MNP3701 ASSIGNMENT
2 SEMESTER 1 .100% CORRECT questions, answers, workings and explanations. for the case study in Appendix C and then answer the question below.
APPENDIX C – CASE STUDY FOR COMPULSORY ASSIGNMENTS
Shoprite, the king of grocery retailers
Throughout the past few years, Shopri...
, Read the case study in Appendix C and then answer the question below.
APPENDIX C – CASE STUDY FOR COMPULSORY ASSIGNMENTS
Shoprite, the king of grocery retailers
Throughout the past few years, Shoprite Holdings has followed a different approach from its major
competitors regarding its business practices. Shoprite has been on the forefront of strategic planning due
to their massive investment in infrastructure. The expansion of the company into franchises has allowed
it to seize their market share from its competitors, as well as cross borders into greater parts of Africa.
Shoprite’s main strategy is still to maintain its position as South Africa’s largest African retailer. Whitley
Basson, CEO of Shoprite Holdings believed that Shoprite’s significant infrastructure investments set them
apart from other retailers. As a result, market penetration was more challenging and costly for newcomers
as they (Shoprite supermarkets) hold such large market shares. Shoprite has over 200 supermarkets in
operation outside the borders of South Africa. Basson believed that the reason behind their success was
due to the time spent in the development of information technology capabilities and international
acquisition skills. Shoprite managed to stay successful by investing in central distribution centres.
Shoprite’s success is shown by a 15% growth in their trading profit to 7.2 billion on the back of a 14.4%
rise in turnover to R130 billion in 2016. This was a trading margin marginally increased from 5.57% to
5.6%. According to Statistics South Africa, the official food inflation rate in 2016 was 7.2%, but Shoprite’s
internal food inflation averaged 3.5%. Shoprite’s internal food inflations were lower compared to the other
giant grocery retailer’s food offering such as Pick n Pay, Spar Group, Woolworths and Massmart’s food.
Market watchers; use the internal food inflation, to assess the price movement of selected goods, because
retailers do not usually disclose their actual pricing strategy.
However, Basson confirmed that their focus is on price and their aim is to retain their low-price leadership
in the grocery retail market. One way of achieving this is by using the rebates; they received from their
suppliers to subsidise price increases. Furthermore, with the used of promotional programmes, Shoprite
can subsidise certain basic foods to assist the poorest of the poor.
Source: Moneyweb. "Shoprite maintains its retail kingpin status". Accessed on 27/07/2017. Available from:
https://www.moneyweb.co.za/news/companies-and-deals/shoprite-maintains-itsretail-kingpin-status/
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