South African retailers, like Woolworths, Pick ‘n Pay, and Checkers, have upped their game and now offer online shopping and delivery services to their customers. Online shopping and delivery services have grown in recent years, with the COVID-19 pandemic being a major catalyst for this. Data from NielsenIQ shows that the point of sale of most of the largest retailers in South Africa have increased food prices by 53% in recent months.
Woolworths now offers Woolies Dash services in many parts of South Africa. However, only 3.1% of Woolworths’ total food sales come from their online customers. This number is still small because Woolworths currently has only a few locations that offer Woolies Dash services in comparison to other online food retailers. Woolworths, however, is in the process of expanding this. They also do not offer any rewards or promotional programs through their online delivery service. But, Woolworths has placed importance on delivering fresh groceries and items that are as cold as they were in the fridges to maintain freshness.
Pick ‘n Pay has recognised the potential of online grocery sales in South Africa and put importance on it in a 2022 strategy document. The document noted that online shopping penetration in South Africa is roughly 1.1%, but this figure is expected to grow to 2.6% over the next five years. This growth may seem small, but this figure estimates R22 billion worth of sales through online shopping that these retailers, and others, want to take advantage of. Pick ‘n Pay offers delivery services through Mr. D, a food delivery service, which has helped to increase its on-demand delivery capacity. The expected increase in online revenue is said to be 700% within four years’ time.
Uniquely, Checkers has put out a marketing campaign that promises that it is cheaper to order their groceries online through their Sixty60 services than to buy them in-store. They have come to this conclusion because the running cost of R7.01 per kilometer, with an average trip totalling 7.5km, would cost close to R53 while their delivery cost is R35. Shoprite and Checkers currently dominate the on-demand food delivery sector as they have a 75% market share.
It was found that the most common items bought online are mostly the basics. Long-life milk increased by 35% in online sales, instant coffee increased by 52% in online sales, bread is commonly bought, and alcohol is also a top-bought item. NielsenIQ said that these results show that these items are commonly bought because many people still work from home after the pandemic and often need these items to snack on and eat throughout the day. By purchasing these items online, they can get their favourite items without having to take a break from work.
When comparing these three retailers, they all have the same same-day delivery charges. The differences are in the prices of the products. It was found that Checkers proved to be the cheapest retailer. Pick ‘n Pay was a little bit more expensive but not too expensive to make a big difference to your wallet. Woolworths was proven to be the most expensive, but this is expected as they are a premium food retailer. When purchasing the same 12 items across all three retailers, there is a R54.50 difference between Checkers and Woolworths, with a R10 difference between Checkers and Pick ‘n Pay.
Online shopping and delivery services are becoming a more attractive form of shopping for many South Africans, especially professionals who often do not have the time to do grocery shopping during the week. Now, South Africans have a range of options, depending on where they live, to shop from their favourite retailers. With competition spiking between the major retailers, consumers should look out for new developments and opportunities offered by the retailers trying to come out on top.
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