“Management’s goal is to provide all communities in Africa with food and household
items in a first-world shopping environment, at the Group's lowest prices.” – Shoprite
Checkers Group
“We, as passionate committed retailers, understand and lead our customers through
excellence and a deep knowledge of our products and services and the world we live
in. We live the Woolworths difference through our value” - Woolworths
Micro Environment: Woolworths and Shoprite Checkers
Suppliers
Woolworths supports the South African supplier base and develops relationships
with their suppliers through supplier conferences and forums (Woolworths Holdings
Ltd: 2012). Part of Woolworths’ business strategy is to support local business and to
ensure social and environmental responsibility across the supply chain (Woolworths
Holdings Ltd: 2012). In order for Woolworths to stay committed to delivering quality
products to its consumers, they expect their suppliers to deliver on consistent
standards and quality and drive new and innovative products.
However, Shoprite Checkers have a number of suppliers who provide their stores
with a range of different brands of each product. For example: Woolworths supply
only two tomato sauce brands in their stores which is their house brand and All Gold,
whereas Shoprite Checkers supply All Gold, Heinz, Wimpy tomato sauce and a few
other brands. Therefore, Woolworths’ supply strategy is to have a small amount of
suppliers and to support local South African suppliers (less choice, more value
strategy), whereas Shoprite Checkers supply strategy is to use a large number of
suppliers to increase their range of products in their stores (more choice, low prices
strategy).
Customers
Woolworths works hard to build long-term relationships with customers, listening to
what they have to say and consistently providing the right product and service to
meet their needs. Woolworths believes that consistent delivery against its brand
values – quality, innovation, value for money, integrity, service, energy and
sustainability – is the way to earn this customer trust. Woolworths provides excellent
customer service and is constantly seeking ways to enhance customers' in-store
experience. Woolworths consistently provides customers with value through their instore experience and quality products.
Shoprite has a very large customer-base who is predominantly at the lower end of
the market. Shoprite earns customer trust by striving to keep prices as low as
possible but also by providing their customers with value for their money. The
mission of the Shoprite Group of Companies is to be the consumers' preferred
shopping destination, by retailing food and non-food products at the Group's lowest
prices in an environment that is conducive to a comfortable and enjoyable shopping
experience (Shoprite Holdings, 2014). At store level, staff and management are
trained to enforce the Group's Consumer Policies geared at ensuring a satisfying
and convenient shopping experience (Shoprite holdings, 2014).The Group
encourages and welcomes feedback from its customers in order to live up to
evolving consumer needs (Shoprite holdings, 2014).
Competition
Woolworths often takes customers away from retailers such as Shoprite Checkers
because Woolworths are known for their fresh produce such as their fruit and
vegetables. However, Shoprite Checkers are well-known for their quality meat which
attracts Woolworths‟ consumers. Therefore, although Woolworths and Shoprite have
very different customer-bases, they are competitors because they both provide value
for money with certain product offerings.
Segmentation, targeting and positioning model and Macro Environment
Segmentation and Demographics: (who is the customer?)
Woolworths client base is mainly driven by the upper-class sector. This is
categorised as Living Standards Measurement (LSM) 8-10 area of customers. Such
customers have excess disposable income to spend more on what the want, than
what they need. Shoprite customers fall under the 4-7 LSM categories – Checkers
has even started attracting LSM 8-10 as well. This client base tends to have limited
disposable income which forces them to budget effectively, and buy what is need,
rather than what they would want.
Targeting: (what do they like?)
Woolworth’s customers are more focussed on looking at the quallity of products,
rather than the price. They will be willing to spend more for a product that they
perceive offers more quality and value for the client. Shoprite customers are price
sensitive and as such, are aware of product pricing to meet their budgeting of their
limited disposable income. That being said, these customers do also take note in
value-for-money products.
Positioning: (how are we telling them to choose us?)
Woolworths has positioned themselves as a transparent body. This positioning
strategy is motivated by the „Going Green and Organic‟ initiatives that society has
trended towards in the 21st century. From stores displaying their energy usage, to
products disclosing exactly where and how they got to the shelf, Woolworths
customers feel in the loop about what they are buying. Stores are branded with
visuals organic foods and fresh produce and have a variety of offerings such as
clothing, make-up, and home ware. Facts about Woolworths local supplier drive are
noticeable at the tills, and customers are further enlightened when they swipe their
Woolworths loyalty card that donates a percentage of your spending (their sales) to
charities across South Africa. Shoprite, in line with their target market, have
positioned themselves as a savings body. Their customers are explicitly made aware
of how much they are saving, and how much Shoprite has saved them over the
years. Stores are filled to the brim with red and yellow „Save‟ signs, and many signs
include the exact Rand amount customers can save with the respective product
purchase. Throughout the Checkers stores, the positioning is very clear in the
alcoholic beverage section. Here, customers experience the brand as a dedicated
team that will stop at nothing to get the best wine and champagne there is, for a
fraction of the price.
The 4 P’s
Product
Woolworths products represent the organisation‟s above-mentioned marketing
strategies. In the food section, their clients expect the very best which is perceived to
be the freshest. So the „sell by‟ dates of Woolworths products are blatantly shortened
to ensure clients never are at risk of purchasing „expired‟ products. This is also due
to the fact that the amount of one product on the shelf at one time is low in quantity.
In contrast, Shoprite food products on their shelves are displayed in bulk due to the
higher number of customers walking through their stores. Also, customers tend to
buy in bulk to get the deals, versus Woolworths’ customers who buy on demand
mostly.
Price
Woolworths’ products are less price elastic than that of Shoprite’s, mostly due to
their target market discussed above. That being said, Woolworths prices their
products based on the perceived value that customers believe such a product to be
worth, which is directly linked to the demand of the product as well – what is
„fashionable‟. In other words: a fleece top made of pure cotton may cost Woolworths
R35 to purchase, but if the demand is such that the value can be placed at R650,
Woolworths would price their product around that level, without focussing too much
on competitor pricing to a certain extent - like a price-setter. As Shoprite‟s customers
are price sensitve, the organisation is focussed more on cutting their own costs than
increasing the prices – a price-taker. This cost strategy means Shoprite have to rely
extensively on their supply-chain management to increase efficiencies and pass
these savings onto the customer. The volume is what Shoprite is after.
Promotion
Woolworths’ customers are exposed to the high standards of living which allow for
customizable advertising via TV commercials, online adverts via social media and
other platforms, and radio. Public relations are key for Woolworths too. Their
clientelle take part in many social events so sponsorships are taken on to create
awareness about who Woolwoths associates themselves with. An example of this is
Masterchef SA having Woolworths as their official food sponsor. Woolworths use a
very clever loyalty programme which is called The World of Difference loyalty
programme. This gives the business more information about what people are buying
and when, and have increased Woolworths understanding of what customers are
looking for. Product ranges can be tailored more effectively and we can provide
customers with information which is more relevant to their needs and lifestyles.
Woolworths World, a customer publication, is targeted at Woolworth’s key customers
– providing them with news and information that will be of interest to them.
Customers can also use a Woolworths rewards card to earn discounts on certain
products. Moreover, their MySchool programme gives customers a chance to
contribute to the development of education in South Africa and we encourage as
many people as possible to subscribe to it. Every time someone makes a purchase
at Woolworths, and their MySchool card is swiped, a percentage of their total spend
at Woolworths is donated to their nominated school. Therefore, Woolworths
promotes itself and the value it provides for customers through their loyalty
programmes. This which draws customers to their store as their customers feel as
though they are receiving value for their money (Woolworths providing for their
needs and also giving discounts) and customers feel as though they are giving back
to the community by shopping at Woolworths (Myschool card).
Shoprite customers are exposed to the above too, but due to their residences, they
are also exposed to „walk by‟ advertsing like billboards on a higher frequency than
Woolworth‟s customers. Shoprite public relations will focus more on community
projects around their customers‟ area as this impacts them (the customer) directly.
An example is local school soccer teams that receive sponsorship of playing kit from
Shoprite. In a first on the African continent, the Shoprite Group of Companies has
announced that consumers will now be able to get instant shopping discounts on
their cell phones to redeem at Shoprite and Checkers stores (Shoprite holdings,
2014).The new innovative mobile coupons, EeziCoupons, are set to revolutionize
outdated paper coupons and yhey are available to all South Africans to enhance the
consumers‟ shopping experience and bring considerable savings to South Africans.
Thus, Shoprite’s promotes itself by issuing their valued customers with loyalty
programmes such as EeziCoupons and through the community uplifting they are
involved in,
Place
Woolworths distributes its products via stores located mostly in major shopping
centres. They used to franchise stores intensely, but changed this strategy recently
and have been buying back franchised stores to gain more control of their brand.
Shoprite doesn‟t necessarily focus on having stores in major shopping malls, but
they are more focussed on key transport hubs. Shoprite‟s aim is to provide their
customers with conveniently located outlets. This is where the majority of their
customers will pass by on their way home. Simply put: wherever a major taxi rank is,
a Shoprite store will be close by. Both Woolworths and Shoprite have a centralised
distribution stategy with regards to their supply management end. This allows both
players to reduce costs, specifically around transport, as they buy in bigger volumes
in one order than what would normally be the case if each region or store would buy
individually – decentralisation. With such high volume orders, they are able to exploit
the efficiencies of this type of supply chain management, which can be passed on to
the consumer via their product pricing. This is more important for Shoprite as
mentioned above.
Branding:
The Woolworths brand has been exemplified by a bold and seemless experience.
When people see the Woolworths logo, they remember their experience with the
organisation. This experience is created from when customers enter the store in the
layout of the store – open and uniform, with their products standing out. To when the
customers pay at the till – cashiers are always willing to assist. In addtion to this,
Woolworths have created a compelling employment brand that attracts the very best
of service staff. Shoprite have branded themselves as „Africa‟s brand‟. With Shoprite
and Checkers attracting most LSM ranges, Shoprite have accomodated the vast
cultures effectively and their brand awareness reveals an organisation that aims to
give back as much as they can.
Growth Strategy and Product Life Cycle
Woolworths have used a differentiation strategy which has resulted in its massive
growth, not only in South Africa, but internationally too. Recently, Woolworths has
acquired the David Jones department stores in Australia. Their businesses are
closely aligned in terms of their target markets and the combination will create one of
the world's largest department stores with meaningful scale, able to leverage
common fashion seasonality with enhanced sourcing capability. David Jones is an
iconic Australian brand and occupies a similar customer positioning to Woolworths in
South Africa at the premium end of the apparel business, with both businesses
enjoying strong aspirational brand identities and a strong alignment of values that put
the customer first, offering excellent service and quality. Thus, this was a very
strategic move for Woolworths to make as they are in the maturity phase (cash cow)
of their life cycle and can therefore afford to expand their business overseas
because they are already and established and successful brand in South Africa.
Shoprite Checkers has had massive growth in Africa and trades in fifteen countries
outside of South Africa. The stores success within Africa is predominantly a result of
their low-cost strategy which targets a larger share of the South African consumer
market. Their low-cost strategy has differentiated their brand in the market because
the group‟s stores are well-known for providing a wide range of products to
consumers that are the most affordable and easily accessible to their target market.
The Shoprite group is a cash cow and is in the maturity phase of their life cycle
because they have a high market share within a mature industry.
Conclusion
Therefore, Woolworths and Shoprite Checkers‟ have very similar distribution
strategies in the market place; however their marketing strategies are very different
because they have very different target markets. Both retailers marketing strategies
have been extremely successful in South Africa and internationally because they
have effectively established themselves through their differentiation strategies that
have earned them a large share in a mature industry.
References:
Shoprite Holdings, 2014. “Shoprite Checkers site” [O]
http://www.shopriteholdings.co.za/OurGroup/Pages/Overview.aspx. Accessed: 29
April 2014.
Woolworths Holdings, 2012. “Woolworths” [O]
http://www.shopriteholdings.co.za/OurGroup/Pages/Overview.aspx. Accessed: 29
April 2014.
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