Shoprite says its turnover is healthy despite a decline noted in consumer spending. “Every division of the group, with the exception of the furniture business, turned in improved results,” Shoprite said in a statement last week. Shoprite chief executive officer, Whitey Basson, said that in a market with rising food inflation, management took a conscious decision to sacrifice gross margins for turnover growth. “This enabled us to increase our market share by 1.3 percentage points to 28,8%,” he said.

Basson referred to the downswing in the economy which is noticeably having an effect on retail sectors, saying the food sector was to a certain extent cushioned against the worst fall-out of such a decline.
“We are not immune to it, but the effects seem to reach us considerably later than the rest of the sector. It is illustrated by the difference in trading conditions that prevail at present in the food and the durable goods market. While food is a basic necessity which consumers can't do without, they cut down very quickly on purchases of durable goods when they feel the economic pressures and credit is at a premium,” he said.
Basson said there is still buoyancy in the food sector primarily in the lower to middle end of the market and an area in which the group trades predominantly.
The turnover from supermarkets in countries such as Namibia, Zambia, Zimbabwe and Botswana grew by 32.4%. “We trade in 16 other countries, and virtually all of them posted excellent results,” he said.
Basson said the group also managed its cost base well with the result that expenditure grew markedly slower than turnover. “An example of such discipline is the fact that our inventories grew 14.1% while turnover increased by almost 22%,” he said.