South African retailers turn to online sales, launch of convenience stores to drive sales

SOUTH AFRICA – The COVID-19 pandemic hugely impacted the food supply value chains across the globe, following the restrictions put in place by the various authorities and governments to reduce the spread of the virus.

To quantify the impact, South African retail food sales amounted to US$39.8 billion in 2020, a 6 percent decline compared to US$6.4 billion registered in 2019.


This was a retrogression from the gains registered in the previous year of 3 percent.

According to a GAIN report by USDA, this was due to the government-imposed restrictions on business hours, the periodic prohibition of alcohol sales, and disruptions to some supply chains with border closures.

South African imports of agricultural products decreased by 6 percent to US$6 billion in 2020 compared to US$6.4 billion in 2019.

Imports of consumer-oriented agricultural products decreased by 17 percent to US$2.2 billion in 2020, down from US$3.1 billion in 2019.


Additionally, all retail stores were/still are required to implement social-distancing policies and sanitation measures, which in some cases led to long lines outside of stores, particularly when deals and discounts were offered.

Further to that, massive unemployment and slowed GDP growth, constrained consumer spending.

About 35% of South African consumers had shopping apps on their phones in 2020, compared to 30% in 2019

Retailers turn to tech to stay afloat

In a bid to continue supplying consumers with the essential goods and keep driving sales, the South African retailers invested in online shopping and grocery delivery avenues, fostering convenience.

South Africa has been slow on the digital front over the years relative to more developed countries such as the United States.


However, the trend is turning, with most retailers investing in a strong online presence, growing competition for communication networks and increasing use of payments via electronic bank transfers.

The COVID-19 pandemic has highlighted the importance and growing need of online shopping and contactless delivery.

The rising number of consumers that have internet access, improvements in delivery services, and consumers’ growing trust in online shopping are expected to see a marked increase.

Approximately 35 percent of South African consumers had shopping apps on their phones in 2020, compared to 30 percent in 2019.

Major retailers like Shoprite, Woolworths and Pick N’ Pay have invested in better delivery services and easy-to-use online platforms to increase sales.

During the period, Pick n Pay acquired on-demand online delivery app Bottles, while Shoprite expanded reach of its Checkers Sixty60 service to now being available in all nine provinces in South Africa.

Supermarket chains get closer to consumers

Other than boosting their online capabilities, the retail chains operators launched more convenience stores, including small spaza shops in townships and informal settlements.

Shoprite Holdings, a market leader in convenience stores with a 38 percent market share, benefits from the success of its OK franchise stores, including USAVE discount stores that offer shopping facilities appropriate to the market in which they trade.

Pick n Pay, including their partnership with bp gas stations, is continuing its expansion to service the low-income areas throughout the country.

The multinational oil and gas company, bp, recently broke the record of becoming the first petroleum company in the country to be granted a liquor licence courtesy of the partnership with Pick n Pay.

Meanwhile, Woolworths/Engen’s expansion of its food chain stores has included a partnership with Uber Eats that allows consumers to order groceries to have it delivered to their doorstep.

Other companies showing growth in the convenience sector include Fruit & Veg City of Food Lovers Market/Caltex; Burger King/Sasol; Steers/Shell; and Wimpy/Engen.

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