Shoprite has expanded its push into South Africa’s informal economy and digital financial services after finalising the acquisition of an initial 51% stake in R&A Cellular.
According to the retail group’s latest financial results, the acquisition gives Shoprite a technology platform through which it can extend its financial and value-added services beyond its formal store network and into informal and semi-formal retail environments.
R&A Cellular provides a point-of-sale platform used by informal retailers to sell prepaid airtime and electricity, gaming and entertainment products, as well as enable card-based payment acceptance.
The deal builds on an existing relationship between the companies, with R&A Cellular already enabling the sale of Shoprite vouchers through its point-of-sale devices.
According to Shoprite, the investment will support the expansion of its financial services and value-added products and services across informal and semi-formal retailers.
The move extends the retailer’s existing financial services capabilities, including its Money Market offering, into community-based trading hubs, such as spaza shops and other informal merchants.
“We continue to invest selectively in adjacent growth markets where specialist expertise and speed-to-market offer a clear advantage,” says Pieter Engelbrecht, CEO of the Shoprite Group.
“Post our financial year-end, we finalised the acquisition of an initial 51% interest in R&A Cellular, which will support the expansion of our financial services and value-added products and services across informal and semi-formal retailers. In addition, we signed a purchase agreement subject to conditions precedent and regulatory approval, to acquire Vida e Caffè.”
Meanwhile, Shoprite’s trading profit increased 8.4% to R16.2 billion, while gross profit rose 8.1% to R66.5 billion for the 52 weeks ended 28 June.
Diluted headline earnings per share rose 12.2% to R15.27.
Shoprite increased merchandise sales from continuing operations by 7.2%, adding R18.1 billion to reach R270.8 billion.
The group says this performance was achieved despite internal selling price inflation averaging only 0.8% within its core Supermarkets RSA segment.
Supermarkets RSA accounted for 84.5% of group sales and increased sales by 7.1%, contributing an additional R15.2 billion to the previous year’s base.
Within the segment, Shoprite and Usave increased sales by 4.3%, alongside internal selling price deflation of 0.1% and 0.6%, respectively.
Checkers and Checkers Hyper performed more strongly, increasing sales by 10%, with internal selling price inflation of 2% and 1.2%, respectively.
Petshop Science, Shoprite’s home-grown pet retail format, continued its rapid expansion, reaching 185 stores after 41 net new store openings. Sales increased by 74.5%.
Digital commerce progress
The R&A Cellular investment comes as Shoprite continues to accelerate adoption of its digital platforms across its retail operations.
Its Sixty60 on-demand digital platform was one of the standout areas of Shoprite’s performance, with sales increasing by more than a third during the year.
“Included in Supermarkets RSA's sales, Sixty60 increased sales by 34.5% to R25.5 billion. This translates to an additional record R6.6 billion in additional revenue over the year,” adds Engelbrecht.
The performance highlights the increasingly important role of digital fulfilment and on-demand shopping within Shoprite’s broader supermarket strategy.
The R&A Cellular transaction represents a different technology opportunity: extending digital transaction infrastructure into parts of the economy where informal retailers act as community-level access points for everyday services.
Through R&A Cellular’s point-of-sale infrastructure, retailers can facilitate transactions, including prepaid services and card payments. Shoprite’s strategy is to use this established footprint to expand the range of financial and value-added services available to customers and merchants.
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