South African supermarket giants in fine food fight

Mon Jun 19, 2017 12:47pm GMT

By TJ Strydom

JOHANNESBURG (Reuters) - As South Africa slides into recession, and households have less and less to spend, the number one supermarket group Shoprite is adopting an unlikely strategy: it's pushing upmarket.

While the lower-income families that have long been its core customers cut back, the spending of the wealthier class remains undented by the downturn.

In a bid to retain its leading industry position, the discount retailer's new boss is driving hard into the upmarket, higher-margin niche dominated by rival Woolworths.

The stage is set for a turf war to win the hearts, minds and wallets of South Africa's richest 2 million households - and ultimately preeminence in the supermarket sector.

Shoprite CEO Pieter Engelbrecht told Reuters that affluent areas and customers were where he saw growth in the maturing South African market.

"A lot of those (wealthier) customers, 2 million of them, actually frequent our stores already, but not exclusively," he said in an interview. "Our job is to get a better share of their wallets when they are in our stores and then impress them so that they come back again."

Shoprite is doubling its offering of the kind of high-end convenience foods that Woolworths has built its reputation on - from gourmet lamb shanks and oxtail stew to teriyaki-and-ginger basted pork ribs. Its range will reach around 500 products by the end of this year, Engelbrecht said.

These products typically cost about 200 rand ($15) for a meal for four - 10 times the minimum wage of 20 rand an hour as set by new labour laws making their way through parliament.   Continued...

Ready to eat meals are seen  at an outlet of retailer Shoprite Checkers in Cape Town, South Africa, June 15, 2017. REUTERS/Mike Hutchings
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