Listed supermarket group Shoprite said on Monday that it has cut margins on basic foodstuffs.
”The group’s success in a tough consumer spend environment has been driven by management’s strategic decision to cut margins on basic foodstuffs in an attempt to alleviate the impact of worldwide food price increases on consumers,” it said in a trading update.
For the 12 months to the end of June 2008, the Shoprite Group increased total turnover by 22,3% to R47,7-billion. Growth on a like-for-like basis was 18%.
During this period, internal food inflation rose to 10,6% compared with less than 6% during the corresponding 12 months in 2007.
The 100 supermarkets Shoprite operated outside the borders of South Africa increased turnover by 38,2% from the previous year. The growth achieved on a like-for-like basis was 30,5%.
”As elsewhere, food inflation in these countries in Africa also put upward pressure on prices,” the company said.
The franchise division, trading mainly under the OK banner, managed a turnover increase of 17%. Unlike the food divisions, the furniture division continued to operate in a near deflationary environment.
”Despite lower consumer spending on durable goods and the introduction of the National Credit Act, the division still succeeded in growing turnover by 5,6%.” — Sapa