The economic constraints remained particularly challenging for lower-income groups affected by the rising unemployment rate. However, with Boxer Punch and U-Save also operating as collection points for social grants, the retailers benefited from extensions to a ZAR350 COVID-19 grant to unemployed households, which boosted footfall to stores.
The race towards financial inclusion has led to an increasing number of retailers introducing financial products to add value to their services. Such initiatives were initially introduced to the channel by Shoprite in 2018 via Shoprite Mobile Money wallet.
U-Save remained the largest discounter in South Africa in the number of outlets and value share terms, as Shoprite improved its footprint to move the brand closer to communities in townships and rural areas. Moreover, U-Save also reiterated its position as offering lower prices, with items such as bread, deli meals and recently launched sanitary packs for as low as ZAR5.
Discounters will continue to target lower-income communities, supported by affordable offers. The trend will benefit from the finalisation of restructuring plans that have been taking place since the pandemic to reduce costs and improve price-management policies.
The increased demand for convenience reported in 2021 will translate into an accelerated expansion of discounters in proximity to households. The move will aim to overcome the digital gap exposed during the pandemic while lowering operating costs.
Discounters will likely remain concentrated between Shoprite and Pick ‘n’ Pay. However, competition will intensify during the forecast period, as operators develop strategies to gain share.
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Discounters are chained retail outlets typically with a selling space of between 400 and 2,500 square metres. Stores have a primary focus on selling a limited range of foods, beverages, tobacco and non-groceries at budget prices, regularly via private label. Discounters can be classified as hard discounters and soft discounters. Hard discounters, first introduced by Aldi in Germany, are also known as limited-line discounters. Stores are typically 400-900 square metres and stock fewer than 1,000 product lines, largely in packaged groceries. Product range available is predominantly made up of private-label brands. Soft discounters are usually slightly larger than hard discounters, and are also known as extended-range discounters. Stores typically stock 1,000-4,000 product lines. As well as private-label and budget brands, stores commonly carry leading brands at discounted prices. Example brands include Aldi, Lidl, and Dia.See All of Our Definitions
This report originates from Passport, our Discounters research and analysis database.
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