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Checkers rewards programme attracts over 4.7m customers

While its Sixty60 one-hour grocery delivery app is also well-received.
The Shoprite Group is known for its reasonable food prices and saw sales jump to a record R157bn in the year to June. Image: Moneyweb

Despite many retailers being negatively impacted by the Covid-19-induced lockdown regulations, the Shoprite Group gained market share and maintained a healthy cash flow – with its Checkers e-commerce and rewards programme attracting more than 4.7 million customers.

The giant food retail group, which is made up of Shoprite, Usave, Checkers and Checkers Hyper and known for its reasonable food prices, reported in its year to end-June results that sales jumped 6.4% to a record R156.9 billion.

This despite its liquor and furniture outlets being closed during the lockdown.

It says its operating profit increased by 8.7%, representing an R9.8 billion increase to R122.4 billion. The group reported a 20 basis point increase in trading margin to 5.3%.

The board has declared a final dividend of R2.27, bringing the total dividend for the year to R3.83 from R3.19 in 2019.

It expanded by 147 stores comprising 101 corporate and 46 franchise stores over the period.

African markets 

The only downhill in its results came from its rest-of-Africa markets, where sales declined by 1.4% in rand terms.

The group said this was mainly due to the lockdown regulations in the past six months which affected store openings, days and hours of trade, as well as restrictions on transport in some countries, impeding the ability of its employees and customers to get to its stores.

Since August the group has embarked on a process through which it will consider the sale of either a majority stake or the entire shareholding in its Nigerian subsidiary after 15 years in that country.

It said it has received interest from potential buyers. The due diligence process is currently in progress and expected to be completed by the end of September 2020.

The group will close its remaining two stores in Kenya in the year ahead due to underperformance resulting from Covid-19 imposed regulations as well as the reduction in interest income earned on government bonds and bills.

Analysis

FNB Wealth and Investments senior portfolio manager Wayne McCurrie says even though the results of its African market were not as positive in comparison to the South African market, the group managed to not increase its losses in comparison to last year’s results.

“The underlying operations didn’t do too bad, but the major issue was that the currencies decreased dramatically against the rand. However, the positive thing about the African markets is that the loss didn’t increase because of the lockdowns,” says McCurrie.

He highlights how the group’s results indicate how resilient the grocery retail market is. He believes they will continue to gain market share due to consumers finding Shoprite the better option in the market to do their grocery shopping as they are cash-strapped as a result of the pandemic.

“They clearly gained market share during the lockdown and they have good cash flow as well, however, all the retailers aren’t badly positioned for Covid-19 because people still shop [for groceries],” McCurrie says.

Sasfin Securities deputy chair David Shapiro says it was expected that the group’s results would be positive.

“They produced relatively good numbers and I think that if you are looking at buying retail shares, the Shoprite Group and Spar Group would be good companies to buy in this space,” Shapiro says.

He says the group’s upper hand is that it caters for the basic needs of consumers.

“They are in a better position than some of the other retailers as they give you what you [consumers] need,” Shapiro says.

E-commerce and rewards an added advantage

In November 2019 Checkers introduced its rewards programme, called Checkers Xtra Savings. According to the results it has signed up 4.7 million customers since inception.

It also revealed that the customer response to the launch of its Checkers Sixty60 one-hour grocery delivery application has been exceptional.

“These are attractive add-ons they have added which reinforce their brand in the market,” Shapiro says.

He says the advantage of the pandemic is that it has forced consumers to stay at home and thereby forced them to adapt to e-commerce.

“The one thing about the lockdown is that it sped up e-commerce that consumers showed resistance towards. The [need] for e-learning among consumers increased dramatically because it had to, and consumers embraced it.

“Companies like Checkers broke down barriers during this period that would have taken them a long time to do if it weren’t for the lockdown. So companies such as this – that were forward-thinking and innovative before the lockdown [benefitted] because the more they digitised, the more they learned about their customers,” Shapiro says.

Shapiro also notes the healthy cash flow of the group.

“What it highlights is that is turning over its stock, and that is a very important measure of how it is doing, so it means that they are not stuck with stock,” Shapiro says.

The future

The big question is whether the group will continue to maintain a positive balance sheet and its newly gained market as life returns to normal.

“That is a very big challenge,” says Shapiro. “What happens now as things get back to normal? People are not forced to be at home anymore, will consumers continue with e-commerce?”

Shapiro says this something that should be watched closely in the next year.

Shoprite share price

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…easily THE BRIGHTEST card in my wallet, jumping right at you!

(Interesting the loyalty model of the older PnP vs the newer Checkers card….the latter learned from the former’s errors).

PnP Shopper Card gives fractions of savings on each purchase…but it seems like a few cents’ worth per product, while Checkers offer savings only on SELECTED items…almost like Dischem/Woollies. At least with Checkers you can choose the discounted items you want to purchase, and the more worthwhile saving runs into a few Rand per item, and not cents as in PnP.)

This is the type of stories we need to hear

Big brother is watching you …

Checkers now needs to spend some money modernising their stores. They have too much stuff everywhere.

Every bit helps.cant they set up petrol stations?

Xtra savings and Sixty60 are not linked together…come on Checkers. Do the right thing.

Apparently they have bought liquor stores? (vs the small area with wines)
That is another very good improvement, the liquor sector is a “gold mine”.

Seems like the food retailers are more certain to pay dividends in 2020 than the financial sectors.

While I still do a lot of shopping at Checkers I still have to get certain stuff from Makro, P&P and Spar & Housewives Market.

There reward system has deteriorated over time unless you have a Bond, Overdraught and in debt. There Interest rates are among the worst.

Time to do a survey which is best for the consumer regarding Rewards and trolley for trolley.

Please include folk that are Retired with no debt.

WJS

I still don’t understand how the Xtra savings EXACTLY works???

So, back in the day, Checkers will put a leaflet out there with a lot of products they think their customers will flock to their store for if priced right. A bit of hit and miss as some stores will have stock consumers don’t need, etc, etc. They still do that. Now however they can take a much targeted approach by recording what you buy, where you buy it and how often you do this, by looking at your purchase behaviour when you use your card at Checkers. Thus, they can target you specifically with a Marie Biscuit price discount if they know that it’s your thing and hopefully you will rush to Checkers to do so. Same with PnP and all other customer retention / loyalty cards. The opportunity I believe, sits in Shoprite, which does not have the card yet.

Wally Stowe. I think you are missing the point. From what you are saying the problem lies with your bank’s loyalty card and not the store. Rewards levels by banks relies on how many of their products you use. Retailers have no connection with your bond or loans or insurance whatever. Store cards work solely on the products THEY sell you.

Vulpes 48. I am referring to FNB rewards system which is linked to Checkers. So I have no gripe with Checkers or Engen Fuel which is linked to FNB E bucks. So my point is Value for money which bank has the best reward system and trolley for trolley do I get the best bang for my buck. In other words do I switch Banks to whoever they are linked to.

Have a safe day.

Wally

Why have a physical card? That’s hardly innovative.

Why not just create an app that the cashier can scan and the customer can see their points and what products are on special at any time?

This would then also improve your interaction with your customers and you can push your specials directly to your target audience and reduce your print advertising spend at the same time.

They have an app. Don’t forget that the majority of Checkers customers are not tech savvy.

And on the app you do get specials which are claimed to be specifically for you.
I still prefer Pick and Pay though, you get money points( some might say they are too little) but are ” free” and are on top of your weekly or monthly specials, personalized specials plus on the spot voucher discount for good found to be selling less somewhere else.

End of comments.

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