Shoprite posts strong results, says it won’t reopen six stores gutted by looters

The Shoprite group has reported a strong set of results, with its gross profit margin improving by 55 basis points to 24.5%.

Its Checkers business grew sales in South Africa by almost 11 % in the past year to 4 July, with more than 1.5 million downloads of its Checkers Sixty60 delivery service app.

Shoprite and Usave increased sales by 8.8% in South Africa, while the furniture segment (including OK Furniture) increased sales by almost 25% – as consumers continued to spend on furniture and electronics, the company said.

Across the group, Shoprite saw its sales increase by 8.1% to R168 billion as weak currencies weighed on sales from other African countries.

The group’s headline earnings grew almost 21 % to 883.8 cents per share. Its headline profit excluded its Nigerian supermarket business (which was sold), as well as its stores in Kenya (which have been closed) and discontinued operations in Uganda and Madagascar.

Over the past year, the group created almost 4 000 new jobs and opened a net 112 stores (including 36 franchise stores). But the company has decided not to reopen six of the 231 stores that have been “significantly” damaged during the civil unrest in KwaZulu-Natal and Gauteng in July.

Some 83 stores remained closed, with 47 of these stores “significantly impacted by fire”.

“[The] process of reopening for these stores will be mixed: some may open in the coming months, some may take a year, others will require new premises,” the group said.

In a presentation, Shoprite CEO Pieter Engelbrecht said that the group managed to reopen some stores that were “completely destroyed” within six days.

Unrest damage will be covered by insurance, and Shoprite already received its first payment from the state insurer Sasria. But some costs, including additional security at other stores during the unrest, can’t be recouped.

Engelbrecht said that at stores that were not damaged during the unrest, sales momentum was “very good” following the year-end. Its full-year dividend increased by 42% to 544 cents per share.

Following the results, Shoprite’s share price climbed by almost 3% to R183.58 in mid-morning trading on Tuesday. Source: Shoprite posts strong results, says it won’t reopen six stores gutted by looters I Fin24 (  Answer ALL the questions in this section.

Question 1 (25 Marks)

Lately, Shoprite’s adventure into Africa ended after fifteen years and at a low as Africa’s number one grocer disinvested from prominent regional markets. With the foregoing statements in mind, select a marketing strategy suited for growth markets to justify Shoprite’s decision to abandon regional expansion in favour of growing the local market. Substantiate your answer using information from the article.

Question 2 (25 Marks)

Chasing after new markets on foreign land has proved to be a gamble. With the aid of research, discuss some presumed social; economic and legal challenges of establishing and sustaining competitive business operations on the African continent outside the boarders of South Africa.

Question 3 (25 Marks)

Shoprite Holdings is a diversified but focused business operation. Assisted with research, analyse how Shoprite Holdings has effectively used integration strategies to retain pole position in the South African retail industry.

Question 4 (25 Marks)

The article reports that Checkers business grew sales in South Africa by almost 11% in the past year to 4 July, with more than 1.5 million downloads of its Checkers Sixty60 delivery service app. With the aid of research and a critical look at Checkers webpages, assess the value addition from Checkers Sixty60 to the Shoprite group revenue inflows.

Answers to Above Questions on Strategic Marketing Management

Answer 1:  A growth strategy is defined as the plan of action with the objective of increasing the business market share. There are different types of marketing strategies that can be applied by a business depending on the stage in which it operates in the particular industry. In the given case of Shoprite, the company has favoured the local market which is growing tremendously as against the regional expansion, and considering this decision of the company, the most appropriate marketing strategy for such growth market would be …………

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