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JIMMY MOYAHA: Bright and early at eight o’clock this morning Africa’s largest retailer – not South Africa’s largest – Africa’s largest grocery retailer in the form of the Shoprite Group gave us an update on their 52 weeks for the year ended 29th June 2025. If the numbers are anything to go by, this is going to be a very interesting conversation.
Revenue figures topped the R250 billion mark. Alongside that, more than R16 billion in savings was returned to customers.
Read: Shoprite’s sales break through R250bn mark
The 500th Usave store opened in South Africa alone. Those are just some of the figures that we’re going to get into with the chief executive officer of the Shoprite Group, Pieter Engelbrecht.
He joins me now to take a look at the performance of the business and see what we make of it. Oom Peter, always lovely catching up… It seems every time we have this conversation there’s always something new and there’s always something that surprises me in the numbers.
Let’s start with your thoughts around the performance of the business over the last year and then we’ll get into some of those numbers that I found quite surprising.
PIETER ENGELBRECHT: Okay, Jimmy, thanks a lot. The summary of it is 8.9% sales growth for the group. Of course RSA supermarkets did much better at 9.5%. So top-line growth at a very, very low inflation – we must not forget that. Inflation came down to as low as 1.9%. One must be careful when you compare percentages, because a little more than a year ago inflation was at 13%. Then of course you report maybe numbers in the twenties.
So if you look at the number of 9% sales growth, you say, ‘Oh, are they slowing down or what?’ That’s not the case. We must always remember that.
Then if we go to the second line, which I’m very proud of, it’s the fact that gross profit has grown by 10.6%. We’ve increased our percentage by 40 bps [basis points], yet remain the cheapest supermarket in South Africa, giving the best value.
You mentioned the number of R16.5 billion to consumers in savings at till point. And then we jump to the bottom line 16.6% growth in trading profit in the macro environment where we are. I don’t have to explain that to you. I think it summarises an outstanding performance from Team Shoprite, of which I’m very proud.
JIMMY MOYAHA: Following our last conversation, Oom Pieter, we’ve spoken about the fact that Shoprite is ticking along as a global grocery retailer at this point – with the margins, with the numbers, with the metrics. By every standard we are no longer comparing Shoprite to some of the local grocery companies you compete with, even though that is still primarily the landscape that you compete with. But at least when I look at the volumes of the amount of goods that the Shoprite business has been able to move in the past year, the numbers suggest that you are one of the best retailers in the world, not just in South Africa.
Now that’s a very telling statistic, especially if we think about the global landscape that we find ourselves in. How is Shoprite able to stay this competitive and this ahead of the game?
PIETER ENGELBRECHT: Right. Number one, we are absolutely customer-obsessed. I know all companies say, ‘customer focused, customer focused’, but we really live and breathe it.
PIETER ENGELBRECHT: I’ll give you one example. We’ve got the policy here that the sun doesn’t set on a customer complaint. What do we mean by that? Every single customer complaint that we get in a day will get resolved in the same day. We don’t go to bed before it gets done. That’s why I can say we are really customer-obsessed.
With that comes the innovation that is needed for us to bring consumers value so that they can improve their lives.
This journey started a couple of years ago. We separated the brands very clearly [of] Shoprite and Checkers, and then we started to invest behind that.
From a technical or technological point of view, we have laid the foundation of the SAP system that gave us line-item profitability and gave us a real view of stock across the supply chain. And, then we started investing in things like price-optimisation tools, personalisation tools, Rainmaker Media, a lot of digital AI data scientists. They started to write algorithms for us, to understand things better and make precise data-[based] decisions, not gut feeling – ‘I feel like this’.
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Maybe you would like this example. We had a situation where one of the regions was losing pie sales. So what does the normal retailer instinct do, or tell you to do? It’s to say, ‘What about two for the price of one?’ That’s until we look at the data and the data says no, people don’t buy two pies. They usually buy a pie and a muffin. Oh, so you make a deal for a price – a pie and a muffin.
That’s a simplistic way of explaining how you are making data-driven decisions compared to what you think and what your gut feel is.
And those products and all those investments we’ve made are starting to come into maturation now. We’re starting to see the return on investment from those. And we’ve been investing quite a bit in capital. For the last three years almost every year we’ve invested R8 billion in capital. Okay – a lot of that went into new stores as well, but a lot of that went into technology.
I’ll give you another last example – I’ll now be giving you two long-winded answers. But there are over 900 software upgrades on the Sixty/60 platform in a year, meaning enhancements to make the experience better, faster, all those things. That alone tells you a story of what goes into the innovation part.
JIMMY MOYAHA: Oom Pieter, I want to take a look at the other side of the business around the expansion – opening a net 281 stores. We touched on the fact that one of those was the opening of the 500th Usave store in South Africa. The business has been growing.
Alongside that, the business has been continuing to create jobs within that space, adding more than 8 700 jobs in this particular financial year.
I saw something interesting that came out of the team at Just Share around the average minimum wage that’s being paid by Top 40 companies. Now, Shoprite didn’t rank highest on that list, but Shoprite does employ more than 150 000 individuals across the business. How do you sustain all of these employees, and how do you take the approach to looking after them the same way you look after your customers?
PIETER ENGELBRECHT: Yes, I do think that’s a one-sided comparison. But it’s not. It’s the emotional argument and not one that you can win. So let’s stick to the facts – Shoprite employees.
On our payroll we have 168 000 people. One must not forget that there are a lot of indirect jobs that are not accounted for here. I’m talking about trolley collectors, merchandisers at store level, security personnel. If you add all of that, we’re talking a number of probably closer to 230 000-odd people that Shoprite almost directly employs.
We are extremely proud of the 8 700 direct jobs we’ve created. Now, what is the thing about minimum wage and then the CEO’s salary? Somewhere I have to start. The second question when you apply for a job that you get asked is ‘What’s the relevant experience?’ Now, where am I going to get the relevant experience if there’s no employment in the country? So we make a special effort to give people a chance. It’s a starting point only, and you don’t stay at that level where you start, the day you start right at the lowest level or at the minimum wage.
In the past year, we specifically selected unemployed youth. We spent R130 million training them to give them some form of experience to equip them better to find employment.
Secondly, we have internally had over 18 000 internal promotions – in other words people who were promoted internally. So they obviously are now moving away and further away from the minimum wage, so to speak.
Then what everybody forgets is that very few, if any other, South African companies have an Employee Trust. Our Employee Trust already has paid over a billion rand to our employees. The only requirement to qualify is you must have two years of employment history with us, of course. You must have been employed by us for two years or more.
Those are not salaries or bonuses and that. It’s easy to forget all of these and the fact that we’ve spent over R1 billion in this year on training of these 170 000 people, equipping them even better to improve or get a promotion – or even, for that matter, to go into business on their own.
I think any person who has been at Shoprite for five years or so can do anything. They would be so well equipped in terms of a general [understanding of] how business is conducted – from reading financial statements to customer service. We have to look at this holistically and then say what we really do.
JIMMY MOYAHA: Holistically it’s certainly an important thing. And for context, that 168 000 people that Shoprite does employ makes them the largest private-sector employer in South Africa by number of people on their payroll.
Oom Pieter, let’s wrap things up with the other billion-rand conversation, the billion rand in buybacks that you’ve been able to conduct in this financial year alone, bringing the total share buybacks of this particular endeavour to just over R2.6 billion. That’s returning value to the other client of yours – and that’s of course the shareholder.
PIETER ENGELBRECHT: Definitely. And this year I’d love to add to that. Obviously we look at our cash, the free cash flow that we generate; we generate roughly R23 billion in cash in a year. We spend R8 billion on capex. We pay tax. We pay dividends. And then we make sure we maintain roughly around $10 billion in free cash flow.
That was part of a plan. We still have a mandate to do more buybacks. But that always comes when we think that is a better option of return to the shareholder than any other investment.
Then, on top of that, don’t forget we have not skipped paying a dividend any year – through Covid and all of those things. The dividend is up this year 9.7%. R8.71 is the final dividend for the full-year dividend. The return on equity on the share for the shareholders is currently at 26% – actually 27% – and the Roic this year [return on invested capital] moved from 16% to 19.6%
I think as a general myself, a shareholder, I am content with that performance.
JIMMY MOYAHA: Contentment from the largest retailer on the African continent after a stellar year of performance. The business continues to grow in every metric, including the online business that has reached just shy of R19 billion in sales through the Sixty/60 business.
But we’re going to have to leave this conversation on that note. We are unfortunately out of time. Thank you so much to the chief executive officer of the Shoprite Group, Pieter Engelbrecht, for taking us through the performance of the business and some of the big milestones the business has been able to achieve.
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