OUR CUSTOMERS ARE AT THE HEART OF OUR BUSINESS - INTEGRATED REPORT 2017 - Shoprite Holdings

Page created by Barbara Bryant
 
CONTINUE READING
OUR CUSTOMERS ARE AT THE HEART OF OUR BUSINESS - INTEGRATED REPORT 2017 - Shoprite Holdings
OUR CUSTOMERS ARE AT
THE HEART OF OUR BUSINESS
   INTEGRATED REPORT 2017
OUR CUSTOMERS ARE AT THE HEART OF OUR BUSINESS - INTEGRATED REPORT 2017 - Shoprite Holdings
Table of                                                                                  Profile
Contents                                                                                  Shoprite Holdings Limited is an investment holding company whose combined
                                                                                          subsidiaries constitute the largest fast moving consumer goods (FMCG) retail operation on
                                                                                          the African continent. We operate a total of 2 301 corporate (owned) and 388 franchise
                                                                                          stores and 19 trusted brands. We provide employment to 143 802 people across our
Business Overview
                                                                                          operations in 15 countries from Cape Town to Accra and the Indian Ocean islands.
Profile                                1
                                                                                          While the Group’s primary business is food         We achieve this by pursuing efficiency in         By setting the conditions for enduring
About this report                      2
                                                                                          retailing, our offering extends to a broad range   everything we do. Our advanced distribution       success, we can continue to provide
Distribution of operations             4
                                                                                          of goods and services including household          centres and sophisticated supply line             affordable food to our communities, invest in
The Group                              6                                                  products, furniture, pharmaceuticals and           infrastructure give us greater control over our   social upliftment and contribute to the African
Our mission and performance highlights 8                                                  financial services, amongst others. At the         operations. This empowers us to overcome          economy − all while creating value for all our
Our business model explained          10                                                  heart of our offering is an unwavering             economic challenges without compromising          stakeholders.
How we add value                      12                                                  dedication to providing the lowest prices to       on quality.
Financial highlights                  14                                                  people of all income levels across Africa.

                                                                                                                                                                                               33
Stakeholder engagement                15

                                                                                          2 689                                              143 802
Operating context and strategy        19
                                                                                                                                                                                                                  distribution
Management Reports
                                                                                          stores                                             staff                                                                centres
Board of Directors                    26
Chairman’s Report                     28
                                                                                          Annual ­turnover
                                                                                                                                             31.9%                                             Almost
Chief Executive’s Report              30

                                                                                                                                                                                               40 years ­
Three-year Financial Review           34
Financial Report
Operational Review
Nurturing our Capitals
                                      35
                                      38
                                      41
                                                                                          R141 bn                                            market share                                      in South Africa
Corporate ­Governance
Corporate Governance Report           56
                                                                                          More than                                          More than
                                                                                                                                                                                               26 years
Nominations Committee Report
Social and Ethics Committee Report
Remuneration Report
                                      60
                                      61
                                      62
                                                                                          1 billion                                          35 million ­                                      outside of
                                                                                          transactions p.a.                                  shoppers p.a.                                     South Africa
Summary Consolidated
Financial Statements 74

Pro Forma Information                98
                                            “On our journey towards                      Africa’s largest fast-moving
                                              becoming the best retailer in
Investor ­Information                         the world, it is going to be                consumer goods retail company
Shareholder Analysis                 101      important for us to c­ ontinue              Shoprite Holdings Ltd comprises the ­following brands:
Notices to Shareholders
Forms of Proxy
                                     103
                                     121      building trust with our                                                                                      better and better

Administration
Shareholders’ Diary
                        Inside back cover
                        Inside back cover     ­customers, by always giving
                                               them what they need at prices
                                               they can afford.”
                                                                   Pieter Engelbrecht
                                                                        Chief Executive
                                                                                                                                               Freshmark

                                                                                                                                                                                                                     Shoprite Holdings Ltd
                                                                                                                                                                                                                    Integrated Report 2017       1
OUR CUSTOMERS ARE AT THE HEART OF OUR BUSINESS - INTEGRATED REPORT 2017 - Shoprite Holdings
Business Overview

About this report

Shoprite Holdings Limited (“Shoprite” or                                                                         Frameworks and assurance                                                       Subsidiaries of Shoprite Holdings Ltd
“the Company”) is pleased to present its 2017                                                                    The information included in the Integrated
                                                                                                                 Report has been provided in accordance with
Integrated Report.                                                                                               the International Financial Reporting Standards
                                                                                                                 (“IFRS”), JSE Listings Requirements, the
                                                                                                                 International Integrated Reporting Council’s
Scope and boundary                                 been no changes in the structure of the                       (IIRC) framework (“the Framework”) and The

                                                                                                                                                                       100%                                      100%                                      100%                                      100%
This Integrated Report covers all the operations   Company during the current reporting period,                  King Code of Corporate Governance (King III).
and performance of the Shoprite Group,             other than through ongoing store openings and
incorporating Shoprite Holdings Limited and all    closures, as part of normal operations.                       No external assurance has formally been
its subsidiaries for the year ended 2 July 2017.                                                                 sought, other than from our external auditors
                                                   Changes in disclosure                                         PricewaterhouseCoopers Incorporated for the
Subsidiaries of Shoprite                           Readers should take note of the following                     annual financial statements, summary                  Shoprite ­                                Shoprite Checkers                         Shoprite ­Insurance                       Shoprite ­
Holdings Ltd                                       changes in accounting policies and disclosure                 consolidated financial statements and pro             International Ltd                         (Pty) Ltd                                 ­Company Ltd                              Investments Ltd
See subsidiary breakdown on opposite page.         practices:                                                    forma financial information. Aspects of our
                                                   J	During 2017, the Group changed its                         information are however assured through the
The information in this report has been selected      accounting treatment of advertising rebates,               following sources:                                    Has operations in:                        Has operations in:
to cater for the interests of stakeholders who        with certain rebates relating to advertising               J	 B-BBEE scorecard verification – Shoprite is       J Zambia                                  J South Africa
require a broad overview of Shoprite, but with        now being deducted from the purchase                           verified on the Amended Codes of Good             J Mozambique                              J Namibia
specific emphasis on investors and funders.           price of goods. Where historical data has                      Practice, Gazette No. 36928 and obtains its       J Botswana                                J Swaziland
                                                      been adjusted in this report, the relevant                     certification from AQRate Verification            J Madagascar                              J Lesotho
We believe the report will provide stakeholders       numbers have been annotated and a brief                        Services (Pty) Ltd, a SANAS accredited            J Uganda                                  J Mauritius
with an overview and better understanding of          explanation included at the bottom of the                      B-BBEE Verification Agency.                       J Angola
Shoprite’s business model, our operational and        tables.                                                    J	 Shoprite's International Trade Department         J Ghana
financial performance, our governance              J	The Group discloses pro forma information                      (ITD), responsible for imports and exports,       J Nigeria
practices and strategy, as well as the risks and      in the Integrated Report related to:                           has achieved a certificate for ISO                J Malawi
opportunities that manifest as the leading            –	constant currency sales performance for                     (International Organisation for                   J	Democratic
FMCG retailer in Africa.                                  Non-RSA operations;                                        Standardisation) 9001 Quality Management             Republic of Congo
                                                      –	52-week results for the 2016 financial                      System awarded by Dekra, which is
Materiality                                               year to facilitate comparisons against the                 accredited by IAF.
The selection of issues to be covered in this             current financial year which consisted of
report was informed by inputs from our
stakeholders, including capital providers and
regulators, and was further refined through
                                                          52 weeks, since the published 2016
                                                          financial year incorporated trading for
                                                          53 weeks; and
                                                                                                                 Forward-looking statements
                                                                                                                 This report may contain forward-looking
                                                                                                                 statements with respect to Shoprite’s future
                                                                                                                                                                                                                 100%                                      100%
engagement with the executive management              –	like-for-like comparisons, to remove the                performance and prospects. While these                                                          MediRite (Pty) Ltd                        Computicket (Pty) Ltd
and board of Shoprite.                                    impact of store openings and closures.                 statements represent our judgements and
                                                                                                                 future expectations, several factors may cause                                                  Has operations in:                        Has operations in:
Reporting comparability                            	These changes and their impact are                          actual results to differ materially from our                                                    J South Africa                            J South Africa
There has been no change in the scope and            discussed in detail in the pro forma                        expectations.                                                                                   J Angola                                  J Botswana
boundary of this report relative to the 2016         information on page 98.                                                                                                                                     J Swaziland                               J Mozambique
report, although the current report has been                                                                     For further information, please contact                                                                                                   J Namibia
expanded to include a wider range of                                                                             Sarita van Wyk on 27 (0) 21 980 4269.                                                                                                     J Zambia
information about the Company. There have

How to navigate our report                         Our Capitals
Throughout our Integrated Report, the following
icons are used to provide linkages to relevant              Intellectual Capital         Our brands, experience and know-how
aspects, or indicate where further detail is
available.
                                                            Human Capital                Our people                                                                   Approval of the Integrated Report
                                                                                                                                                                      The board of directors of Shoprite acknowledges its responsibility to ensure the integrity of this report and confirm that this Integrated Report addresses all
                                                            Financial Capital            Equity and funding from our shareholders and debt providers                  material matters and provides a balanced overview of the Company and its prospects. The board has therefore approved the 2017 Integrated Report for
                                                                                                                                                                      publication.
This icon signifies related
                                                            Manufactured Capital Our stores, distribution centres, fleet and manufactured products
information elsewhere in                                                                                                                                              On behalf of the board
this report.
                                                            Social Capital               Our customers, suppliers, communities and other s­ takeholders

                                                            Natural Capital              Our environment

This icon signifies related
information available online at:                   The icons above signify each of the capitals employed by Shoprite to effectively execute our business model.       CH Wiese                                                PC Engelbrecht
www.shopriteholdings.co.za                                                                                                                                            Chairman                                                Chief Executive Officer
                                                   Where cross referenced, the icons signify information that is relevant to an understanding of the impact of each
                                                   capital on our business.                                                                                           21 August 2017

         Shoprite Holdings Ltd                                                                                                                                                                                                                                                                        Shoprite Holdings Ltd
2        Integrated Report 2017                                                                                                                                                                                                                                                                      Integrated Report 2017         3
OUR CUSTOMERS ARE AT THE HEART OF OUR BUSINESS - INTEGRATED REPORT 2017 - Shoprite Holdings
Business Overview

Distribution of operations
                                                                          Ghana                                                                          Nigeria

Africa’s leading                                                          6                                Ghana
                                                                                                                                                                     DRC                                                                                                          Uganda
retailer, importer
and exporter of
                                                                          Gross domestic
                                                                          product, constant
                                                                          prices (% change)
                                                                          Inflation, average
                                                                          consumer prices
                                                                          (% change)
                                                                                                   4.041

                                                                                                  17.455
                                                                                                                                                                     1
                                                                                                                                                                     Gross domestic
                                                                                                                                                                                                                                                                                  2
                                                                                                                                                                                                                                                                                  Gross domestic

                                                                                                                                 Nigeria
                                                                                                                                                                     product, constant                                                                                            product, constant
                                                                                                                                                                     prices (% change)        2.400                                                                               prices (% change)           4.673
                                                                          Population (millions)   27.573

­grocery products
                                                                                                                                 23
                                                                                                                                                                     Inflation, average                          Democratic ­                                 Uganda
                                                                                                                                                                                                                                                                                  Inflation, average
                                                                                                                                                                     consumer prices                                                                                              consumer prices
                                                                                                                                                                                             22.430           Republic of Congo                                                                               5.464

2 301
                                                                                                                                                                     (% change)                                                                                                   (% change)

                                                                                                                                                                     Population (millions)   84.130                                                                               Population (millions)      41.087

                                                                                                                                 Gross domestic

                                                                                                                                                                                                                                                                                                                                                    Mauritius
                                                                                                                                 product, constant
                                                                                                                                 prices (% change)        -1.541
                                                                                                                                                                                              Zambia                                                                                                      Mozambique

                                                                                                                                                                                              63                                                                                                                                                    3
                                                                                                                                 Inflation, average

                                                                                                                                                                                                                                                                                                          26
                                                                                                                                 consumer prices
                                                                                                                                 (% change)               15.699
                                                                                                                                 Population (millions)   183.636

                                                                                                                                                                                              Gross domestic                                                                                                                                        Gross domestic
                                                                                                                                                                                              product, constant                                                                                           Gross domestic                            product, constant
                                                                                                                                                                                              prices (% change)        2.967                                                                              product, constant                         prices (% change)        3.600
                                                                                                                                                                                                                                                                                                          prices (% change)        3.400            Inflation, average
                                                                                                                                                                                              Inflation, average

                                                                                                                                 Angola                                                       consumer prices
                                                                                                                                                                                                                      17.900
                                                                                                                                                                                                                                                                                                          Inflation, average                        consumer prices
                                                                                                                                                                                                                                                                                                                                                    (% change)               0.978

                                                                                                                                 51
                                                                                                                                                                                              (% change)                                                                                                  consumer prices
                                                                                                                                                                     Angola                                                                                                                               (% change)              19.199
                                                                                                                                                                                                                                                                                                                                                                             1.268
                                                                                                                                                                                              Population (millions)   16.717                                                                                                                        Population (millions)
                                                                                                                                                                                                                                                                                                                                  28.751

Total corporate stores
                                                                                                                                                                                                                                                                                                          Population (millions)

                                                                                                                                                                                                                                                  Zambia

                                                                                                                                 Gross domestic
                                                                                                                                 product, constant
                                                                                                                                 prices (% change)            —                                                                                                                    Mozambique
                                                                                                                                 Inflation, average
                                                                                                                                 consumer prices
                                                                                                                                 (% change)               32.378                                                                                         Malawi
Contribution per operating segment                                                                                               Population (millions)    27.360
                                                                                                                                                                                                                          Botswana                                                  Malawi

        4%
                6%                                                 2% 2%
                                                                                                                                 Namibia                                                                                  39                                                        7                                                      Madagascar

                                                                                                                                 106
                                                   17%                                                                                                                                                                    Gross domestic                                            Gross domestic                                                                  Mauritius
18%                                                                                                                                                                                                                       product, constant                                         product, constant
                                                                                                                                                                                                                                                                                                                 2.270
                                                                                                                                                                                                                          prices (% change)       2.864                             prices (% change)

                                                                                                                                                                                                                          Inflation, average                                        Inflation, average
                                                                                                                                                                                                                          consumer prices                                           consumer prices
                                                                                                                                                                                                    Botswana              (% change)              2.810                             (% change)                 21.683
                                                                                                                                                                                                                                                  2.154                                                        18.632
                                                           Contribution
                                                                                                                                 Gross domestic                                                                           Population (millions)                                     Population (millions)

       Contribution
                                                                                                                                 product, constant
                                                                                                                                 prices (% change)         0.100
                                                                                                                                                                                                                                                                                                                                                             Madagascar
                                                           to trading                                                                                                 Namibia

                                                                                                                                                                                                                                                                                                                                                             9
       to sales
                                                                                                                                 Inflation, average
                                                                                                                                 consumer prices

                                                           profit                                                                (% change)

                                                                                                                                 Population (millions)
                                                                                                                                                           6.727
                                                                                                                                                           2.300
                                                                                                                                                                                                                         Swaziland

                                                                                                                                                                                                                                                                                                       Swaziland

                                                                                                                                                                                                                                                                                                       26
                                                                                                                                                                                                               Lesotho                                                                                                                                       Gross domestic
                                                                                                                                                                                                                                                                                                                                                             product, constant
                                                                                                     79%                                                                                                                                                                                                                                                                              4.138
                                        72%                                                                                                                                                                                                                                                                                                                  prices (% change)
                                                                                                                                                                                             South Africa
                                                                                                                                                                                                                                                  Lesotho
                                                                                                                                                                                                                                                                                                                                                             Inflation, average

                                                                                                                   South Africa
                                                                                                                                                                                                                                                                                                                                                             consumer prices

                                                                                                                                                                                                                                                  23
                                                                                                                                                                                                                                                                                                                                                             (% change)               6.737

                                                                                                                   1916
                                                                                                                                                                                                                                                                                                       Gross domestic
                                                                                                                                                                                                                                                                                                       product, constant                                     Population (millions)   24.916
        Q Supermarkets RSA        Q Supermarkets Non-RSA        Q Furniture            Q Other                                                                                                                                                                                                         prices (% change)          -0.426
                                                                                                                                                                                                                                                                                                       Inflation, average
                                                                                                                                                                                                                                                                                                       consumer prices
                                                                                                                                                                                                                                                                                                       (% change)                 8.033
Supermarkets RSA: represents all Shoprite, Usave, Checkers, Checkers Hyper and LiquorShop                                                                                                                                                         Gross domestic
                                                                                                                                                                                                                                                                                                       Population (millions)      1.132
                                                                                                                   Gross domestic product,                                                                                                        product, constant
stores in South Africa;                                                                                            constant prices (% change)               0.279                                                                                 prices (% change)       2.866
Supermarkets Non-RSA: represents all Shoprite, Usave, Checkers, LiquorShop and certain Hungry                      Inflation, average consumer                                                                                                    Inflation, average
                                                                                                                                                            6.341                                                                                 consumer prices
Lion stores in countries outside of South Africa;                                                                  prices (% change)
                                                                                                                                                                                                                                                  (% change)              7.000
Furniture: represents all House & Home, OK Furniture and OK Power Express stores;                                  Population (millions)                   55.909
                                                                                                                                                                                                                                                  Population (millions)   1.937
Other (these businesses operate in South Africa as well as Non-RSA): represents all Transpharm,                                                                     Source: International Monetary Fund, World Economic
Checkers Food Services (CFS), MediRite, OK Franchise and Computicket outlets/operations.                                                                            Outlook Database, April 2017

        Shoprite Holdings Ltd                                                                                                                                                                                                                                                                                                                       Shoprite Holdings Ltd
4       Integrated Report 2017                                                                                                                                                                                                                                                                                                                     Integrated Report 2017                     5
OUR CUSTOMERS ARE AT THE HEART OF OUR BUSINESS - INTEGRATED REPORT 2017 - Shoprite Holdings
Business Overview

The Group

                                                                                                                           Store count                                                                                                                           Store count

                                                                                                       Target             Non-                                                                                                  Target                         Non-
 Brand                              Summary                                                            market       RSA   RSA            Total   Brand   Summary                                                                market                  RSA    RSA                 Total

                                    Affordable and accessible, Shoprite caters to the mass middle-     LSM 4 – 7                                         Located inside Shoprite and Checkers stores, MediRite is well-         Same as Shoprite
                                    income market by providing its lowest prices on basic goods,                                                         positioned to meet the growing need for easily accessible              and Checkers

                                                                                                                                   613
                                    including groceries and household products. As the Group’s                                                           and affordable healthcare to customers across all income

                                                                                                                                                                                                                                                                         162
                                    original and flagship brand, Shoprite owns the most stores in                                                        levels. Many MediRite pharmacies are located in previously
                                    South Africa, and is the main spearhead for growth into Africa.                 458   155                            disadvantaged communities where few pharmaceutical
                                                                                                                                                         services are available.                                                                        146     16
                                    The chain’s simple philosophy – “When we save, Usave” is           LSM 1 – 5
                                    backed by a strategy of small-format stores offering a limited                                                       LiquorShop offers a full assortment of wine, beer and spirits at       Same as Shoprite
                                    range of basic foods at everyday low prices to lower-income                                                          affordable prices to Checkers and Shoprite customers.                  and Checkers
                                    consumers. The small-format stores are an ideal vehicle for the
                                    Group’s expansion into Africa and allow far greater penetration
                                    into previously underserved communities in South Africa.                        302    65      367
                                                                                                                                                         Positioned near Group supermarkets, outlets feature separate
                                                                                                                                                         entrances and also appeal to passing trade.
                                                                                                                                                                                                                                                        376     14       390
                                                                                                                                                         Transpharm Pharmaceutical Wholesalers distributes a wide               Targets pharmacies,
                                    Convenience, quality and freshness define the Checkers             LSM 8 – 10                                                                                                               vetenarians, clinics,
                                                                                                                                                         range of pharmaceutical products and surgical equipment to
                                    brand. Time-pressed upper-income consumers in search of a                                                                                                                                   hospitals and
                                                                                                                                                         pharmacies, hospitals, clinics, dispensing doctors and                 dispensing doctors.
                                    world-class shopping experience enjoy great value on a wide
                better and better                                                                                                                        veterinary surgeons across South Africa. The Shoprite Group is
                                    selection of groceries, household products, fresh and
                                                                                                                                                         expanding this dynamic company to improve its existing
                                    convenience foods and speciality lifestyle ranges of wine and
                                                                                                                                                         national distribution network.
                                    coffee. Located in shopping malls and other convenient

                                                                                                                                   209
                                    premises across South Africa and some neighbouring
                                    countries, the brand caters to discerning shoppers in affluent                                                       The OK Franchise Division franchises three different types of retail   The various store
                                    residential areas.                                                              202     7                            formats (OK Foods, OK MiniMark & OK Express), a liquor outlet          formats, with their
                                                                                                                                                                                                                                different identities
                                                                                                                                                         (OK Liquor) and a wholesale outlet (Megasave). Each of these           and facilities,
                                                                                                                                                         formats has its own identity and personality and offer shopping        cater to the needs of
                                    Checkers Hyper offers the same speciality food selections          LSM 8 – 10                                                                                                               the community in
                                                                                                                                                         facilities appropriate to the market in which they trade. This
                                    and great value as Checkers, but within large-format stores                                                                                                                                 which they are
                                                                                                                                                         includes a wide range of fresh and non-perishable food items, as
                                    that encourage bulk rather than convenience shopping. The                                                                                                                                   located.
                                                                                                                                                         well as general merchandise. The OK Franchise continuously
                                    general merchandise ranges are far wider in Hyper stores,

                                                                                                                                                                                                                                                                         388
                                                                                                                                                         strives to cement the brand as a retailer that can be counted on,
                                    focusing on categories like small appliances, pet accessories,
                                                                                                                                                         and today they have 388 stores in neighbourhoods and
                                    garden and pool care, outdoor gear, home improvement,
                                                                                                                                                         communities across South Africa, Namibia and Swaziland.                                        336     52

                                                                                                                                         37
                                    homeware, baby products, toys and stationery. Checkers
                                    Hyper stores operate in South Africa only and are found in
                                    areas with high population densities.                                            37    —                             Hungry Lion prides itself on sharing MORE with its customers           LSM 4 – 7
                                                                                                                                                         by delivering tasty fried chicken with MORE flavour and MORE

                                                                                                                                                                                                                                                                         197
                                                                                                                                                         value. Operating in seven African countries, the brand strives
                                    The OK Furniture chain brings affordable quality to homes          LSM 5 – 7
                                                                                                                                                         to provide high-quality fare at affordable prices in a modern
                                    across Africa. With its vast geographic spread of stores, the
                                    brand offers a wide range of furniture, bedding, loose
                                                                                                                                                         fast-food environment.                                                                         130     67
                                    carpeting, electrical appliances and home entertainment

                                                                                                                                   407
                                    products at the lowest prices, cash or on credit. Choice quality                                                     Checkers Food Services is the business-to-business (B2B) brand         Targets a range of
                                    goods and exceptional service define the ‘no problem’                                                                of the Shoprite Group delivering a wide range of quality products      businesses in the
                                    shopping experience.                                                            338    69                            at the lowest prices to the hospitality and catering industry.         hospitality and
                                                                                                                                                         Leveraging off the Group’s bulk-buying power and centralised           catering industry.
                                                                                                                                                         distribution network, Checkers Food Services distributes to its
                                    This chain of small-format stores sells a carefully selected       LSM 5 – 7
                                                                                                                                                         customers in South Africa (Gauteng and Western Cape
                                    range of white goods and home entertainment products, as
                                                                                                                                                         provinces) through dedicated warehouses and logistical fleets.

                                                                                                                                         29
                                    well as bedding and loose carpeting. Located mainly in high-
                                    density areas, shoppers can choose to pay with cash or take
                                    advantage of competitive credit options.                                         24     5                            Computicket is the largest provider of ticketing services in           LSM 4 – 10
                                                                                                                                                         South Africa with a footprint in key countries across Africa.          Bus: LSM 4 – 7
                                                                                                                                                                                                                                Travel: LSM 7 – 10
                                    House & Home offers upper-income consumers quality                 LSM 7 – 10
                                                                                                                                                         Computicket covers a wider variety of things to do, ranging            Events: LSM 4 – 10
                                    homeware at affordable prices. Goods include a large selection
                                                                                                                                                         from theatre, concerts, festivals and sporting events; to travel,
                                    of exclusive and well-known ranges of furniture, bedding,
                                                                                                                                                         which includes bus and flight tickets, car rental and

                                                                                                                                         52
                                    appliances, home entertainment and floor covering products.
                                                                                                                                                         accommodation both nationally and internationally.
                                    Stores are located throughout South Africa, Namibia and
                                    Botswana.                                                                        49     3                            In addition to enabling experiences, Computicket also facilitates
                                                                                                                                                         a range of business solutions which are geared towards making
                                                                                                                                                         the most of its offerings to its business partners. These business
                                                                                                                                                         solutions include stadium management, capacity management,
                                                                                                                                                         travel management and access control.

         Shoprite Holdings Ltd                                                                                                                                                                                                                             Shoprite Holdings Ltd
6        Integrated Report 2017                                                                                                                                                                                                                           Integrated Report 2017      7
OUR CUSTOMERS ARE AT THE HEART OF OUR BUSINESS - INTEGRATED REPORT 2017 - Shoprite Holdings
Business Overview

Our mission

We are                                                                                                                       Our performance highlights
the largest                                                                                                                  Financial                                    Intellectual                                      Environmental
­private sector                                                                                                              highlights                                   capital
                                                                                                                                                                          performance
                                                                                                                                                                                                                            performance

 employer in
                                                                                                                             J	R141 billion turnover                                                                       J	7 350 tonnes of plastic diverted
                                                                                                                             J	R8.1 billion trading profit                                                                    through recycled bags
                                                                                                                                                                          J	19 trusted brands                              J	Generated 1 102 MWh of renewable
                                                                                                                             J	R5.6 billion headline earnings
                                                                                                                                                                          J	Gained 45 basis points market share in            energy in 2017

 South Africa
                                                                                                                             J	Dividends distributed of R2.6 billion
                                                                                                                                                                             South Africa to 31.9%, equivalent to R1.5      J	Replaced more than 775 000 fluorescent
                                                                                                                             J	Trading margin increased from                billion in sales                                  tubes and 80 000 control gear with energy
                                                                                                                                5.60% to 5.76%
                                                                                                                                                                          J	Smooth succession of key management               efficient alternatives
                                                                                                                                                                                                                            J	Saved 27 810 tonnes of CO2 valued at

 and a leading
                                                                                                                                                                          J	Successful launch of Fresh Food category

                                                                                                                             Manufactured                                 J	Extension of Private Label                        R32 million
                                                                                                                                                                                                                            J	Flagship new distribution centre aiming

                                                                                                                             capital                                                                                           for Green Star accreditation

 employer in                                                                                                                 performance                                  Social
                                                                                                                                                                          capital
                                                                                                                                                                                                                             Awards in
                                                                                                                                                                                                                             the reporting
 Africa.
                                                                                                                             J	2 689 stores in 15 countries
                                                                                                                             J	Net 138 new stores opened                 performance                                        period
                                                                                                                             J	5 new distribution centres opened

                                                                                                                                                                          J	More than 29 million shoppers across SA

                                                                                                                             Human
                                                                                                                                                                                                                             J	2016/17 Icon Brands Survey –
                                                                                                                                                                          J	Over 1 billion customer transactions in 2017
                                                                                                                                                                                                                                winner of the Grocery Food Retail
                                                                                                                                                                          J	Customer growth of 2.4%
                                                                                                                             performance
                                                                                                                                                                                                                                category
Our mission is to deliver low prices in   We aspire to become the global leader     ensuring the most affordable products
                                                                                                                                                                          J	3.9% volume growth                              J	2016/17 Ask Afrika Youth Brands Survey
a world-class shopping environment        in customer service, putting the          available, lending a helping hand to
to customers across the African           customer first in all things we do. Our   those in need or feeding the most                                                     J	Customer satisfaction at record levels             – winner of the Food Retail category
continent. We bring choice, quality       mantra is that no customer leaves the     vulnerable in our society, we ensure     J	Employment for 143 802 people             J	More than 23 000 suppliers                      J	2017/18 Kasi Star Brands Survey
products and job creation to              store unhappy and our employees are       that we remain relevant to and trusted                                                J	More than 1 000 growers utilised, of which         – winner of the Food Retail and Toy
                                                                                                                             J	6 027 new jobs created in 2017
communities in all the countries we       empowered and have the full authority     by the communities we serve.                                                             295 are small enterprises                          Retail categories
serve. Our low-cost promise has been      to do what is necessary to ensure our                                              J	1 994 414 training hours invested in
                                                                                                                                                                          J	3.6 million meals served by our mobile          J	2016 The Times & Sowetan Shopper
the foundation of our business for        customers are satisfied.                  Finally, we believe in treating all         employees
                                                                                                                                                                             soup kitchens                                      Survey – winner of the Grand Prix Award
close to 40 years and we are relentless                                             people, be it our colleagues or our      J	46 000 employees trained on food safety                                                         and Best Grocery Store category
in our efforts to keep our business       We are a business with heart, always      customers, with respect and integrity,      in 2017                                   J	3 000 bursaries awarded valued
                                                                                                                                                                             at R130 million to date                         J	2016 Sunday Times Top Brands
efficient and our prices low.             reminding ourselves that we are part      keeping our promises and acting fairly
                                                                                                                                                                                                                                – winner of the Grocery Store category
                                          of a broader community and                in all our dealings.                                                                  J	Total CSI spend of R35.4 million
We have become the number one             demonstrating to ourselves and our                                                                                                                                                 J	Nielsen – Rated #1 in the world for ad
                                                                                                                                                                          J	R108 million in surplus food donations
retailer in Africa through a steadfast    customers that we #ActForChange.                                                                                                                                                      recall on Facebook
                                                                                                                                      For more detail about
commitment to the values we hold dear.    Whether it is through job creation,                                                         our capitals, refer to the
                                                                                                                                      section on Nurturing our
                                                                                                                                      capitals, on page 41 – 55.

      Shoprite Holdings Ltd                                                                                                                                                                                                                  Shoprite Holdings Ltd
8     Integrated Report 2017                                                                                                                                                                                                                Integrated Report 2017         9
OUR CUSTOMERS ARE AT THE HEART OF OUR BUSINESS - INTEGRATED REPORT 2017 - Shoprite Holdings
Business Overview

Our business model explained

What
we need                                 Our ­operating
                                        model                                                                                   The result
to execute                                                                                                                      of what we do

          1.                                      Centralised
                                                  distribution
                                                                                                                                J	
                                                                                                                                  SA’s largest private
                                                                                                                                  sector employer –
                                                                                                                                  wages, salaries and
          Strong brands                                                              Our outputs                                  other staff benefits
                                                                                                                                  of R10.8 billion
                                                                                     – benefits
          2.                                     Advanced
                                                supply chain
                                                                                     to the
                                                                                                                                J	
                                                                                                                                  Significant job creation
                                                                                                                                    – 55 000 new jobs
          Great people                                                               customers                                      since 2010

                                                                                                                                J	
                                                                                                                                  Development of

          3.                                   Sophisticated
                                                                                     J	
                                                                                       Consistent value for
                                                                                       money – Shoprite
                                                                                                                                  small suppliers
                                                                                                                                  – R177.8 million
          Loyal customers                                              World-class                                                contributed towards
                               Low               sourcing
                                                                       shopping
                                                                                       internal food inflation
                                                                                       of 5.9% vs official food
                                                                                                                                  ­Enterprise and

                               prices
                                                                                                                                   Supplier Development

          4.
                                                                                       inflation of 10%
                                                                       environment   J	
                                                                                       A diversified product
                                                                                                                                   Initiatives in 2017

                                              Efficient ­                              range – sold 7­ .4 billion
                                                                                                                                J	
                                                                                                                                  Feeding those in need
          A strong                         operating model                             items in 2017
                                                                                                                                  – 3.6 million people
                                                                                                                                  were fed in 2017,
          ­balance sheet                                                                                                          and R108 million of
                                                                                     J	
                                                                                       Acting for change
                                                                                         in our communities                       food donated

          5.                                      State of the
                                                   art stores
                                                                                         – 2.6% of net
                                                                                         profit after tax to
                                                                                         community projects
                                                                                                                                J	
                                                                                                                                  Consistent
                                                                                                                                    shareholder
          State of the art                                                                                                          returns – 20% p.a.
                                                                                                                                    compounded annual
          ­infrastructure                                                                                                           growth rate (CAGR)
                                                   A keen                                                                           in total shareholder

          6.                                    ­assessment
                                               of customers’                                                                    J	
                                                                                                                                    return over 10 years

                                                                                                                                  A cleaner environment
          Environmentally                                                                                                           for our children
                                                    needs
          sound practices
      For more detail about                                                               For more detail about our financial
      our capitals, refer to                                                              performance refer to the financial
                                         For our Value Added
      pages 41 – 55.                                                                      report on page 35.
                                         Statement refer to page 14.

      Shoprite Holdings Ltd                                                                                                                   Shoprite Holdings Ltd
10    Integrated Report 2017                                                                                                                 Integrated Report 2017   11
OUR CUSTOMERS ARE AT THE HEART OF OUR BUSINESS - INTEGRATED REPORT 2017 - Shoprite Holdings
Business Overview

How we add value

Key strategic aspects of our business model drive our long term success

                                                      Delivering the lowest
                                                      prices through
                                                      increased efficiency
                                                      We pursue efficiency in everything that we do.
                                                      By streamlining our supply chain, upgrading our
                                                      operations and driving down costs, we are
                                                      better able to deliver the lowest prices in a first-
                                                      world shopping environment to consumers                                                                     Retail storage,
                                                      across Africa.
                                                                                                                                                                  availability and
                                                                                                                                                                  information technology
                                                      Our advanced
                                                                                                                                                                  Our advanced supply chain also presents the
                                                      supply chain                                                                                                opportunity to re-engineer our retail stores and
                                                      Shoprite improved its competitive advantage                                                                 optimise the use of retail space by dedicating
                                                      and sustainability by taking control of its supply                                                          the minimum area to storage and the maximum
                                                      chain in line with international best practices in                                                          area to trading space.
                                                      retail and today not only commands a
                                                      leadership position in the industry but has also                                                            Our technological platforms are continuously
                                                      become the African continent’s largest                                                                      being refreshed to keep us abreast of
                                                      distributor of grocery products.                                                                            technological developments. A new ERP
                                                                                                                                                                  system and investments in digital
                                                      Our state-of-the-art distribution centres and                                                               transformation have led to increased
                                                      supply line infrastructure give us greater control                                                          efficiencies, more collaboration and better
                                                      over our inventory across 15 African countries.                                                             innovation across our businesses. Continuous
                                                      This empowers us to introduce a number of                                                                   investment in customer science and big data
                                                      cost-saving efficiencies without decreasing                                                                 allows for improved decision making in terms of
                                                      margins or compromising on quality.                                                                         promotions, products, store layouts and pricing.

Fully-owned fleet
Our large fleet of trucks and trailers operates
24 hours a day, seven days a week to ensure                                                                  Centralised distribution
maximum availability of goods that are
delivered on a time schedule. Sophisticated                                                                  The Group has invested in an extended
transport route planning and scheduling                                                                      centralised distribution network that enables us
software optimises store deliveries and reduces                                                              to seamlessly manage the supply of products to
the number of trucks on the road, thereby                                                                    our stores across the continent.
reducing congestion, lowering our carbon
footprint and saving costs.                                                                                  As the first South African retailer to receive the
                                                                                                             renowned ISO 9001 accreditation for import
This efficient supply chain infrastructure also                                                              and export handling, we continue to pursue our
empowers small-to-medium sized suppliers to                                                                  strategic lead in supply chain management.
deliver merchandise directly to our centres and                                                              Our International Trade Department sources
avoid the need to invest in either warehousing                                                               products from anywhere in the world with
or vehicles. Our trading partners are a vital link                                                           extreme efficiency, assuring our customers of
in our supply chain and we work closely with                                                                 choice, availability of products and value for
them to create mutually beneficial relationships                                                             money. We have invested substantially to create
that go beyond simple supply and demand                                                                      a network of advanced distribution centres.
management.                                                                                                  Their accompanying transport operations are
                                                                                                             supported by sophisticated information
We have been pioneering reverse logistics                                                                    management systems. A substantial portion of
initiatives that enhance our sustainability and                                                              the investment in information technology and
environmental position, in line with international                                                           logistics infrastructure has been devoted to
best practices. Our focus is on re-use, recycle                                                              upgrading and expanding our distribution
and the reduction of waste to landfill.                                                                      network.

         Shoprite Holdings Ltd                                                                                                                                                     Shoprite Holdings Ltd
12       Integrated Report 2017                                                                                                                                                   Integrated Report 2017      13
OUR CUSTOMERS ARE AT THE HEART OF OUR BUSINESS - INTEGRATED REPORT 2017 - Shoprite Holdings
Business Overview

Financial highlights                                                                                                                                                                                                                     Stakeholder engagement
Shoprite Holdings Ltd and its Subsidiaries for the year ended 2 July 2017

                                                                                                       Restated      Sales
                                                                                        52 weeks       53 weeks                 160 000

                                                                                 %          2017           2016
                                                                           increase          Rm             Rm+                 140 000                                                                                                                                                                                                                   Employees
                                                                                                                                                                                                                                                                                                                                                          and Trade

                                                                                                                                                                                                                               141 000
Sale of merchandise                                                             8.4       141 000       130 028                 120 000                                                                                                                                                                                                                    Unions
                                                                                                                                                                                                                                         Our stakeholders

                                                                                                                                                                                                                     130 028
Trading profit                                                                 11.6         8 127         7 281
Earnings before interest, income tax, d
                                      ­ epreciation and                                                                                                                                                                                  Shoprite maintains relationships with a range of

                                                                                                                                                                                                           113 694
                                                                                                                                100 000

                                                                                                                    R Million
­amortisation (EBITDA)                                                          6.8        10 013          9 376                                                                                                                         interested parties to continuously improve the
                                                                                                                                                                                                                                                                                                                                                                                                                 Communities,

                                                                                                                                                                                                 102 204
 Profit before income tax                                                      11.2         7 615          6 848                                                                                                                         alignment of interests between the Company
                                                                                                                                                                                                                                                                                                                                                                                                             including community-

                                                                                                                                                                                        92 457
 Basic headline earnings                                                       14.8         5 554          4 838
                                                                                                                                 80 000                                                                                                  and its key stakeholders. The stakeholder
                                                                                                                                                                                                                                                                                                    Shareholders                                                                                              based organisations
                                                                                                                                                                                                                                         groups below have been identified based on the

                                                                                                                                                                               82 468
                                                                                                                                                                                                                                                                                                  and debt funders                                                                                           and non-governmental
                                                                                                                                                                                                                                         extent to which they can influence the financial

                                                                                                                                                                      72 076
                                                                                                                                 60 000
Performance measures                                                                                                                                                                                                                     and operational performance, as well as the                                                                      ion in environm                                        organisations
                                                                                                                                                                                                                                                                                                                                                       uct

                                                                                                                                                             67 209
                                                                                                                                                                                                                                                                                                                                                                         en
Diluted headline earnings per share (cents)                                    11.9       1 007.4          900.3                                                                                                                         strategic direction of the Group.                                                                           ed                    ti

                                                                                                                                                    59 127
                                                                                                                                 40 000                                                                                                                                                                                                           t r
Dividends per share declared (cents)                                           11.5         504.0          452.0

                                                                                                                                                                                                                                                                                                                                                                                m
                                                                                                                                                                                                                                                                                                                                                 ha
                                                                                                                                          47 474

                                                                                                                                                                                                                                                                                                                                                                                 pa
                                                                                                                                                                                                                                                                                                                                               et
Dividend cover (times)                                                                        2.0            2.0

                                                                                                                                                                                                                                                                                                                                                                                   cts
                                                                                                                                                                                                                                                                                                                                 focus to ensur
Trading margin (%)                                                                            5.8            5.6                 20 000

                                                                                                                                                                                                                                                                                                                                                                                       remains a top
Return on average shareholders’ equity (%)                                                   19.4           19.3
+	
                                                                                                                                     0
 The 2016 figures have been restated for the change in accounting treatment of advertising rebates. Refer to note

                                                                                                                                          2008

                                                                                                                                                    2009

                                                                                                                                                             2010

                                                                                                                                                                      2011

                                                                                                                                                                               2012

                                                                                                                                                                                        2013

                                                                                                                                                                                                 2014

                                                                                                                                                                                                           2015

                                                                                                                                                                                                                     2016

                                                                                                                                                                                                                               2017
 12 of the summary c­ onsolidated financial statements for more detail.

                                                                                                                                                                                                                                                                                                                             ide
Definitions

                                                                                                                                                                                                                                                                                                                                                                                                     pro
                                                                                                                                                                                                                                                                                                                            w
                                                                                                                                                                                                                                                                                                                          p-

                                                                                                                                                                                                                                                                                                                                                                                                        io
Return on average shareholders’ equity                                                                                                                                                                                                                                                                                                             ou                     y
                                                                                                                                                                                                                                                                                                                                                                              rit
Basic headline earnings, expressed as a percentage of the average of capital and reserves and interest-bearing borrowings at the beginning and the end                                                                                                                                                                                           Gr
of the financial year.

                                                                                                                                                                                                                                                                                                     Suppliers                                                                                                   Customers

Value-added Statement                                                                                                   24.1%                                                                                        52.7%

                                                                                        Restated
                                                         52 weeks                       53 weeks                                                                                                                                                                                                                                                          Regulators
                                                             2017                           2016
                                                                                             Rm+

                                                                                                                                                    2017
                                                              Rm                %                              %
                                                                                                                                                                                                                                         Stakeholder engagement
Sale of merchandise                                        141 000                        130 028
Investment income                                              415                            285                                   9.9%
                                                                                                                                                                                                                                         Shareholders and debt funders
Cost of goods and services                                (119 447)                      (110 329)
Value added                                                 21 968          100.0          19 984          100.0
                                                                                                                                                   13.3%
                                                                                                                                                                                                                                         Engagement methods
Employed as follows:                                                                                                                                                                                                                     Shoprite engages with investors through meetings, investor days, webcasts, conference calls, perception studies and surveys, conferences and
                                                                                                                                                                                                                                         ­presentations.
Employees
Salaries, wages and service benefits                        11 563           52.7          10 356           51.9
                                                                                                                                                                                                                                         Key issues raised                                                                                                       Our response

Providers of capital                                         2 926           13.3           2 642           13.2
                                                                                                                                24.9%                                                                                                    Africa growth opportunities and disclosure                                                                              We are providing more information on the
Finance costs to providers of funds                            340            1.5             498            2.5                                                                                                                                                                                                                                                 investment case and economic outlook for
Dividends to providers of share capital                      2 586           11.8           2 144           10.7                                                                                                                                                                                                                                                 Africa.

                                                                                                                                                    2016
                                                                                                                                                                                                                                         Access to management                                                                                                    Access to management was improved this year
Income tax                                                                                                                                                                                                                                                                                                                                                       by increasing the number of meetings with
Income tax on profits made                                   2 180             9.9          1 998           10.0                                                                                                                                                                                                                                                 investors and by attending investor
                                                                                                                                                                                                                                                                                                                                                                 ­conferences locally and abroad.
Reinvested                                                                                                              10.0%                                                                                        51.9%               Understanding Shoprite’s strategy                                                                                       In-depth strategy discussions have been
Reinvested in the Group to finance future
                                                                                                                                                                                                                                                                                                                                                                 ­incorporated in investor presentations and
­expansion and growth                                        5 299           24.1           4 988           24.9
                                                                                                                                                                                                                                                                                                                                                                  included in the Integrated Report.
 Depreciation and a
                  ­ mortisation                              2 457           11.2           2 288           11.4                           13.2%
Retained earnings                                            2 842           12.9           2 700           13.5                                                                                                                         Management succession                                                                                                   CEO succession was well flagged and the new
                                                                                                                                                                                                                                                                                                                                                                 team have made themselves available to meet
Employment of value added                                   21 968          100.0          19 984          100.0                                                                                                                                                                                                                                                 with investors. Succession seems to have been
                                                                                                                                                                                                                                                                                                                                                                 well-received.
+	
 The 2016 figures have been restated for the change in accounting treatment of advertising rebates.                  Employees                     Providers                   Income tax                  Reinvested
 Refer to note 12 of the summary c
                                 ­ onsolidated financial statements for more detail.                                                               of capital

        Shoprite Holdings Ltd                                                                                                                                                                                                                                                                                                                                                                         Shoprite Holdings Ltd
14      Integrated Report 2017                                                                                                                                                                                                                                                                                                                                                                       Integrated Report 2017    15
OUR CUSTOMERS ARE AT THE HEART OF OUR BUSINESS - INTEGRATED REPORT 2017 - Shoprite Holdings
Business Overview

Stakeholder engagement (continued)

Employees and Trade Unions                                                                                                                                         Customers

Engagement methods                                                                                                                                                 Engagement methods
Through our weekly store staff meetings, a new CEO video initiative, our internal newspaper Baked Beans and Bully Beef, information sharing via Trade              Engagement with customers is primarily through three platforms:
Unions, suggestion boxes, in-store training, Super Service awards and TopStars singing competition across Africa, we create an environment where                   J The Brand Health tracker survey;
staff are well-informed and engaged.                                                                                                                               J Social media platforms – where engagement has increased notably in recent times; and
                                                                                                                                                                   J Direct interaction with customers in the stores.

Key issues raised                                                                                      Our response
                                                                                                                                                                   Our customers increasingly communicate                                                               Social media interaction
Career development and growth                                                                          We maintain regular and consistent interaction
                                                                                                                                                                   with us via social media platforms – to
                                                                                                       with the people within our business to ensure                                                               Brands                                   Facebook        Twitter    YouTube     Instagram
                                                                                                                                                                   follow specials, request store details or
                                                                                                       that they are adequately challenged, continue
Education and training                                                                                                                                             product information and provide their
                                                                                                       to grow and develop and are rewarded based                                                                  Checkers RSA                              944 106       146 608         2 054       25 369
                                                                                                                                                                   views on a range of topics. We initially
                                                                                                       on key performance indicators.
                                                                                                                                                                   used social media as a marketing channel        Shoprite RSA                              877 015       109 233         1 420          N/A
Health and safety                                                                                                                                                  and have since extended its functionality
                                                                                                                                                                   to a customer response, retention and           Shoprite Nigeria                         1 223 624      209 000           N/A          N/A
                                                                                                                                                                   recovery mechanism, as well as a brand-
Transformation and empowerment                                                                                                                                                                                     Shoprite Zambia                            19 863           N/A           N/A          N/A
                                                                                                                                                                   building medium.

Remuneration and incentives
                                                                                                                                                                   Key issues raised                                                                        Our response
                                                                                                                For more information about our staff initiatives
Study assistance                                                                                                                                                   Affordability                                                                            ‘Everyday low prices’ is our overarching
                                                                                                                refer to Human Capital discussion on page 41.
                                                                                                                                                                                                                                                            ­objective and our entire business model is
                                                                                                                                                                                                                                                             structured and geared to deliver this on a
                                                                                                                                                                                                                                                             ­consistent basis.
Communities
                                                                                                                                                                   Availability of products                                                                 We continuously engage with a broad and
Engagement methods                                                                                                                                                                                                                                          diversified range of suppliers to ensure on-shelf
Engagement occurs primarily through the social initiatives that Shoprite undertakes, as well as through direct customer feedback as these communities                                                                                                       availability of product in all our stores. We use
also comprise our customers.                                                                                                                                                                                                                                more than 23 000 suppliers in 43 countries to
                                                                                                                                                                                                                                                            provide customers with the greatest choice
                                                                                                                                                                                                                                                            and consistent availability.
Key issues raised                                                                                      Our response
                                                                                                                                                                   Quality complaints and safety concerns                                                   Shoprite maintains extensive quality control
Focus on food security                                                                                 Shoprite fights hunger through a variety of
                                                                                                                                                                                                                                                            programmes to ensure product quality and
                                                                                                       feeding programmes, food gardens and food
                                                                                                                                                                                                                                                            safety and an efficient compliance and recall
                                                                                                       donations.
                                                                                                                                                                                                                                                            system. This year, we have had an enhanced
Empowerment                                                                                            Women play a significant role in our business –                                                                                                      rollout of training on issues of food safety and
                                                                                                       they are our customers, employees and                                                                                                                hygiene. We also empower our staff to resolve
                                                                                                       suppliers. We partner and assist with various                                                                                                        all complaints and ensure maximum customer
                                                                                                       initiatives to support this group. We also                                                                                                           satisfaction.
                                                                                                       support a large number of small suppliers and
                                                                                                       growers.                                                    Healthy options                                                                          We have added more than 100 lines to our
                                                                                                                                                                                                                                                            Fresh Convenience Foods this year and
Job creation                                                                                           At Shoprite, we not only provide a substantial
                                                                                                                                                                                                                                                            launched an industry-leading Gordon Ramsay
                                                                                                       number of direct employment opportunities
                                                                                                                                                                                                                                                            endorsed kids’ meal range, which sold more
                                                                                                       related to our stores, but we also develop skills
                                                                                                                                                                                                                                                            than 200 000 meals in three months.
                                                                                                       among the unemployed to create a pipeline for
                                                                                                       future job creation.
                                                                                                                                                                   Environmental sustainability                                                             Shoprite focuses strongly on the usage of
Community development                                                                                  Shoprite is committed to growing and                                                                                                                 recycled materials, as well as reducing
                                                                                                       developing the communities we serve and                                                                                                              packaging, reducing waste and minimising its
                                                                                                       have a variety of initiatives in place to facilitate                                                                                                 carbon footprint. Its leading innovation in the
                                                                                                       this. While our initial focus is on meeting                                                                                                          recyclable Checkers shopping bag has
                                                                                                       immediate needs, our longer-term objective is                                                                                                        significantly reduced landfill and will be rolled
                                                                                                       always to put in place sustainable initiatives                                                                                                       out to its other brands next year.
                                                                                                       that will ultimately ameliorate the need. We
                                                                                                       often work in partnership with other
                                                                                                       organisations to deepen the impact of our
                                                                                                       interventions.

        Shoprite Holdings Ltd                                                                                                                                                                                                                                                  Shoprite Holdings Ltd
16      Integrated Report 2017                                                                                                                                                                                                                                                Integrated Report 2017       17
Business Overview

Stakeholder engagement (continued)                                                                                                                           Operating context and strategy

Regulators                                                                                                                                                   Our market place – long term drivers

Engagement methods                                                                                                                                           A large and growing population on the African continent
Engagement occurs primarily through meetings, regulatory submissions and interaction via industry bodies.                                                    requiring food and staple products
                                                                                                                                                             Africa’s population is set to DOUBLE to 2.4 billion people by 2050. Large
                                                                                                                                                             scale and rapid urbanisation, strong population growth and economic
Key issues raised                                                                                          Our response                                      growth that is persistently higher than that of developed economies,
                                                                                                                                                             continue to make Africa an attractive long-term investment opportunity.
Ongoing compliance with regulatory                                                                         We maintain a strong focus on ensuring that
­frameworks                                                                                                Shoprite complies with all applicable
                                                                                                                                                             As the largest retailer in Africa, with almost 40 years of experience in
                                                                                                           regulations­in all the countries we operate in.
                                                                                                                                                             South Africa and more than 26 years in the rest of Africa, Shoprite is
Job creation                                                                                               Governments of the countries in which we          ideally positioned to meaningfully participate in this growth.
                                                                                                           operate are particularly concerned with job
                                                                                                           creation and Shoprite is a people-intensive       Low commodity prices, weak currencies and pervasive drought conditions
                                                                                                           business – we have a broad range of initiatives   momentarily slowed our game plan for Africa in 2017, but we remain
                                                                                                           in place to attract, recruit and train large      committed to the long-term opportunities presented by the continent.
                                                                                                           ­numbers of staff.                                The 15 markets that Shoprite operates in, have a combined population of
                                                                                                                                                             500 million people and a collective gross domestic product (GDP) of
                                                                                                                                                             R15 trillion.

Suppliers

Engagement methods
Suppliers are engaged through direct interaction, farm visits, agricultural shows and our electronic platform.                                                                                                                             Significant levels of unemployment and food insecurity
                                                                                                                                                                                                                                           in parts of the African continent
                                                                                                                                                                                                                                           Climate change may exacerbate these challenges by potentially
Key issues raised                                                                                          Our response
                                                                                                                                                                                                                                           disrupting production patterns and increasing production costs.
Opportunities to supply to Shoprite                                                                        Shoprite maintains a large and diverse group                                                                                    Shoprite continues to diversify its sources and portfolio of suppliers to
                                                                                                           of suppliers. We focus on building long-lasting                                                                                 ensure availability of products on a consistent basis.
                                                                                                           relationships with suppliers through direct
                                                                                                           interaction and communication. Shoprite works                                                                                   We are working tirelessly to provide customers with products that are
                                                                                                           with over 1 000 growers and sources more                                                                                        affordable and accessible. In 2017, we subsidised over 44 million
                                                                                                           than 90% of all products locally, in support of                                                                                 loaves of bread and rolled out our R5 meals project to specifically
                                                                                                           the communities it serves.                                                                                                      address these challenges. We also ensure ready availability of a range
                                                                                                                                                                                                                                           of staple foods for under R10.

Transformation                                                                                             A high percentage of Shoprite’s fresh produce
                                                                                                           suppliers are small and medium enterprises
                                                                                                           and in South Africa more than half of the
                                                                                                           ­suppliers deliver on contracts worth less than
                                                                                                            R500 000 a year.

Growth and development                                                                                     Shoprite maintains a number of small-
                                                                                                           enterprise development initiatives to develop
                                                                                                           and grow suppliers in local communities. Our      Muted economic growth outlook
                                                                                                           ­continued significant investment in supply       Current trading conditions are characterised by limited macro-economic
                                                                                                            chain infrastructure, also assists these         support and low consumer and business confidence. The defensive nature
                                                                                                            suppliers by reducing their travel time and      of our brands and our ‘best value’ proposition become most evident under
                                                                                                            costs.                                           these trading conditions. Shopping for staples and basic foodstuffs
                                                                                                                                                             generally remain resilient throughout the economic cycle in the lower
                                                                                                                                                             income groups. In addition, an increase in value seeking behaviour is
                                                                                                                                                             benefiting our brands and market share in middle income groups. At the
        For further detail of our engagement and                                                                                                             opposite end of the scale, our recent successes in respect of increased
        interaction with these stakeholder groups,                                                                                                           penetration of the upper LSM groups is providing robust growth
        refer to our Chief Executive’s report on
                                                                                                                                                             opportunities despite the current economic challenges. Our differentiated
        page 30 and Nurturing our capitals on
        pages 41 – 55.                                                                                                                                       portfolio provides us with significantly more competitive levers to weather
                                                                                                                                                             current conditions.

        Shoprite Holdings Ltd                                                                                                                                                                                                                                                           Shoprite Holdings Ltd
18      Integrated Report 2017                                                                                                                                                                                                                                                         Integrated Report 2017       19
Business Overview

Operating context and strategy (continued)

                                                                                                                                                               Managing business risks
Increase in regulation and standards                                           Online shopping trends                                                          Our principal risks may impede on Shoprite’s ability to achieve our objectives. To determine the key risks, our risk universe is assessed from a likelihood as
Growing compliance requirements in every jurisdiction we operate require       Online shopping is rapidly growing on a global scale. In Africa, the            well as an estimated impact perspective and risks are categorised according to its combined score on these two dimensions.
diligence and strong systems for oversight. Over-regulation is stifling        trend is still in its infancy, not least because of limited logistics                   Key risks                                      Mitigation
entrepreneurship, and is adding significant complexity and cost to doing       infrastructure. It is Shoprite’s intention to participate in this trend as it

                                                                                                                                                               1
business for small suppliers.                                                  matures on the continent.                                                               Unavailability of key systems                  J 24 hour monitoring of all key systems
                                                                                                                                                                       Key IT systems may be off-line resulting       J Formal Disaster Recovery programme that is tested on a regular basis
At Shoprite, we believe that you get people out of poverty by creating free    An eCommerce project is currently being finalised.                                      in disruption to business operations           J In the process of migrating systems to the Cloud
market conditions and ease of doing business. We provide ongoing                                                                                                                                                      J Identify, diagnose and resolve incidents with support teams
support and guidance to small and medium enterprises, as part of our                                                                                                                                                  J Thorough testing of application changes
commitment to help overcome the challenges to comply with the required                                                                                                                                                J Data protective mechanisms in place (automated data back-ups, IPS installations)
standards.                                                                                                                                                                                                            J Back-up communication channels (3G, satellite)

                                                                                                                                                               2
                                                                                                                                                                       Losses due to fraud                            J Formal approval system embedded for capital and operational expenditure
                                                                                                                                                                                                                      J All payments are done via EFT systems with reputable banks
                                                                                                                                                                                                                      J Automated system controls with online banking systems
Changing trends in customer preferences and                                                                                                                                                                           J	The controls around significant EFT systems have been assessed by PwC, the Group’s
­consumption behaviours                                                                                                                                                                                                 ­independent external auditor
Consumers are increasingly making healthier food choices, opting for                                                                                                                                                  J Critical financial systems subjected to regular risk based internal audit
organic, low-fat, or low-carb options, or eliminating ingredients based on                                                                                                                                            J Monthly reconciliations of all ledger accounts
food sensitivities, allergies or personal convictions. There is a growing                                                                                                                                             J Monthly review of Income Statements at lowest level entity (Branch)
trend towards fresh food, healthy options and convenience. This trend is                                                                                                                                              J Well-publicised Hotline systems managed by independent external party

                                                                                                                                                               3
particularly evident in the more affluent communities who have a wider                                                                                                 Non-performance of outsourced                  J Establish multiple suppliers for key services to avoid over-dependency
choice of lifestyles.                                                                                                                                                                                                 J Conduct regular price and service benchmarking
                                                                                                                                                                       ­service providers
                                                                                                                                                                                                                      J Develop in-house capabilities for key services
Shoprite is strongly participating in this trend with the Checkers brand,                                                                                                                                             J Standard contract terms and conditions
with the rollout of a wide range of fresh and ready-made options and                                                                                                                                                  J Establish process to implement and enforce contracts

                                                                                                                                                               4
investment in the cold chain, quality specifications and quality
                                                                                                                                                                       Foreign exchange losses                        J	All imports and exports are executed in accordance with the Group’s Treasury mandate that was
management. We have also expanded our ranges of healthier alternatives
                                                                                                                                                                       The Group may be exposed to foreign              ­independently reviewed and then approved by the Board
– gluten free, sugar free, banting and carbohydrate substitutes – and
                                                                                                                                                                       currency losses as a result of operating in    J Adoption of hedge accounting as part of accounting policies
launched a range of healthy kids’ foods with a “no junk” promise.
                                                                                                                                                                       various countries and due to importing         J	Weekly review of cash balances in the Group by Treasury forum during weekly foreign exchange
                                                                                                                                                                       significant amounts of merchandise                meetings
In tough economic times, customers tend to compromise on quantity but,
                                                                                                                                                                                                                      J Investment in US$ linked Angolan Government bonds
to the extent possible, not on quality. They will generally continue to seek
                                                                                                                                                                                                                      J	Limit exposure by hedging in accordance with Treasury mandate, e.g. using Letters of Credit and
the premium quality product but buy a smaller quantity. Customers want a
                                                                                                                                                                                                                         Forward Foreign Exchange Contracts
value exchange of great quality and an affordable price but within budget.
                                                                                                                                                                                                                      J Convert surplus cash into hard currency as soon as possible

                                                                                                                                                               5
To accommodate this trend, Shoprite has started selling single serving
offerings of premium products, smaller sized options and ‘loose served’                                                                                                Project and transformation failure             J Project payments are structured on a milestone delivery basis
products at counters, allowing customers to select the quantity they can                                                                                               Project implementations may be delayed,        J	Projects overseen by Steering Committees that include various business heads. In major projects
afford.                                                                                                                                                                over budget and not meeting expectations         the CEO, CFO and/or COO will also be involved.
                                                                                                                                                                                                                      J	In the SAP implementation, SAP also provides expertise to manage the overall programme. In addition,
                                                                                                                                                                                                                        independent programme assurance forms part of the governance processes of the programme.
                                                                                                                                                                                                                      J Manage projects in accordance with project management best practices
                                                                               Fast pace of change in technology                                                                                                      J Track and monitor all projects through Value Management Office
                                                                               Where and how retailers interface with customers is changing rapidly                                                                   J	All new prospective projects subjected to a rigorous cost-benefit review before being submitted
                                                                               and technology and access to big data are key drivers in the changing                                                                    to a Project Approval Committee that consists of senior management members. Where material,
                                                                               landscape.                                                                                                                               the CEO and CFO will attend.

                                                                                                                                                               6
                                                                                                                                                                       Non-compliance with laws and                   J Embedded compliance framework
                                                                               Shoprite is actively using basket data and advanced customer analytics                  ­regulations relevant to the business          J Regular reviews by Internal Audit
                                                                               to guide all customer centric decision-making, from product ranges per                  Competition Act                                J	Utilising software to assist in monthly reporting, compliance management and providing alerts on
                                                                               store, to pricing, timing, products to promote and layout of stores.                    Occupational Health and Safety Act               new/changes in legislation.
                                                                                                                                                                       Pharmacy Act                                   J Appointment of dedicated Compliance Officer
                                                                                                                                                                       Medicines and Related Substances Act
                                                                                                                                                                       Companies Act
                                                                                                                                                                       Employment Equity Act
                                                                                                                                                                       Labour Relations Act
                                                                                                                                                                       National Environmental
                                                                                                                                                                         Management Waste Act
                                                                                                                                                                       Income Tax Act
                                                                                                                                                                       B-BBEE Act
                                                                                                                                                                       Consumer Protection Act
                                                                                                                                                                       Protection of Personal Information Act

                                                                                                                                                               7
                                                                                                                                                                       Breakdown/interruptions in                     J	A comprehensive and formalised Business Continuity and Recovery Programme which is also in
                                                                                                                                                                       supply chain                                     the process of being rolled out to all Distribution Centres
                                                                                                                                                                       Certain macro or internal events may           J In process of matching suppliers’ capabilities
                                                                                                                                                                       result in supply chain disruptions             J Regular fire and risk reviews with training where required
                                                                                                                                                                                                                      J All critical centres have standby generators
                                                                                                                                                                                                                      J	State of the art security and fire prevention systems, including alarms, access control,
                                                                                                                                                                                                                        ­closed-­circuit television and sprinkler systems

        Shoprite Holdings Ltd                                                                                                                                                                                                                                                                  Shoprite Holdings Ltd
20      Integrated Report 2017                                                                                                                                                                                                                                                                Integrated Report 2017      21
Business Overview

Operating context and strategy (continued)

Strategic focus areas                                                                                                                                         Strategic                                                                                       Our customers’
Shoprite’s strategic intent is to continue to strengthen and extend its leadership position as the foremost FMCG retail operation on the African continent.   objective        Initiatives and progress                                                       ­response                                      Related risks
The Company intends to do this by unstintingly focusing on the delivery of low prices and a world-class shopping environment in every region it enters.
The Company is confident that the unique aspects of its chosen business model, as well as the strategies implemented to exploit key drivers of growth,
                                                                                                                                                                                                                                                               New record levels of
will continue to deliver sustainable value creation for all stakeholders for the next 40 years. The growth vectors are spread across various dimensions,
ensuring that there are multiple opportunities to be seized.
                                                                                                                                                              Building a
                                                                                                                                                              ­customer-
                                                                                                                                                                               We make the customer our focus
                                                                                                                                                                               J	An organisation-wide understanding of customers’ expectations               customer satisfaction                          1       2        3
                                                                                                                                                               first culture
                                                                                                                                                                                                                   1.	What you want, when you
                                                                                                                                                                                                                       want it
                                                                                                                                                                                                                                                                                                                      7
                                                                                                                                                                                          OUR                      2. First time freshness                                               better and better

                                                                                                                                                                                     ­PROMISE                      3. Low prices you can trust
                                                                                                                                                                                       TO OUR                      4.	World-class shopping
                                                                                                                                                                                                                       experience (clean and
                                                                                                                                                                                                                                                              91% 87% 81%
                                                                                                                                                                                  ­ USTOMERS
                                                                                                                                                                                  C                                    simple to shop)

                                    2                                                      3
                                                                                                                                                                                                                   5. Friendly, helpful staff                 J	2.4% customer growth
                                               Growing                                               Developing                                                                                                                                                   and 0.45% gain in market
                                               LSM                                                   Private                                                                   J	Operational management aligned to the brands
                                                                                                                                                                                                                                                                  share – record high market
                                                                                                                                                                                                                                                                  share at year-end
                                               8 – 10                                                Label                                                                     J	Invested two million training hours, mostly around customer service, up    J	Eight customer awards in
                                               Share of                                                                                                                            12%
                                                                                                                                                                               J	Customer science and data capabilities supporting smarter decision-
                                                                                                                                                                                                                                                                  the past year
                                               Wallet                                                                                                                              making, with more relevant ranging and pricing and a 2% improvement
                                                                                                                                                                                   in on-shelf availability
                                                                                                                                                                                                                                                                                                                   Refer to page 21
                                                                                                                                                                               J	A team that is trained and empowered to do what is necessary – not a                                                            for related risks
                                                                                                                                                                                   single customer leaves the store unhappy.                                                                                       information.

                                                                                                                                                              Growing          J	Checkers has a significant opportunity to further grow share of wallet of

                                                 Drivers
                                                                                                                                                              LSM 8-10            high LSM customers.
                                                                                                                                                                               J	These customers are 4 times more valuable in terms of size of basket,
                                                                                                                                                                                                                                                                                                              1       3        5
                                                                                                                                                              share of
                                                                                                                                                                                  than the average shopper
                                                                                                                                                              wallet
                                                                                                                                                                               J	An accelerating trend in this customer base towards fresh, convenient
                                                                                                                                                                                                                                                                                                                  6       7

                                                of growth 4
                                                                                                                                                                                  and added-value foods
                                                                                                                                  Stronger

     1
                                                                                                                                                                               J	Checkers intends to compete strongly to take advantage of this
              Customer-                                                                                                           Franchise                                       growing market – we have visited and learned from the best Fresh Food
                                                                                                                                                                                  suppliers globally and have implemented much of our learnings
              first                                                                                                               Offer                                        J	Management restructured to provide complete focus per brand
              ­Culture                                                                                                                                                         J	We recruited a top team of developers (chefs and food technologists) to
                                                                                                                                                                                  support the adoption of premium products, including a wider range of
                                                                                                                                                                                  gourmet food offerings.
                                                                                                                                                                               J	Shoprite’s business model is well suited towards an effective delivery in
                                                                                                                                                                                  this segment in terms of its supply chain, speed to the market and
                                                                                                                                                                                  quality control.
                                                                                                                                                                               J	Fresh has launched more than 100 new convenience products in the
                                                                                                                                                                                  past year and more than 110 new products are currently in
                                                                                                                                                                                  development.
                                                                                                                                                                               J	Products in Checkers’ Ready to Cook range have received the seal of
                                                                                                                                                                                  approval from the South African Chefs Association.                          J	Checkers has seen the
                                                                                                                                                                               J	The product offering is being supported by an award-winning store              largest gain in LSM 8-10
                                                                                                                                                                                  design, providing an attractive and high-quality shopping experience.          shoppers since 2011 and

                                  6                                                         5
                                                                                                                                                                                                                                                                 was the fastest growing
                                              Strategic                                               Leverage                                                                                                                                                   supermarket chain in this
                                              Footprint                                               African                                                                                                                                                    target segment in the last
                                                                                                                                                                                                                                                                 year.
                                              Expansion                                               Advantage                                                                                                                                               J	The introduction of a Fresh
                                                                                                                                                                                                                                                                 Foods category was met
                                                                                                                                                                                                                                                                 with great success.
                                                                                                                                                                                                                                                              J	Fresh convenience foods
                                                                                                                                                                                                                                                                 sales have doubled this
                                                                                                                                                                                                                                                                 year
                                                                                                                                                                                                                                                                                                                   Refer to page 21
                                                                                                                                                                                                                                                              J	Kids ready-to-eat category                        for related risks
                                                                                                                                                                                                                                                                 has doubled since launch                          information.

        Shoprite Holdings Ltd                                                                                                                                                                                                                                                            Shoprite Holdings Ltd
22      Integrated Report 2017                                                                                                                                                                                                                                                          Integrated Report 2017                  23
Business Overview

Operating context and strategy (continued)

Strategic                                                                                      Our customers’                                               Strategic                                                                                  Our customers’
objective    Initiatives and progress                                                          ­response                          Related risks             objective    Initiatives and progress                                                      ­response                        Related risks

Developing   J	Promoting private label is a win-win for both Shoprite and our                 J	Shoprite has already had                                  Strategic    New stores                                                                    J	Customers welcome our
­private        customers – providing choice at better value for customers and better
                margin for the Company.
                                                                                                  great success with difficult
                                                                                                  categories, with its Zip
                                                                                                                                   1      2         3       footprint    J	72 new supermarkets opened this year
                                                                                                                                                                         J	82 new supermarkets to open in 2018
                                                                                                                                                                                                                                                          low prices, wide range of
                                                                                                                                                                                                                                                          products, job opportunities
                                                                                                                                                                                                                                                                                          1       2         4
 label                                                                                                                                                      ­expansion
             J	It also provides the opportunity to deleverage power from multi-national          Cola and Lovies Nappies                                                                                                                                 and community
                suppliers
             J	341 new products have been launched since January 2017.
                                                                                                  often outselling the original
                                                                                                  brands                           5                7
                                                                                                                                                                         Store formats optimised
                                                                                                                                                                         J	Flexible formats are being introduced to better serve each market
                                                                                                                                                                                                                                                          involvement.
                                                                                                                                                                                                                                                       J	Optimised store size
                                                                                                                                                                                                                                                                                                  3
             J	There is further room to increase Shoprite’s private label participation.      J	Private label participation             6                                                                                                               improve ROI                     5                 7
                The Food and Grocery categories currently have a 14.7% participation
                in South Africa in an industry worth R29.9 billion, relative to the industry
                                                                                                  improved by 1% in South
                                                                                                  Africa and 1.2% in Non-
                                                                                                                                                                         Capitalise on bricks-and-mortar
                                                                                                                                                                         J	Bricks-and-mortar an advantage for Omni Channel offerings – ability to
                                                                                                                                                                                                                                                       J	Centralised distribution
                                                                                                                                                                                                                                                          offers effective inventory
                                                                                                                                                                                                                                                                                                  6
                participation of 18.5%, according to Nielsen (2017).                              RSA this year                                                             get items to any city at a low cost                                           management and a
             J	The Non-RSA opportunity remains totally untapped.                              J	Private label gross margin                                             J	Continue to extend our lead in Africa                                         positive cash cycle,
                                                                                                                                        Refer to page 21
                                                                                                  was up 2.3 percentage                 for related risks                                                                                                 supporting the low cost
                                                                                                  points year-on-year                   information.                     Own the supply chain                                                             promise.
                                                                                                                                                                         J	Shoprite maintains a sizeable head start in centralised distribution,
                                                                                                                                                                            with 24 years’ experience and an investment of more than R40 billion
A stronger   J	A part of the business that has                                                J	Franchise business is                                                  J	123 000m² Cape Town Cilmor DC – opening in September 2017
­franchise      received strong focus this year.                                                  doing well, at 10.1% like-       1      2         4                    J	Transplanting expertise into Non-RSA regions, including two new
 offer       J	We have refined our model and we are                                              for-like sales growth.                                                    Distribution Centres in Angola and the purchase of a Distribution Centre
                doing express format stores, as well                                           J	Increased appeal, with a                                                  in Nigeria
                as forecourt stores                                                               net 29 new members                      3                              J	International sourcing from 43 countries, supplying 15 countries
             J	Strong opportunities for growth
                through private label, general merchandise,
                                                                                               J	Gained market share
                                                                                               J	Money market service
                                                                                                                                   5                7                    Expanding borders
                Money Market services and our turn-key system solution.                           counters have experienced               6                              J	Shoprite will not confine its growth to existing African countries
             J	We have redone the private labels and introduced general merchandise              substantial turnover                                                   J	New Non-RSA countries are being explored
                that the stores never had before                                                  growth                                                                 J	Other emerging markets are being investigated as a catalyst for our
             J	The franchise business is getting more and more products from our              J	29% more products                                                         growth ambition, but expansion will be done cautiously
                distribution centres and getting the pricing benefit.                             distributed from Shoprite
             J	Rebranded stores are growing at twice the pace of other stores                    DCs, improving retailer                                                Implementing the right technology for 2020
             J	Adding another 75 fuel station forecourt stores                                   margins by 0.5%                       Refer to page 21
                                                                                                                                                                         J	We are on a drive to further modernise our technology landscape for
                                                                                               J	Trading profit growth                 for related risks                   rapid deployment and scalability
                                                                                                  ahead of turnover growth              information.                     J	SAP COR3 – the biggest technology project ever undertaken by Shoprite.
                                                                                                                                                                         J	4 years in the making – delivered on time and under budget
                                                                                                                                                                         J	Enables Omni Channel and e-commerce
Leverage     J	Shoprite has operated in Africa for more than 26 years. Our wealth of          J	Shoprite has a well-                                                   J	Access to data lake of 100 terrabytes
African         experience and track record is unsurpassed and a significant                      established record in 15         1      2         4                    J	Can run 20 million lines at point of purchase
­advantage      ­competitive advantage                                                            African countries and is                                               J	Cost reductions i.t.o. managing interface speed                                                                     Refer to page 21
             J	Shoprite operates 437 stores outside South Africa. We have sufficient             well-regarded.                                                         J	Introduction of Google’s G Suite and Cloud-based solutions leads to                                                 for related risks
                 scale to open distribution centres in these countries, which will further        Governments, regulators                 3                                 enhanced collaboration and efficiencies                                                                             information.
                 assist to entrench our position as market leader
             J	African population is set to double to 2.4 billion people by 2050.
                                                                                                  and customers are
                                                                                                  generally very favourably        5                7
             J	The growing middle class is forecast to reach 1.1 billion people by 2060.         disposed to the                         6
             J	Rapid urbanisation trends – 24 million people are moving to cities each           establishment of stores
                 year until 2045, which implies that Africa’s top 18 cities will have             from the Shoprite Group in
                 combined spending power of $1.3 trillion by 2030 – Shoprite is well              their countries and
                 positioned to capitalise on this opportunity.                                    communities.
             J	The long-term forecast growth for each region we have entered outside          J	55 new stores opened, 43
                 South Africa is higher than that of the domestic economy, providing              planned for 2018,
                 significant diversification benefits and growth prospects to the                 significant further
                 Company.                                                                         opportunities available.
             J	Current economic challenges and a slowdown in the number of
                 properties being developed have reduced the pace of our store rollouts
                 into Africa. In the long term, we remain confident of the investment          	Africa is a
                 proposition of the continent.
                                                                                                 long game
                                                                                                 with many                              Refer to page 21

                                                                                                 cycles                                 for related risks
                                                                                                                                        information.

      Shoprite Holdings Ltd                                                                                                                                                                                                                                                       Shoprite Holdings Ltd
24    Integrated Report 2017                                                                                                                                                                                                                                                     Integrated Report 2017     25
You can also read