Is Checkers Sixty60 eating Spar alive?

The Checkers Sixty60 on-demand delivery machine roars on, with sales through this platform growing by 58% in its last financial year. Between 2021 and 2024, the number of deliveries has quintupled (up 530%).

It continues to roll out the Sixty60 service which, as at September, was available at 539 locations, an increase of 73 from the prior year (15%). At the beginning of September, it had 283 Checkers stores, 38 Checkers Hyper stores and a further 276 Checkers LiquorShops in the country. Impressively, Sixty60 is now at 90% of its store base.

There is absolutely no doubt that Sixty60 has been a key driver in the growth of the Checkers business, which continues to be the star in the Shoprite Group, alongside Usave (the core Shoprite business is battling, relatively speaking).

Checkers reported sales growth of 12% in its last financial year. And between July 2023 and June 2024, very roughly aligned to its fiscal, Checkers took R4 billion in market share from its competitors.

ALSO READ: Shoprite Checkers to buy ‘liquor’ from Pick n Pay, Spar

The fight is on

For all the talk of the titanic battle between Checkers and Woolworths for affluent customers – and make no mistake, they are battling aggressively for every rand – the truth is that Checkers has been taking market share from all competitors.

In recent years, as Pick n Pay has stumbled, it has seized on that opportunity.

However, under returning CEO Sean Summers, Pick n Pay is up for the fight.

And when it comes to on-demand deliveries, Pick n Pay has invested aggressively in its asap! service (it rushed to acquire the Bottles app and platform in 2020, when it realised just how big a threat Sixty60 was).

Its commercial services agreement with the Takealot Group, which embeds Pick n Pay as the grocery service for the Mr D app, likely didn’t come cheap, but former CEO Pieter Boone must’ve realised that it had to do something more than hope that asap! would continue to grow in order to compete with Checkers in the on-demand delivery space.

That deal may yet be proven to be Boone’s best decision as CEO.

ALSO READ: Pick n Pay launches same-day grocery delivery

Sparring with Spar

Arguably the most exposed to Sixty60’s continued success is Spar.

Sixty60 is predicated on convenience. Spar’s entire offering across its three main formats (SuperSpar, Spar and Kwikspar) is premised on convenience.

Stores are owner-run and generally have quite specific offerings, especially in fresh, in the communities in which they trade.

Turnover growth for Spar’s grocery business in South Africa was just 5.1% in its last fiscal (to the end of September). This is useful as the one month difference in year-end between Shoprite Group and Spar allows one to directly compare their numbers.

Importantly, this growth is not the reported growth by the listed Spar business (it is primarily a wholesaler, aside from a small number of corporate-owned supermarkets). This is retail turnover growth across all its outlets. Turnover growth at Tops (its liquor business) was higher, at 9.2%, with combined growth of 5.7%. This is half the rate of Checkers.

Spar’s Spar2U on-demand delivery service had a somewhat muted start, but it has aggressively rolled this out to 525 sites (it has 2 550 stores in southern Africa).

Practically all SuperSpars (and their adjacent Tops liquor stores) are available on the Spar2U service, but the platform hasn’t really seen aggressive marketing in the same way Checkers and Pick n Pay have punted their apps.

ALSO READ: As one Pick n Pay closes, a Checkers opens …

While only a single metric, Pick n Pay asap! and Checkers Sixty60 are numbers four and five, respectively, in the food and drink and shopping categories on Apple’s iOS App Store in South Africa. Spar2U is number 14 in shopping.

The single biggest difficulty Spar has is that it is providing a single platform to its customers, but because it doesn’t own its stores (with the exception of a handful), it has to rely on the stores themselves for the fulfilment part of the process.

Systems and processes can only take you so far in a business where trading is managed independently by the owner operators.

The other main challenge facing Spar is that competing Checkers outlets in suburbs and areas in which Spar has a presence are able to take the share of the convenience shop (milk, eggs, bread) away from Spar – which might be the only reason they shop at their local Spar in the first place. Once that spend is taken away, they may shift their purchases of other groceries away too.

Finally, Checkers continues to aggressively open stores.

Its new smaller Checkers Foods format is focused squarely on convenience and even these stores are leveraged for Sixty60. How quickly will it roll these out?

Spar executives may be worried about more than just a botched SAP implementation at its KwaZulu-Natal warehouse …

This article was republished from Moneyweb. Read the original here.