Welcome to our monthly newsletter that provides commentary on major themes emerging from the Insights dashboards. This month, we turn our attention to the Grocery category…
Insights’ first reading of 22seven user spending in September indicates that spending in the Apparel category increased at the fastest rate, compared to other major retail categories, while spending on General Merchandise continues to lag.
Overall, the growth rate over the last three months remains modest across all categories, as shown in the chart below. Categories like Eating Out, Groceries and Pharmaceutical retail all have low single-digit growth rates.
Shoprite’s rising market share has been the dominant theme
of the grocery sector over the past few years. We analysed this phenomenon in
, published in early September, where we attributed growth in user spending based on loyalty to different grocery retailers.
The key finding was that the growth of Shoprite and Checkers has been fueled by Pick n Pay’s failure to retain previously loyal customers. In our view, the reallocation of spend by these customers to other retailers – and to Checkers Sixty60 – accounts for a large part of the shift in market share.
The
at Pick n Pay gives weight to our findings. And, as we’ll show in the next section, our latest data indicates that there’s no sign of a near-term reversal in Pick n Pay’s market-share fortunes.
In Shoprite’s most recent results presentation, the group published a chart showing the extent of its market-share gains across all its brands over the past three years. The chart below contrasts this ‘official’ measure to spending share by 22seven users at all Shoprite brands.
22seven users likely underrepresent Shoprite and Usave shoppers, so our measure might understate the reported level of market share, but there’s still a strong correlation (88%). Most importantly, the chart demonstrates continued gains for Shoprite Group brands over the past quarter, which we unpack below.
In case you missed it...
Checkers 360: a review of a booming grocery giant. Why is it so successful and what can competitors do about it?
Over the past three months,
22seven users have continued to spend more of their grocery wallet at Checkers.
The next chart splits the movements in spending share for each retailer into Store, On-demand and Online.
Once again, we see gains for Checkers (from Sixty60) and for Spar (from increased spending at its stores). Over the period, users shifted spending away from Pick n Pay and Woolworths stores.
As rugby fans are well aware,
Sixty60 is spending big money as a leading sponsor of the Rugby World Cup broadcasts
, which began in early September on DStv’s Supersport.
In
, we concluded that it would be very difficult and costly for any competitor to unseat Sixty60, given how dominant the service is in the on-demand category. But Pick n Pay asap! seems to be trying… They’re the leading sponsor of the Cricket World Cup broadcasts on Supersport, which started in early October. Yes, there are delivery scooters all over our TV screens right now!
We haven’t seen any asap! ads with highly-paid pundits commentating on braai techniques (yet) but it
is
noteworthy that the Pick n Pay advertisements do not feature the partnership with Mr D that was launched with much fanfare this time last year. In other words, although customers can still order Pick n Pay groceries through Mr D, it seems the group is also pushing ahead with asap! as a standalone offering. This makes sense, to us at least, but it calls into question the original strategic decision to dilute control over this driver of growth in the first place.
When it comes to analysing performance, it’s difficult to split the asap!/Mr D partnership from Mr D’s existing business. What we do know is that Mr D has outperformed its main rival, Uber Eats, over the past 12 months. If we attribute this difference in performance to asap!, then we have a generous assessment of asap!’s adjusted performance over the past year.
Even so, it’s not flattering, especially when compared to the towering example of Sixty60. This might also explain why Pick n Pay is pivoting to take back control of their on-demand service.
On the other hand, the marketing spend allocated to this battle is a small respite for DStv executives, who have had a horrid year…
That’s it for this month. There are many more insights available from our spending dashboards. Please set up a time to discuss these in more detail to ensure you get the most from this unique data set.
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More research
Spending dashboards
The 22seven Insights dashboards offer investors and retailers a detailed, real-time view of the aggregated spending decisions of more than 50,000 actual consumers across South Africa.
Insights tracks spending across seven major categories such as Food, Apparel, and Home. Every major category is further segmented into sub-categories, and a specific dashboard is available for each one. We have updated and expanded the dashboards and we’ll continue to do so over the next few months.
The dashboards provide a market overview that includes changes in market share for each retailer, as well as an estimate of growth in user spending. Users are segmented into six income brackets that allow for detailed tracking. In addition, the dashboards include five years of historic information and other metrics, such as average transaction value and median monthly spend per user.
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