Shoprite last week quietly launched a new franchise in Cape Town, opening OK urban as part of the group’s expansion in South Africa.
Inspired by customer preferences for a “one-stop neighbourhood hub”, the first OK urban store opened in Sonstraal, Durbanville. In an area that doesn’t have much retail activity, Shoprite is testing the waters with its cashless offering and “convenience at supermarket prices”, while reducing its exposure to other countries in Africa, and facing tougher restrictions on local acquisitions because of competition issues.
The move to cashless shopping has been driven by customers’ increased use of cards, SnapScan and smartwatches. Shoprite opened its first cashless store, Uniq clothing, in Cape Town’s Canal Walk in March, and the Hyper in Brackenfell has been running a cashless system for some time.
The retailer says the cashless stores provide a safe environment and reduce the risk of armed robberies.
The retailer says having cashless stores reduces the risk of armed robberies
The OK urban store’s products range from baby goods and detergents to fresh sushi made on the premises, alongside a deli with grilled chicken and pies. At the entrance are artisanal products and baked goods (rusks and cookies) from family-owned bakery Beertjie, which has been bolstered by the group’s support in growing small and medium businesses.
On the shelves are a number of private-label products that are found in Checkers as well as convenience ranges that include ready-to-eat, heat-and-eat and ready-to-cook meals. These include the Simple Truth range, which has crushed wholewheat flakes and sweet chilli sauces, and the Forage & Feast range, with its rooibos tea and peri-peri sauce. The availability of private-label products continues to grow in the group and at its latest reporting period (2022), its supermarket private-label participation measured 18.8%, up from 18.3% in 2021.
The colours of the OK division’s outlets are usually red and green, but OK urban’s black and white with hints of green are similar to Woolworths’s colours. The OK urban brand has eschewed plastic shopping bags, substituting them with bags made of paper and material. The shop features a coffee bar with takeaway options.
The group is believed to be assessing other areas in the Western Cape for venues to roll out the brand, and will aim at urban environments. The store is corporately managed, but will be franchised.
Despite already being the largest retailer in the country, the group still considers acquisitions in South Africa, Shoprite CEO Pieter Engelbrecht has said. In its latest annual report, the company says it is competing for “share of stomach” in competition with its retail, restaurant and home-delivery counterparts. It is broadening this to also compete for greater “share of wallet” through organic and greenfield initiatives that extend to premium pet, baby and wellness products. In its latest reporting period in March, it says it has had 46 straight months of growth in market share.
Shoprite has transformed the 94 Cambridge Food and Rhino Cash & Carry stores it bought from Walmart-owned Massmart. In its latest reporting period, it says double-digit same-store growth outstripped those of rivals and boosted market share by R3.9bn for the 26 weeks ending December 2022.
The brands in the group cover the South African consumer spectrum. Shoprite and Usave dovetail to serve the core mid- to lower-segment customer with value, range and accessibility, while Checkers and Checkers Hyper continue to make inroads into the mid- to upper segment. OK urban seems to address what the group says in its annual report is “time and cost pressures for our customers”, which it sees as a priority.
“This underpins many business decisions, such as expanding our reach of community-based Usave stores or building on our successful on-demand grocery delivery solution Checkers Sixty60,” the group says.
Shoprite’s core South African supermarkets business generates 80% of sales and 91.2% of profits, and is corporate owned and operated. Its base of 1,820 stores is represented by Shoprite, Usave, Checkers, Checkers Hyper, Shoprite and LiquorShop, and are owned and managed end to end by the group. They are not franchised.
According to its latest (2022) financial year-end report Shoprite had 513 OK franchise stores. The division is about a one-stop neighbourhood convenience destination through OK Foods, OK MiniMark, OK Express and OK Liquor stores. These brands provide groceries, fresh foods and liquor close to communities.
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