South Africa's Largest Retailers from Steinhoff to Woolworths

South African Retail Industry Chains With the Largest Revenue

Cradlestone Mall
Cradlestone Mall, Johannesburg, Gauteng, South Africa.

South Africa Tourism/Flickr 

Retail groceries and supermarkets are the niche with the largest potential for retail growth among South African retailers. According to Euromonitor, the popularity of retail supermarket chains continues to rise among the largest portion of low- to middle-income South African consumers. ShopRite Holdings in the largest retailer, and the company's success is based on a strategy that targets consumers from all income groups.

Overall, according to Euromonitor, slow growth in retail is expected in South Africa due to low consumer confidence, high levels of debt, and a fragile economy.

The South African Hub

Prior to 2014, African retailing was concentrated in South Africa. Cities like Johannesburg and Durban have mega 37-acre malls, which is roughly half the size of the Mall of America in Bloomington, Minnesota. Considering the lack of globalization, African retail companies (in particular, their food retailers) are large in comparison to other retailers around the world.

The South Africa retail industry is expected to grow, according to Euromonitor. However, that growth might be affected by economic instability and additional labor disputes within the mining industry. Because it is a mature market, South Africa has limited remaining retail expansion opportunities compared to other African countries where organized retail chain locations have yet to be established and any other activity by retail chains is either limited or almost non-existent.

Economics, Infrastructure, and Other Factors

Because the African retail industry lacks infrastructure, supermarket companies such as ShopRite Holdings are succeeding in the South African market and others like it. The company is investing in local distribution centers, which cuts costs, allowing ShopRite to supply products to a larger portion of the population.

As the African economy continues to improve and expand, retail grocery stores are playing a significant role. Furniture and housewares stores are expected to see an increase in profitability as consumer spending power improves and people can afford the items sold at these types of retailers. In a nation that is home to some of the poorest countries in the world, the retailers expected to prosper in the short term are those that supply basic commodities to the emerging middle class.

Approximately 350 million Africans fell into the middle-class range in 2018, according to estimates from the African Development Bank, with Egypt and Nigeria having the largest middle-class populations.

Billionaire Population Expected to Grow

In contrast to the extreme poverty found in many African countries, according to the Wealth Report 2015, the number of “ultra-high net worth” individuals in Africa with assets worth more than $30 million, is expected to grow by almost 50 percent by 2024. This increased wealth presents a significant opportunity for luxury retailer brands and designer goods.

Internet Retailing

Internet retailing has seen double-digit growth in recent years with increasing sales of smartphones and other mobile devices. As virtual retailers expand into the African markets, the orientation of African consumers toward mobile technology should motivate more than one retailer to emphasize mobile commerce (m-commerce). It is possible that retailers will skip the development of online Internet shopping websites altogether.

The growing promise of profitability to virtual retailers, in general, should encourage retailers to expand into more established markets like South Africa as they establish the infrastructure necessary to expand into other African countries.

The Most Significant Retailers

One of the greatest boosts to South African retailing was the 2013 corporate buyout of Massmart by Walmart, the largest U.S. retailer. The $2.4 billion deal gave Walmart access to over 50 million new customers, according to BusinessDay online. With this foothold in the African retail industry, Massmart leaders launched a pilot store in Nigeria in 2014 that was designed to directly compete with Africa's largest domestic retail chains: ShopRite, Pick n Pay, and the SPAR Group.

There's no guarantee that Walmart will successfully challenge these hometown favorites, particularly considering Walmart was forced to close approximately 50 under-performing stores in Brazil and China in 2015 and 2016.

Walmart is engaging in deliberate, albeit slow, growth in Africa. In international markets outside the United States, consumers have proven fiercely loyal to local brands, independent retail sellers, and local markets that are as much about social connections as consuming.

Foreign retailers in emerging markets create a different consuming culture. However, even if African consumers embrace goods from other countries, Walmart/Massmart will have to compete with other international retailers such as France's Carrefour, which is making inroads to Africa's retail market.

Positive Retail Trends

The growth in Africa's retail industry is expected to continue. However, this may be offset by international retailers who struggle with difficult (or impossible) supply logistics. These retailers may choose to import products from established global suppliers instead of African product producers.

In the United States, at least, local independent sellers and entrepreneurs have struggled to compete with a global supply chain such as that of Walmart. Whether a similar scenario will play out in Africa depends on consumer desire and the ability of the African retail industry to respond to foreign entrants.

Largest South African Retailers

Each year, Deloitte compiles its Global Powers of Retailing report, which ranks retailers from all over the world according to total revenue. The latest annual list shows the updated ranking of 250 retailers from 32 different countries.

This 2018 Global Powers of Retailing list reflects the revenue that was generated in the fiscal year 2016 for each of the South African retail companies. This list is arranged according to the revenue ranking assigned to each of the South African retail companies compared to the revenue of all 250 of the top retail companies worldwide.

Largest Retailers in South Africa with Revenue Rankings

(Out of the top 250 retailers globally)

#94 - Shoprite Holdings

ShopRite Holdings is Africa's largest food retailer. It operates 2,843 supermarkets in 15 countries serving 35 million customers across Africa and the Indian Ocean Islands The company is headquartered in the Western Cape province of South Africa. Its primary business is food retailing to consumers of all income levels with the goal of providing all communities in Africa with food and household items in a world-class shopping environment but at the lowest possible prices.

As of 2019, the company employs approximately 147,000 people. Revenues for FY2017 (the latest figures given by Deloitte's Global Powers of Retailing) were $10.34 billion.

#156 - SPAR Group

This supermarket chain is a Dutch multinational retail chain and franchise brand with approximately 12,500 stores in 42 countries. The company was founded in 1932 by Adriaan van Well. Through its affiliate organizations, Spar operates in most parts of Africa, Europe, and parts of Asia and Oceania. It is headquartered in Amsterdam.

In July of 2014, Spar Group South Africa opened its first supermarket in Angola. In August 2014, the group acquired 80 percent of the BWG Group, which had outlets in Ireland and south-west England. This helped it soar to the number three position among South African retailers. The company generated $6.232 billion in revenues for FY2017.

#176 - Pick n Pay

Pick n Pay is the second largest supermarket chain store in South Africa. It was established in 1967. It can also be found in other regions of South Africa such as Botswana, Mozambique, Zambia, Zimbabwe, Lesotho, Namibia, and Mauritius.

The supermarket behemoth was founded by Jack Goldin, who was born in Obeliai, Lithuania but moved to South Africa when the Nazis invaded his hometown. Raymond Ackerman purchased three Pick n Pay supermarkets (in Cape Town) from Goldin and, today, Ackerman's son Gareth currently serves as CEO of the company. FY2017 revenues were $5.418 billion.

#191 - Woolworths Holdings Limited

Woolworths Holdings Limited (not to be confused with the now-defunct American W.F. Woolworths chain) is a South African chain of retail stores and one of the largest in the country. It is modeled after Marks & Spencer of the United Kingdom. The first department store opened in The Old Royal Hotel in Cape Town in 1931 and was founded by a gentleman named Max Sonnenberg. It operates through both corporate and franchise stores throughout South Africa and neighboring countries.

Various store formats include full-line stores, food stand-alone stores, food and homeware lifestyle stores, and stores offering textiles such as clothing, footwear, and homewares. In-store cafes offer organic teas and coffee as well as light meals while some stores also offer tapas bars. In 2015, Woolworths was acclaimed the best store for customer care in accordance with the South African Customer Index. Revenues for FY2017 were $4.944 billion.