Shoprite to Sell Property to Pay for Online Store Upgrades

• Shoprite to Sell Property to Pay for Online Store Upgrades

Shoprite Holdings Limited, Africa’s biggest grocer, announced it would be letting go of some properties to free up cash for technology investment, growing online sales and upgrade its supermarket for fresh food.

According to the Chief Executive Officer, Pieter Engelbrecht, global retailers are leasing rather than buying properties because “the heavier your property portfolio gets in your total asset base, the lower your return on invested capital becomes,” the CEO said. “So eventually we become more of a property company than a retail company.”

He explained that this is the kind of investment that gives the company very good returns.

“We can’t ignore where the world is going and customer data is critically important for the future of retailers,” Engelbrecht said. “We now know much more about our products, our margins and our customers.”

The company has made huge strides in its offering of expensive food, area largely dominated by Woolworths Holdings Ltd in South Africa.

“In the premium fresh section of our business we’ve added 350 million rand ($23 million) in market share,” Engelbrecht said. “The customers that we’ve profiled as premium buyers in our fresh stores are growing 3 1/2 times faster than in the rest of our business, so we are certainly attracting a more affluent customer more often.”