Checkers Triumphs Over Pick n Pay in Retail Revenue Race

Checkers, the prominent supermarket brand under the Shoprite Group, has achieved a landmark triumph over its competitor Pick n Pay by generating higher revenue, reflecting a significant shift in the South African retail landscape. In a strategic reveal, Shoprite’s operational update for the 52-week period ending June 30, 2024, highlighted a 12.0% increase in total sales of merchandise, cresting at around R240.7 billion.

The group's aggressive expansion included the addition of 292 new outlets, boosting its operational store count to 3,639. In South Africa alone, 201 new stores opened, totaling 2,322 across the country. This expansion envelops numerous store formats, from Shoprite to Checkers, Usave, LiquorShop, and several specialist stores.

Significantly, supermarkets under the Supermarkets RSA unit, which contributes 81.0% to the group's sales, witnessed a sales growth of 12.3%. Standout successes included Checkers and Checkers Hyper, each with a 12.3% sales growth, and the Checkers Sixty60 service, which surged by 58.1%.

Shoprite's performance received a boost thanks to Eskom's reduced load-shedding from March to July, reflected in decreased diesel generator costs from R500 million to R254 million in the latter half of the year. Yet, Shoprite anticipates a modest rise in water and electricity expenditure, projecting mid- to low single-digit increases.

Conversely, Pick n Pay's financial year ending February 25, 2024, painted a bleak picture. The retailer's like-for-like revenue growth staggered at 3%, below inflation levels, with trading profit plummeting by 87%. An alarming net loss of R3.2 billion is the grievous result of a high-interest expense of R2.4 billion, debt, and a substantial R2.8 billion impairment loss.

Pick n Pay's financial distress stemmed from a steep rise in interest-bearing liabilities, swelling to R30.8 billion. A consequential R4 billion rights issue was initiated to recapitalize, and a future IPO for Boxer is underway. The operating loss reported by Pick n Pay stores intensified to R1.5 billion for the financial year, compounded by a hefty asset impairment.

These contrasting tales of retail prowess and financial collapse reflect the diverging trajectories of Checkers and Pick n Pay. With Checkers advancing in both revenue and growth, it illustrates robust market consolidation vis-à-vis Pick n Pay's struggle with structural and operational setbacks.