More about Whitey Basson

During 1980 the company was restructured; some of the old stores were closed and new stores were opened. In that period, he realised that the corporate identity of the company had to be changed and that to grow the company at its maximum speed the focus had to be targeted towards the middle to lower LSM market, which by far represented the largest portion of the economically active population of South Africa. He however realised that to achieve his goals, acquisitions and turnarounds of struggling companies had to be a priority. At the same time Shoprite lacked growth potential for new openings as, it was not considered by the majority of property developers as anchor tenant due to the size and limited advertising spend of the company.

Basson’s first acquisition was six old Ackermans food stores, which were controlled by the Edgars Group, in 1984. During the late 1980’s one of the most dominant players in the Western Cape, the 27 store Grand Bazaars Group, came up for sale and a deal with Shoprite was almost concluded. But the opportunity was lost in the closing stages when it was sold to Basson’s good friend Carlos dos Santos, who then operated a wholesale company out of Gauteng.

During the 1980’s the company tested the waters in rural markets and started slowly closing in on cities. By 1998 the company had tentacles out in the North Western Cape and as far afield as the most Northern areas in Mpumalanga and other areas where the market was big enough to quietly creep in under the radar screens of the major supermarkets, which at that stage was dominated by the Pick ‘n Pay, OK Bazaars and Checkers.

In 1990 Basson approached Dos Santos and bought Grand Bazaars at what was considered an even better price than the original deal.

With reasonable market dominance in the Western Cape Shoprite now had a platform from which it could accelerate its growth and on two occasions the Checkers Group, which was running into financial troubles, were approached. The first acquisition attempt was unsuccessful due to, what Basson describes as, too many people having unrealistic views of the value of a specific number of stores, compared to an efficient operation that was focused at a particular end of the market.

The Shoprite Group was listed on the JSE Securities Exchange during 1986 and apart from a few thousand shares that were issued in a private placing the Group’s capital base still consisted of the R1 million originally paid for the 8 initial stores plus the accumulated profits over the years to 1991.

Basson pursued Checkers a second time and as a result of Basson’s personal relationship with the then chairman of Sanlam a deal was struck which saw Shoprite reversed into the holding company of the Checkers Group and majority control was obtained of the total which now became the Shoprite Checkers Group. To turn around the loss-making Checkers group was a mammoth task as Checkers at that stage comprised of 169 stores and its losses equaled the turnover of Shoprite. With the purchase of Checkers Basson saved 16 500 jobs.

Within a period of nine months the Checkers chain was turned around and Shoprite Checkers became a profitable company trading across all LSM’s with a total of 241 stores. For the first time Shoprite was offered the opportunity to compete in the modern shopping centres that were being developed. Despite being operated under two brand names; the company was able to trade selectively in the different markets targeted by the stores in the Shoprite or Checkers brands respectively.

The real break for Shoprite came at the end of 1997 when the OK Bazaars, which at that stage was losing more than the profits made by the Shoprite Checkers Group, ran into major financial difficulties and a R1 deal was struck with the South African Breweries; the sole shareholder of the OK Bazaars chain. Once again the management of Shoprite was able to return OK to profitability and a process was embarked upon to separate the brands according to the specific catchment areas and markets where the stores were located. The OK brand was kept alive and turned into the OK Franchise Division while the OK Furniture and House & Home branches were consolidated into an OK Furniture company. The Hyperama stores were converted to Checkers Hyper stores. The OK takeover was a mammoth task as more than 150 food stores had to be converted and modernised. At the same time 14 091 jobs were saved.

During 2001 the decision was finally taken to market the companies under the Shoprite and Checkers brands separately and strategic plans were adopted to reposition the Checkers brand as close as possible to its major rival Pick ‘n Pay.

As Basson was always interested in low cost limited assortment stores such as the Aldi’s of Europe, which incidentally was the first project he studied before acquiring Shoprite and nearly saw him ending up in a joint venture with an Italian group, its policy of centralised warehousing now offered the opportunity to start the Usave chain that trades in even lower LSM’s than the Shoprite brand with a cost structure that could afford a 50% reduction in gross margin while still offering excellent returns on investment.

The success of the Checkers repositioning has resulted in it becoming the fastest growing brand in South Africa and while forfeiting almost 4% in market share due to the closure of unviable OK Bazaars stores, the Group’s core business slowly increased and is enjoying close on 30% market share in the formal retail food market of South Africa.

One of Basson’s most ambitious dreams was to extend Shoprite’s operation to countries on the continent beyond South Africa’s borders and after the release of Nelson Mandela in 1995, Shoprite opened up new stores in Africa; the first one being in Lusaka, Zambia. His personal dream was to drive down food prices in Africa and to make sure that the food security in the major cities on the African continent would bring Shoprite the approval and support of African leaders. Probably the Group’s biggest achievement up to now is its investment into modern supermarkets in countries in far north as Nigeria and Ghana.

Basson also admits to failures after having closed down the Group’s supermarket businesses in Egypt due to restrictive legislation and red tape, and later in India and Tanzania to pursue business interests elsewhere on the continent, most notably on the lucrative West Coast of Africa where the Group is increasingly strengthening its position. He is however bold in the sense that he has always believed that for a retail company to grow it needs as a portion of its earnings to invest risk capital as retail companies need to develop new markets.