Shoprite targets informal retail with fintech expansion

Shoprite, the South African retail giant, has bolstered its expansion into the informal economy and digital financial services by finalizing a 51% stake acquisition in R&A Cellular. This strategic move aims to extend Shoprite's financial and value-added services beyond its formal store network into informal and semi-formal retail environments.

In its latest financial results, Shoprite reported an 8.4% increase in trading profit to R16.2 billion and a 8.1% rise in gross profit to R66.5 billion for the 52 weeks ending June 28th. The CEO of Shoprite, Pieter Engelbrecht, emphasized the company's commitment to investing in adjacent growth markets, stating that the acquisition of R&A Cellular would support the expansion of Shoprite's financial services and value-added products across informal and semi-formal retailers.

R&A Cellular provides a point-of-sale platform that enables informal retailers to sell prepaid airtime, electricity, gaming, entertainment products, and card-based payments. This acquisition complements Shoprite's existing financial services, such as its Money Market offering, which will now reach community-based trading hubs like spaza shops and other informal merchants.

Additionally, Shoprite signed a purchase agreement to acquire Vida e Caffè, subject to conditions precedent and regulatory approval. The company's trading profit increased by 8.4% to R16.2 billion, with gross profit rising by 8.1% to R66.5 billion for the same period. Diluted headline earnings per share increased by 12.2% to R15.27.

Despite internal selling price inflation averaging only 0.8% within its core Supermarkets RSA segment, merchandise sales from continuing operations grew by 7.2%, reaching R270.8 billion. Supermarkets RSA accounted for 84.5% of group sales, increasing by 7.1% to R15.2 billion. Checkers and Checkers Hyper saw stronger sales, growing by 10%, while Petshop Science expanded rapidly, reaching 185 stores and increasing sales by 74.5%.