stock up on essentials.

Finally, retailers should enhance their human capital management capabilities. With customer expectations for great personalised service at an all-time high, retailers that want to win the hearts and minds of customers need to ensure in-store staff can deliver a consistently great customer experience.

It’s no longer enough that in-store staff simply stock shelves and process purchases. Smart retailers will invest in attracting and retaining top talent to ensure in-store staff can provide helpful information, guidance and support to customers during their purchases.

Retailers may choose to partner with technology providers that have the experience and global insight to guide how technology is deployed to assist with the above three priorities. For retailers that get it right, there is practically no limit to their success over the coming years.

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To implement a feasible, affordable, maintainable environment that fulfils the business objectives, preparations must be made well in advance to allow sufficient time to plan related efforts. Involve business users early to collect process and func­tional requirements, which helps ensure buy-in to the completed solution. Requirements and pre-existing assumptions should be assessed against best practices, including preconfigured content and configuration guidelines. All parties should agree and sign off on the scope. This ensures that the implementation is delivered on time and with expected quality and scope. Adopting best practices and limiting customizations will also reduce maintenance effort, especially for cloud solutions, as upgrade cycles are controlled by �鶹ԭ��.

A scope-change process should be agreed on to make sure the completed solution remains rele­vant. The process must guide decisions about the scope changes. It could include lessons learned from proofs of concept, identifying smarter ways to adapt existing business requirements to best practices, new business requirements, and the chance to leverage new best practices.

The Shoprite Group of Companies won Gold in the �鶹ԭ�� Africa 2018 Quality Awards – refer to this article. During the preparation phase of their project, key design decisions were workshopped and documented which aided as an accelerator for scope confirmation as well as for the detailed design phase. In their presentation to the judges, one of the key contributors to the success of their project was establishing and adhering to the key design decisions. This would also mean that it is imperative to manage requirements and scope changes very carefully throughout the project.

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With a background in financial management and business valuations, I have always been intrigued by ‘strategy’, that thing that ultimately sets a company apart from the next and probably, together with strong leadership, the main driver behind sustained value creation. In a series of interviews, I will be exploring different business leaders’ (all chartered accountants) approach to strategy.

I had a virtual interview with Anton de Bruyn, CFO of the Shoprite Group of Companies, to gain insights on what shaped Shoprite’s strategy during the early stages of the COVID-19 crisis. Four interesting items stood out:

The importance of adherence to risk management principles

The phrase ‘that brings me back to risk management’ echoed throughout the interview. It underlines the importance that Anton places on having a solid risk management framework. Adherence to principles such as risk registers for all divisions, having disaster recovery plans, business continuity plans, as well as regular risk forum discussions, was already part of Shoprite’s culture. The benefit of going through the risk management process lies therein that you already have a good idea of how you should react and what your contingency plans look like should anything unforeseen happens.

To illustrate how it practically unfolded, he took me through an example relating to their distribution centres. During 2018, due to labour unrest and other contributing factors, their distribution centres in Gauteng came under severe pressure, this in a time when they also went live with a new ERP system, leading to a material impact on the business − more than a billion rand lost in sales. The continued operation of their distribution centres is one of their top identified risks and the implementation of crafted continuity plan speaks to this risk. When COVID-19 happened, even though the cause was different, the continuity plans were ready to be activated.

Anton added that you will never be able to foresee exactly how things will play out, that a pandemic will hit, or that government will impose various regulations within different levels of opening the economy. As the pandemic poses new risks, such as potentially having a large number of your 2 800 stores closed at the same time due to infections, the framework is in place to formulate new contingency plans.

Another aspect feeding into the risk management process relates to Shoprite’s management structure, which ensures that everyone within Exco is continuously part of the risk management process. ‘Currently, the Exco meetings revolve mostly around the contingency plans and how to manage the implementation thereof.’

Future-proof yourself

‘Some 12−18 months ago the business looked different to where we are today on the back of the profit warning issued in February 2019,’ Anton said. ‘In the past two to three years there were many management changes, including the group appointing a new CEO, Pieter Engelbrecht, who succeeded Whitey Basson and had to land a clear message on strategy for the group going forward.’

Anton refers to the process as ‘future-proofing yourself’ so that you ensure that you stay relevant and move in line with international trends. And 12−18 months ago, they had to put a lot of attention on working capital, liquidity and refocusing capital allocation to strengthen their cash flow as part of ‘future-proofing themselves’. It inevitably placed them in a stronger position ahead of the crisis.

‘That brings me back to risk management …’ Anton emphasised that you must do a ‘risk assessment’ on your strategy to see if your strategy is still relevant, looking at all the strategic drivers. In order to ‘future-proof yourself and stay relevant’ you need to continuously look at ways to innovate in line with international trends (for example unlocking alternative revenue streams and focusing on online offerings). ‘You need to get the combination right between short-term quick wins and longer-term bigger strategies. If you stop innovating, you will stop being relevant, which will have an impact on the growth of your customer base.’

Some things can be implemented quickly, like seeing what to focus on during the pandemic − Shoprite expanded their online offerings, introduced virtual vouchers, and focused more on cell phone-related sales, among other things. Then there are other innovations that take longer to develop and roll out, like their FreshX store formats and Checkers rewards programme, both hugely successful.

‘There is, however, one proviso to innovation: you need to have the systems in place, especially the IT platform, to be able to handle these changes.’ Shoprite invested in an �鶹ԭ�� ERP system and �鶹ԭ�� software integration that allowed them to do things that they would not have been able to do in the past.

Communication with all role players

Continuous and clear communication with all stakeholders of the group, which includes the board, staff, shareholders, suppliers, the investor community, financiers and analysts, is crucial, and not just in a time of crisis. ‘If you don’t have the same message to all role players, people will get confused.’

Firstly, your board should know what strategy management drives and they need to buy in and support that strategy.

During the lockdown period management continued to update the board.

Also, your overall business strategy is not a secret anymore. Historically it could have been a ‘secret competitive advantage’, but today the communication of strategy is much more in the public domain, especially for a listed company. Shoprite has nine key drivers they focus on and these get communicated widely to all stakeholders (www.shopriteholdings.co.za/shareholders-investors).

Shoprite’s CEO communicates directly to the staff via their own company application. He publishes videos in which he shares strategic goals (for example key messages regarding cost drivers) and gives clear guidance on what is expected. ‘Communication’ − Anton could not emphasise it enough − ‘the better you communicate, over and over giving the same message, the better the strategy will be followed.’

Shoprite need to communicate in 14 countries, each with its own set of rules.

‘Within an environment that changes every day, the structure in which you communicate becomes extremely important,’ said Anton.

Corporate culture: passion and positivity

‘What pulls one through in a time of crisis is passion and the way in which you approach it. Positivity unlocks creative thinking. It is all about positivity and accepting challenges. You need a management team and employees with a lot of passion. Our CEO drives positivity.’

Anton continued that one of the first things Shoprite did was to ensure that their staff were safe (protective gear, enough sanitiser, rolling out mobile clinics). They also, early on during the lockdown, paid all staff an appreciation bonus − ‘retail is a hard and fast environment, you need to show you care about your staff and keep them motivated.’

We ended our conversation with some general business strategy-related topics, including the age-old principle of focusing on the client/customer. Shoprite’s approach is driven by a saying in their business that ‘no customer will leave the store unhappy’, so people go out of their way to make customers feel happy. New projects are approached with the questions ‘Is it for the benefit of the customer?’ and ‘How does it benefit the customer?’, a clear example of putting the customer at the centre of strategic thinking.

On incorporating sustainability and corporate citizenship into strategy, Anton mentioned that the integrated report is the first point of departure. Their company is totally committed and they embrace their role in society − supplier development (from information technology service providers to fruit and vegetable suppliers), soup trucks (utilised during periods of crisis) and mobile trucks serving rural areas, to mention a few. ‘It is nice to see that we can make a difference. The company does a lot and tries to give back to the communities − at the end of the day it is all about the customer.’

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