My theory from a longer term equity stance (3+yrs) is there is a new reality confronting retail SA. Shoprite has for while been trading on it's proven reputation to deliver. I'm not so sure that is the case going forward, consumers don't have much scope to trade lower than what Shoprite offers through it's other outlets Usave etc...I'm not saying it's plateaued but I don't know where the growth will come from to move the needle.
For this post I'm kinda lumping Pick N Pay with Shoprite as they're both facing the same hurdles from a growth/what's next perspective.
Massmart tried to take them on & well failed miserably. Wallmart arrogance.... well this is Africa boet...!
Woolies customers can trade down to what Shoprite are now offering in their convenience section & the upper priced lines they are expanding into.
Shoprite has a decent furniture section yet they could go into clothing more meaningfully...?
My biggest issue with Shoprite is this African expansion...Hopefully it's not a balls to the wall attitude....! Think Tiger Brands scenario or even Woolies down under disaster...Even more money in the toilet backing a CEO who won't fall on his own sword.
The overseas investor market wants a growth for growth sake result every year & when it doesn't appear they dump. Now 951k is not alot when over 6mil traded yesterday but it's the herd mentality it speaks to coming from the outside.
Anyway all comments/views & contradictions welcome....
Have a great day at market...