It was also odd because both claimed that at the end of the day, it didn’t matter who was the biggest, but who was the most profitable by overall store-space. So if it doesn’t matter who is the biggest, then why did Shoprite claim Pick n Pay’s figures were “hogwash”, and Pick n Pay claim the “figures speak for themselves”. Or, to put it another way, hogwash.

Why the emotion? Why the anger? And critically, who is actually the biggest? Sadly, the answer to that last question is complicated. But first, let’s start with the claims. Shoprite said in an announcement on the Stock Exchange News Service that over the three months to September, its market share reached a 10-year record of 31.67%. At that level, it says it overtook Pick n Pay for the first time in three years – quite an achievement. Then in its presentation to investors last week, Pick n Pay voiced its claim that it gained 0.4 percentage points of market share between  August 2008 to August 2009, putting its August 2009 market share at 33,9%, and citing AC Neilsen figures. The comparable figure for Shoprite in 2009 was 29%.
Of course, it’s even more complicated than that, because both chains have brands outside their flagship stores. Pick n Pay excluded Score, which it is going to close down. But critically, it included Boxer, its rural chain, which is intended to compete with the Shoprite brand. However, it seems, Pick n Pay did not include Boxer in the figures it supplies to AC Neilsen until recently, and how recently may have disrupted the universe and caused the error in calculation.

What is not disputed is that the recession has blown wind into the sails of Shoprite, which predominantly caters for the lower end of the market. Consequently, it’s also not disputed that Shoprite has been gaining market share as people have traded downwards during the recession. The big victim here has been neither Shoprite nor Pick n Pay, but Woolworths. Both the big supermarkets agree that winning market share is not simply a matter of opening stores; the issue is to operate profitably on a metre-for-metre basis in every store. Yet, being the biggest of the big undoubtedly also gives the larger company bragging rights, and losing this status would be a blow for Pick n Pay, just as winning it would be a feather in the cap of Shoprite.

Yet even if Shoprite does win this battle, there will still be a question mark over what will happen when the economy turns. Perhaps the real winner will be neither Shoprite nor Pick n Pay; it will be Woolies, on a metre-for-metre basis.

By Tim Cohen

(Photo: Shoprite’s national feeding programme)