South Africa’s high-end food retail market has traditionally been dominated by Woolworths, but Checkers is now grabbing a bigger slice of the pie thanks to various initiatives.
Checkers has traditionally targeted most market segments through its Checkers and Checkers Hyper stores.
Woolworths, in turn, focussed nearly exclusively on the high-end market with its Woolworths Food outlets.
Woolworth’s focus on quality and convenience through products like cut fruit and microwave meals has made it a favourite among well-off South Africans.
The strategy to target the high-end market paid off handsomely. Woolworths’ food business now generates R36 billion in revenue per year and contributes R2.7 billion in operating profit.
In its 2020 financial results, Woolworths said the exceptional performance of its food business made a big contribution to the group’s overall results.
Considering Woolworths Food’s strong performance and relatively high gross profit margin of 24.9%, it is hardly surprising that Checkers wants to muscle in on this lucrative market.
Shoprite Holdings CEO Pieter Engelbrecht said capturing a larger share of South Africa’s premium food retail segment continues to be one of their biggest growth drivers.
Shoprite is partly achieving this growth through its new FreshX Checkers stores and state-of-the-art flagship supermarkets.
The new supermarkets feature freshly made artisanal breads, coffee bars, temperature-controlled wine tasting rooms, and stone-baked pizzas.
Shoppers are also treated to Wild Pacific salmon caviar served at a sushi bar, a chocolatier bar, and an in-store Kauai.
Checkers is clearly targeting rich clients through its new high-end stores, but this is not its biggest value proposition to this market. It is, in fact, its Sixty60 online shopping service.
Checkers launched its Sixty60 one-hour grocery delivery service in select locations in Sandton, Johannesburg, and Cape Town in November 2019.
It was an instant hit. The Sixty60 app is modern and user-friendly, and the food is delivered faster than any competing service.
Following this successful launch, Checkers rapidly expanded its Sixty60 service throughout South Africa and is now available in 195 supermarket and liquor stores nationwide.
Checkers Sixty60 is the number one grocery shopping app in South Africa with more than 1 million downloads and over 15,000 products to choose from.
Checkers would not disclose Sixty60 order numbers, but industry speculation suggests it is around 10,000 per day.
So significant is demand that Sixty60 had to extend its delivery hours. These extended delivery hours added to the convenience for customers.
Checkers has built a world-class ecommerce service in a matter of years which provides South Africans with unmatched convenience.
To achieve this rapid development and rollout, Checkers partnered with local firms Zulzi and Cowabunga.
Zulzi helped to build the Checkers Sixty60 delivery app in just six months while Cowabunga support the delivery and monitoring systems.
Through its Sixty60 service, Checkers has taken a big lead in the South African food delivery market.
Woolworths is not sitting back. In December 2020, the company launched its own same-day delivery service called Woollies Dash.
Woolies Dash currently operates in 18 stores and is the first retailer in South Africa to offer a full cold chain to customers’ doors.
“It is a very innovative technology that meets our very stringent cold chain standards, packaged within a lightweight carrier,” Woolworths spokesperson Silindile Gumede told MyBroadband.
“This is an important part of our offering, as freshness is key to our quality.”
Gumede said their customers responded well to a same-day service. “We see Woolies Dash as large growth opportunity,” she said.
Woolworths has been iterating and improving the Woolies Dash service in preparation for a further rollout.
“We can already see the benefit of getting this to market as a trial in its first iteration. The customer feedback and fast iterations has resulted in markedly improved App store ratings,” said Gumede.
Woolworth’s traditional online shopping service also continues to do well. It achieved triple digit growth across food, fashion, beauty, and homeware.
“In foods, we launched Click and Collect to augment our already very large scheduled delivery service,” Gumede said.
“We are therefore one of the few retailers which offer the full suite of services – scheduled delivery, click and collect, and same-day on-demand.”
Woolies Dash will augment, and not replace, Woolworth’s next day scheduled delivery services which has a large national footprint.
The company is confident its three-pronged approach – scheduled delivery, Woolies Dash, and click and collect – sets it up for strong growth.
The premium food retail market used to be fought with high-end stores which feature a wide range of products, excellent service levels, and unique additions like a coffee bar.
While these physical retail stores remain an important value proposition, the new battleground is online shopping.
Sixty60 has changed the convenience game and others will have to follow or lose out.
The battle for online supremacy is on.