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2021
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Retail environment
Emerging technologies and shifts in consumer expectations are dramatically changing the retail landscape,
with systems applied to all parts of the value chain driving efficiencies and precision retailing. Economic, social and environmental aspects are also challenging continuity of supply chains. Communication is more direct and immediate, with customers wanting more convenience across a spectrum of products and services. Retailers must, therefore, innovate to enhance the customer experience across both physical and digital interactions.
Strategy and investment case, page 40
Performance and outlook, pages 60-89
Digitisation
Technology is changing retail, with integrated enterprise resource planning (ERP) systems applied through the value chain to improve efficiencies and digital platforms facilitating omni-channel shopping. More retailers are using technology to seamlessly engage with customers across channels in an attempt to improve their retail experience.
Indicators
• The COVID-19 pandemic has changed online shopping |
behaviour, according to a UNCTAD survey of about |
3 700 consumers in nine emerging and developed economies. |
Following the pandemic, more than half of the survey's |
respondents now shop online more frequently and rely on the |
internet more for news, health-related information and digital |
entertainment. Consumers in emerging economies have made |
the greatest shift to online shopping.6 |
• Shopping behaviour has changed as a result of the COVID-19 |
pandemic. Online shopping grew exponentially as consumers |
have become omni-channel shoppers, shopping both online |
Innovation
Increased competition between retailers provides more product and shopping options to customers. This drives innovation in systems and support functions to deliver on high customer expectations. In a dynamic retail environment, innovation is critical to maintaining a competitive advantage both in physical stores and digital platforms.
Indicators7
- South Africa's e-commerce spend increased by 30% on average in the first half of 2020 compared to the prior year. Rand Merchant Bank expects the sector's value to surge by
150%, to R225 billion, within the next five years. The market's growth in 2020 has been spurred by consequences of the COVID-19 pandemic.
• South Africa's online spend accounts for only 2% of all |
retail transactions, compared to the global average of 16%, |
according to Euromonitor. The South African online market |
therefore remains largely untapped. Statista market and |
consumer data projects that 31.6 million South Africans could |
Diversifying revenue streams
A data-driven retail environment enables a deeper understanding of our customers and the ability to tailor services to meet customer needs. This customer-centric model uncovers opportunities
to optimise decision-making, offer add-on services and adapt channels to market. New entrants are bypassing traditional channels, while those with established retail footprints are testing new channels and product offerings. Diversifying revenue streams enhances competitiveness within what remains a low-margin environment and provides added value services that support customer growth and long-term retention.
Indicators
• The mobile payments market was valued at USD 1 449.6 billion |
in 2020 and expected to reach USD 5 399.6 billion by 2026 |
and grow at a CAGR of 24.5% over the forecast period |
(2021 - 2026). Owing to changing lifestyle, daily commerce |
and rapid growth in online retailing, this trend is expected to |
continue for many years.8 |
• As of January 2021 there were 38.1 million active internet |
users in South Africa. Among them, an overwhelming majority |
messagesAbout Shoprite HoldingsAbout this report
Home/contents page
Addressing material matters: | |||
Strategy, trade environment | |||
#6 | MATERIAL MATTER | ||
and growth | |||
CROSS REFERENCE | #1 | MATERIAL MATTER | management |
Click to read more about related content | Information and technology | ||
#7 | MATERIAL MATTER | Customer centricity | |
within the Integrated Annual Report | Case studies: | ||
Page | |||
Checkers Sixty60, page 67 |
Xtra Savings, page 71
WEB REFERENCE
Click to link to external information on the
Shoprite Holdings website
Website
and in-store. |
Response
- Expanded Checkers Sixty60 on-demand grocery delivery to 233 sites
- Offered customers convenient and seamless digital products to support their daily needs through our Xtra Savings rewards and Money Market app
- Optimised marketing spend with a targeted online and more personalised marketing approach using data analytics
- https://unctad.org/news/covid-19-has-changed-online-shopping-forever-survey-shows
- https://www.businessinsider.co.za/half-of-sa-could-be-shopping-online-by-2024-if-data-costs-and-deliveries-improve-2020-11
be converted to online shopping by 2024. |
Response
- Expand the scope of our customer offerings to include more digital solutions, leveraged Checkers Sixty60 further and continue to diversify revenue streams
- Continuous improvement and integration of the integrated ERP system allows for data analytics to be applied in future product and service development
- Extended the digital ecosystems by expanding and improving virtual vouchers and digital coupons to include loyalty rewards from extended partners including FNB and Old Mutual
(over 36 million) also used mobile internet. During the same |
period it was found that nearly 99% of those using social media |
accessed their accounts through mobile phones.9 |
Response
- Launched K'nect mobile, our own mobile virtual network operator, offering competitive rates and other rewards to customers
- Launched Rainmaker Media, providing specialised and focused media services for FMCG product supply partners using Group IP and technology
- https://www.mordorintelligence.com/industry-reports/mobile-payment-market
- https://www.statista.com/statistics/685134/south-africa-digital-population/
Performance and outlookApproach to value creationLeadership
Indicates which section of the Integrated Annual Report you are currently viewing - click to jump to another section
OTHER REFERENCES
GRI
King IV
Checkers Sixty60 won three awards at the 2020/21 Marketing Achievement Awards for Excellence in new product or brand launch, Excellence in Marketing innovation and Excellence in Digital brand marketing.
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K'nect launched with flat call and data rates while Shoprite, Checkers and Usave customers are rewarded with free data and airtime.
SHOPRITE HOLDINGS LTD Integrated Annual Report 2021
Shareholder information
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Integrated Annual Report | Annual Financial Statements | Corporate Governance Report | Sustainability Report | Form of proxy |
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REFERENCE
Page
Website: www.shopriteholdings.co.za
GRI
King IV
For further information on this Integrated Annual Report, please contact Sarita van Wyk on svwyk@shoprite.co.za.
CONTENTS
About this | 02 About this report |
report |
About Shoprite | 06 | Purpose and values |
Holdings | 08 | Performance highlights |
10 | Our business | |
12 | Brand overview | |
14 | Operating environment | |
18 | Governance in action | |
Leadership | 22 | Chairman's message |
messages | 24 | Chief Executive Officer's message |
30 | Chief Financial Officer's message |
Approach to | 40 | Strategy and investment case |
value creation | 44 | Integrated business model |
46 | Risks and opportunities | |
52 | Our stakeholders | |
56 | Our material matters |
Performance | 62 | COVID-19 overview |
and outlook | 64 | Financial Capital |
68 | Intellectual Capital | |
72 | Manufactured Capital | |
75 | Human Capital | |
80 | Social and Relationship Capital | |
87 | Natural Capital | |
Shareholder | 92 | Shareholders analysis |
information | 93 | Shareholders' country classification |
94 | Notice to Shoprite Holdings shareholders: AGM | |
104 | Online Annual General Meeting guide | |
106 | Abbreviations and acronyms | |
107 | Form of proxy | |
IBC | Administration |
1
About this report
About Shoprite Holdings
Leadership messages
Performance and outlookApproach to value creation
Shareholder information
SHOPRITE HOLDINGS LTD Integrated Annual Report 2021
2
ABOUT THIS REPORT
Welcome to our Integrated Annual Report (IAR) for the year ended 4 July 2021. This IAR forms part of our Integrated Reporting suite, which includes our annual financial statements, Sustainability Report and Corporate Governance Report where we provide information required by our stakeholders.
3
Our theme for this year's report is Affordability, which is our golden thread throughout. We explain this theme as follows:
AFFORDABILITY | report | ||
this | |||
EFFICIENCY | REWARDS | VARIETY | About |
Operational efficiency | Our Xtra Savings rewards | Our wide range of | |
is critical for us to | programme across our | products, services and | |
stay competitive on | Checkers and Shoprite | private labels provide |
The Group is committed to creating long-term, ethical and collaborative relationships and we aim to provide a balanced view of how the Group creates, preserves and erodes value. This includes disclosures related to performance in the year under review as well as areas of future focus.
Annual Financial Statements
Our stakeholders, page 52
Integrated business model, page 44
Frameworks and guidelines
Shoprite Holdings Limited1 (Shoprite or the Group or the Company) is an investment holding company, with its Home Office in South Africa. It is listed in the food retailers and wholesalers' sector on the JSE Limited, as well as on the Namibian and Zambian Stock exchanges.
This IAR, the Company's notice of the Annual General Meeting (AGM) and the audited annual financial statements are published in compliance with the relevant provisions of the JSE Listing Requirements and the
South African Companies Act No. 71 of 2008. | GRI 102-1 |
Shoprite enhances its communications on economic, social and environmental performance, by reporting against the Global Reporting Initiative (GRI) Standards: Core option, the UN Sustainable Development Goals (SDG) and the Task Force on Climate-Related Financial Disclosures (TCFD). Disclosures are made in our IAR and our Sustainability Report and the GRI Index can be found on page 75 of our Sustainability Report.
Corporate Governance Report
Sustainability Report
TCFD Index, page 81
Financial disclosures contained in this report are aligned to the Group's annual financial statements. These statements comply with the following reporting guidelines and standards:
- The International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee and the South African Institute of Chartered Accountants (SAICA).
- Financial Reporting Guidelines issued by the Accounting Practices Committee and the Financial Pronouncements issued by the Financial Reporting Standards Council.
- Relevant financial reporting requirements of the JSE, as contained in the JSE Listing Requirements, and reporting requirements of the Companies Act, 2008.
Materiality determination
We have applied the principle of materiality in developing our report and determining what information is to be included. Our overarching objective with this report is to provide our stakeholders with a transparent and balanced view of the Group in respect of our strategy and business model, and the inputs thereto. This includes the capitals, and how they result in the outputs and ultimately the outcome for our Group. In our view, information is material both from a quantitative and qualitative perspective, and is, in our estimation, decision-useful to the readers of
our integrated report. | GRI 102-46 |
Our material matters, page 56
Performance and outlook, pages 60-89
Stakeholder relationships
The Group is committed to creating long-term, ethical and collaborative relationships, which is essential
for the business' growth and continued success.
We continually seek to improve channels for engaging stakeholders and integrating their feedback into how we identify material matters, risks and opportunities, and implement our strategy.
Our stakeholders, page 52
Value creation
The section on the Group's approach to value creation provides an overview of our operating environment, our strategy and investment case, stakeholders and material matters. The section details how value
- created to benefit the business and its stakeholders - is created over time through the Group's business activities. The relationship between required inputs and desired outcomes, in line with the Group's strategic drivers, are represented in the business model and trade- offs section, as well as in the capitals-structured performance and outlook section.
Approach to value creation, pages 38-59
Performance and outlook, pages 60-89
1The Group's subsidiary structure is explained in detail in the Directors' report in the annual financial statements available on www.shopriteholdings.co.za.
affordability. If we can cut | brands has the largest | customers with variety, | ||||||
costs out of our supply | membership base in | alternative solutions and | ||||||
chain through being | South Africa, giving | affordability, that caters | ||||||
efficient and mindful of | customers instant | to their personalised and | ||||||
waste, it means we can | cash-back rewards on | relevant needs. | ||||||
extend the consumer's | their purchases, making | Shoprite Holdings | ||||||
spending ability. | shopping more affordable. | |||||||
Assurance of the Group's external | ||||||||
Forward-looking information | ||||||||
reporting suite | About | |||||||
The Board takes primary responsibility for the overall consistency, | This report contains forward-looking statements regarding | |||||||
relevance and reasonableness of the information throughout the report. | the Group's operations and its performance prospects. | |||||||
Furthermore, the Board reviews and approves this integrated report | These statements involve an inherent level of uncertainty. They do, | |||||||
for issue. | however, reflect our best judgement and estimates informed by | |||||||
Internal and external assurance across our reporting suite include: | the Group's Board-approved business plans as at the time of | |||||||
publication of this report. The COVID-19 pandemic continues to | messages | |||||||
1 2021 Integrated Annual Report: internally approved | contribute to uncertainty in the short to medium term. Within this | |||||||
context, the Group cannot take responsibility for updating or | ||||||||
by the Board | ||||||||
revising any forward-looking statements except as required by | Leadership | |||||||
2 2021 Annual financial statements: externally audited | ||||||||
applicable legislation or regulation. | ||||||||
by PricewaterhouseCoopers (PwC) | ||||||||
3 2021 Sustainability Report: internally approved by the Board on | Report approval | |||||||
the basis of the recommendation of Shoprite's Social and Ethics | ||||||||
The Board of Directors of Shoprite Holdings has acknowledged its | ||||||||
Committee (SEC) | ||||||||
responsibility in ensuring the integrity of this Integrated Annual Report | ||||||||
4 Corporate Governance Report, aligned to the King IV | ||||||||
and has delegated responsibility to the Audit and Risk Committee to | ||||||||
disclosures: internally approved by the Board | review the report. The Audit and Risk Committee has recommended the | |||||||
Integrated Annual Report for approval by the Board. | creation | |||||||
5 2021 Climate Change CDP Report: externally verified | ||||||||
The Board has reviewed the preparation and presentation of the report | ||||||||
6 The Group's B-BBEErating and that of all its subsidiaries: | ||||||||
externally verified by AQRate | and is of the opinion the report addresses all the issues that are material | value | ||||||
to - or could materially affect - the Group's ability to create, preserve | ||||||||
to | ||||||||
GRI 102-56 | or erode value on a sustainable basis over the short, medium and | |||||||
Approach | ||||||||
The Audit and Risk Committee evaluates the performance of the external | long term, in a transparent and balanced manner. It has assessed the | |||||||
assurance obtained from the Group's combined assurance process and | ||||||||
auditor, PwC, against specified criteria and | assesses the effectiveness | |||||||
is satisfied the model enables an | effective internal control environment | |||||||
of the external audit process. It is satisfied | with the effectiveness of the | |||||||
for internal decision-making by management. The Board believes | ||||||||
external audit and the quality of the external auditor. A formal framework | ||||||||
the report complies with the recommendations of the International | ||||||||
governs the process through which PwC renders non-assurance | ||||||||
Integrated Reporting Council's Framework and fairly represents the | ||||||||
services to make sure audit independence is not compromised. | outlook | |||||||
performance of the Group for the reporting period ended 4 July 2021. | ||||||||
The Audit and Risk Committee approved the terms of a master service | ||||||||
The Board has approved the report on 30 September 2021. | ||||||||
agreement for the provision of such services by PwC as well as a pre- | ||||||||
and | ||||||||
approval policy stating the nature and extent of non-assurance services | Signed on behalf of the Board | |||||||
that may be provided. | Performance | |||||||
The Board is comfortable that the information in this report is transparent | ||||||||
and reliable. | ||||||||
For a full understanding of the Group's performance in 2021, | Wendy Lucas-Bull | Pieter Engelbrecht | ||||||
the Integrated Annual Report should be read alongside the reports | Chairman | Chief Executive Officer | ||||||
listed before. These reports are all available as published reports on our | ||||||||
website, www.shopriteholdings.co.za. | information | |||||||
Scope and boundary
The report covers the integrated performance of the Group's operations for the reporting period 29 June 2020 to 4 July 2021 (FY 2021). Information on the subsidiaries, operating segments and countries of operation included as part of the Group are reported on from pages 10 to 13.
The financial reporting boundary includes the Group's subsidiaries. During the second half of the financial year, the Group disposed of its interest in the Nigerian Supermarket business, closed its operations in Kenya and has subsequently also received binding offers for the sale of assets
and leases for its operations in Madagascar and Uganda. | GRI 102-10/102-49 |
Other | |
It was a significant year given that we sold our Nigeria business, closed our operations in Kenya, and classified our operations in Madagascar | Shareholder |
and Uganda as discontinued. It is for this reason that the comparative statement of comprehensive figures has been restated. | |
Two additional Independent Non-executive Directors were appointed after year end on 11 August 2021. These members have been included as |
part of the Board of Directors.
SHOPRITE HOLDINGS LTD Integrated Annual Report 2021
4
2
ABOUT
SHOPRITE HOLDINGS
Who we are and what we do
"Shoprite is Africa's largest fast-moving consumer goods retailer."
5
About this report
About Shoprite Holdings
Leadership messages
Performance and outlookApproach to value creation
Shareholder information
2 093 trucks and trailers deliver products to more than 2 900 stores every day, providing more than 24 million customers with a wide range of products.
SHOPRITE HOLDINGS LTD Integrated Annual Report 2021
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Shoprite Holdings Ltd. published this content on 18 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 October 2021 12:21:03 UTC.