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Retail environment
Emerging technologies and shifts in consumer expectations are dramatically changing the retail landscape,
with systems applied to all parts of the value chain driving efficiencies and precision retailing. Economic, social and environmental aspects are also challenging continuity of supply chains. Communication is more direct and immediate, with customers wanting more convenience across a spectrum of products and services. Retailers must, therefore, innovate to enhance the customer experience across both physical and digital interactions.
Strategy and investment case, page 40
Performance and outlook, pages 60-89
Digitisation
Technology is changing retail, with integrated enterprise resource planning (ERP) systems applied through the value chain to improve efficiencies and digital platforms facilitating omni-channel shopping. More retailers are using technology to seamlessly engage with customers across channels in an attempt to improve their retail experience.
Indicators
• The COVID-19 pandemic has changed online shopping
behaviour, according to a UNCTAD survey of about
3 700 consumers in nine emerging and developed economies.
Following the pandemic, more than half of the survey's
respondents now shop online more frequently and rely on the
internet more for news, health-related information and digital
entertainment. Consumers in emerging economies have made
the greatest shift to online shopping.6
• Shopping behaviour has changed as a result of the COVID-19
pandemic. Online shopping grew exponentially as consumers
have become omni-channel shoppers, shopping both online
Innovation
Increased competition between retailers provides more product and shopping options to customers. This drives innovation in systems and support functions to deliver on high customer expectations. In a dynamic retail environment, innovation is critical to maintaining a competitive advantage both in physical stores and digital platforms.
Indicators7
150%, to R225 billion, within the next five years. The market's growth in 2020 has been spurred by consequences of the COVID-19 pandemic.
• South Africa's online spend accounts for only 2% of all
retail transactions, compared to the global average of 16%,
according to Euromonitor. The South African online market
therefore remains largely untapped. Statista market and
consumer data projects that 31.6 million South Africans could
Diversifying revenue streams
A data-driven retail environment enables a deeper understanding of our customers and the ability to tailor services to meet customer needs. This customer-centric model uncovers opportunities
to optimise decision-making, offer add-on services and adapt channels to market. New entrants are bypassing traditional channels, while those with established retail footprints are testing new channels and product offerings. Diversifying revenue streams enhances competitiveness within what remains a low-margin environment and provides added value services that support customer growth and long-term retention.
Indicators
• The mobile payments market was valued at USD 1 449.6 billion
in 2020 and expected to reach USD 5 399.6 billion by 2026
and grow at a CAGR of 24.5% over the forecast period
(2021 - 2026). Owing to changing lifestyle, daily commerce
and rapid growth in online retailing, this trend is expected to
continue for many years.8
• As of January 2021 there were 38.1 million active internet
users in South Africa. Among them, an overwhelming majority
messagesAbout Shoprite HoldingsAbout this report
Home/contents page
Addressing material matters:
Strategy, trade environment
#6
MATERIAL MATTER
and growth
CROSS REFERENCE
#1
MATERIAL MATTER
management
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Information and technology
#7
MATERIAL MATTER
Customer centricity
within the Integrated Annual Report
Case studies:
Page
Checkers Sixty60, page 67
Xtra Savings, page 71
WEB REFERENCE
Click to link to external information on the
Shoprite Holdings website
Website
and in-store.
Response
be converted to online shopping by 2024.
Response
(over 36 million) also used mobile internet. During the same
period it was found that nearly 99% of those using social media
accessed their accounts through mobile phones.9
Response
Performance and outlookApproach to value creationLeadership
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OTHER REFERENCES
GRI
King IV
Checkers Sixty60 won three awards at the 2020/21 Marketing Achievement Awards for Excellence in new product or brand launch, Excellence in Marketing innovation and Excellence in Digital brand marketing.
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K'nect launched with flat call and data rates while Shoprite, Checkers and Usave customers are rewarded with free data and airtime.
SHOPRITE HOLDINGS LTD Integrated Annual Report 2021
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2021
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NAB LIITYR
2021
2021
Integrated Annual Report
Annual Financial Statements
Corporate Governance Report
Sustainability Report
Form of proxy
Index to navigational icons
STAKEHOLDERS
Customers
Shareholders and financiers
Communities
Trade unions
Employees
Suppliers
Regulators
CAPITALS
MATERIAL
MATTERS
STRATEGY
REFERENCE
Page
Website: www.shopriteholdings.co.za
GRI
King IV
For further information on this Integrated Annual Report, please contact Sarita van Wyk on [email protected].
CONTENTS
About this
02 About this report
report
About Shoprite
06
Purpose and values
Holdings
08
Performance highlights
10
Our business
12
Brand overview
14
Operating environment
18
Governance in action
Leadership
22
Chairman's message
messages
24
Chief Executive Officer's message
30
Chief Financial Officer's message
Approach to
40
Strategy and investment case
value creation
44
Integrated business model
46
Risks and opportunities
52
Our stakeholders
56
Our material matters
Performance
62
COVID-19 overview
and outlook
64
Financial Capital
68
Intellectual Capital
72
Manufactured Capital
75
Human Capital
80
Social and Relationship Capital
87
Natural Capital
Shareholder
92
Shareholders analysis
information
93
Shareholders' country classification
94
Notice to Shoprite Holdings shareholders: AGM
104
Online Annual General Meeting guide
106
Abbreviations and acronyms
107
Form of proxy
IBC
Administration
1
About this report
About Shoprite Holdings
Leadership messages
Performance and outlookApproach to value creation
Shareholder information
SHOPRITE HOLDINGS LTD Integrated Annual Report 2021
2
ABOUT THIS REPORT
Welcome to our Integrated Annual Report (IAR) for the year ended 4 July 2021. This IAR forms part of our Integrated Reporting suite, which includes our annual financial statements, Sustainability Report and Corporate Governance Report where we provide information required by our stakeholders.
3
Our theme for this year's report is Affordability, which is our golden thread throughout. We explain this theme as follows:
AFFORDABILITY
report
this
EFFICIENCY
REWARDS
VARIETY
About
Operational efficiency
Our Xtra Savings rewards
Our wide range of
is critical for us to
programme across our
products, services and
stay competitive on
Checkers and Shoprite
private labels provide
The Group is committed to creating long-term, ethical and collaborative relationships and we aim to provide a balanced view of how the Group creates, preserves and erodes value. This includes disclosures related to performance in the year under review as well as areas of future focus.
Annual Financial Statements
Our stakeholders, page 52
Integrated business model, page 44
Frameworks and guidelines
Shoprite Holdings Limited1 (Shoprite or the Group or the Company) is an investment holding company, with its Home Office in South Africa. It is listed in the food retailers and wholesalers' sector on the JSE Limited, as well as on the Namibian and Zambian Stock exchanges.
This IAR, the Company's notice of the Annual General Meeting (AGM) and the audited annual financial statements are published in compliance with the relevant provisions of the JSE Listing Requirements and the
South African Companies Act No. 71 of 2008.
GRI 102-1
Shoprite enhances its communications on economic, social and environmental performance, by reporting against the Global Reporting Initiative (GRI) Standards: Core option, the UN Sustainable Development Goals (SDG) and the Task Force on Climate-Related Financial Disclosures (TCFD). Disclosures are made in our IAR and our Sustainability Report and the GRI Index can be found on page 75 of our Sustainability Report.
Corporate Governance Report
Sustainability Report
TCFD Index, page 81
Financial disclosures contained in this report are aligned to the Group's annual financial statements. These statements comply with the following reporting guidelines and standards:
Materiality determination
We have applied the principle of materiality in developing our report and determining what information is to be included. Our overarching objective with this report is to provide our stakeholders with a transparent and balanced view of the Group in respect of our strategy and business model, and the inputs thereto. This includes the capitals, and how they result in the outputs and ultimately the outcome for our Group. In our view, information is material both from a quantitative and qualitative perspective, and is, in our estimation, decision-useful to the readers of
our integrated report.
GRI 102-46
Our material matters, page 56
Performance and outlook, pages 60-89
Stakeholder relationships
The Group is committed to creating long-term, ethical and collaborative relationships, which is essential
for the business' growth and continued success.
We continually seek to improve channels for engaging stakeholders and integrating their feedback into how we identify material matters, risks and opportunities, and implement our strategy.
Our stakeholders, page 52
Value creation
The section on the Group's approach to value creation provides an overview of our operating environment, our strategy and investment case, stakeholders and material matters. The section details how value
Approach to value creation, pages 38-59
Performance and outlook, pages 60-89
1The Group's subsidiary structure is explained in detail in the Directors' report in the annual financial statements available on www.shopriteholdings.co.za.
affordability. If we can cut
brands has the largest
customers with variety,
costs out of our supply
membership base in
alternative solutions and
chain through being
South Africa, giving
affordability, that caters
efficient and mindful of
customers instant
to their personalised and
waste, it means we can
cash-back rewards on
relevant needs.
extend the consumer's
their purchases, making
Shoprite Holdings
spending ability.
shopping more affordable.
Assurance of the Group's external
Forward-looking information
reporting suite
About
The Board takes primary responsibility for the overall consistency,
This report contains forward-looking statements regarding
relevance and reasonableness of the information throughout the report.
the Group's operations and its performance prospects.
Furthermore, the Board reviews and approves this integrated report
These statements involve an inherent level of uncertainty. They do,
for issue.
however, reflect our best judgement and estimates informed by
Internal and external assurance across our reporting suite include:
the Group's Board-approved business plans as at the time of
publication of this report. The COVID-19 pandemic continues to
messages
1 2021 Integrated Annual Report: internally approved
contribute to uncertainty in the short to medium term. Within this
context, the Group cannot take responsibility for updating or
by the Board
revising any forward-looking statements except as required by
Leadership
2 2021 Annual financial statements: externally audited
applicable legislation or regulation.
by PricewaterhouseCoopers (PwC)
3 2021 Sustainability Report: internally approved by the Board on
Report approval
the basis of the recommendation of Shoprite's Social and Ethics
The Board of Directors of Shoprite Holdings has acknowledged its
Committee (SEC)
responsibility in ensuring the integrity of this Integrated Annual Report
4 Corporate Governance Report, aligned to the King IV
and has delegated responsibility to the Audit and Risk Committee to
disclosures: internally approved by the Board
review the report. The Audit and Risk Committee has recommended the
Integrated Annual Report for approval by the Board.
creation
5 2021 Climate Change CDP Report: externally verified
The Board has reviewed the preparation and presentation of the report
6 The Group's B-BBEErating and that of all its subsidiaries:
externally verified by AQRate
and is of the opinion the report addresses all the issues that are material
value
to - or could materially affect - the Group's ability to create, preserve
to
GRI 102-56
or erode value on a sustainable basis over the short, medium and
Approach
The Audit and Risk Committee evaluates the performance of the external
long term, in a transparent and balanced manner. It has assessed the
assurance obtained from the Group's combined assurance process and
auditor, PwC, against specified criteria and
assesses the effectiveness
is satisfied the model enables an
effective internal control environment
of the external audit process. It is satisfied
with the effectiveness of the
for internal decision-making by management. The Board believes
external audit and the quality of the external auditor. A formal framework
the report complies with the recommendations of the International
governs the process through which PwC renders non-assurance
services to make sure audit independence is not compromised.
outlook
performance of the Group for the reporting period ended 4 July 2021.
The Audit and Risk Committee approved the terms of a master service
The Board has approved the report on 30 September 2021.
agreement for the provision of such services by PwC as well as a pre-
and
approval policy stating the nature and extent of non-assurance services
Signed on behalf of the Board
that may be provided.
Performance
The Board is comfortable that the information in this report is transparent
and reliable.
For a full understanding of the Group's performance in 2021,
Wendy Lucas-Bull
Pieter Engelbrecht
the Integrated Annual Report should be read alongside the reports
Chairman
Chief Executive Officer
listed before. These reports are all available as published reports on our
website, www.shopriteholdings.co.za.
information
Scope and boundary
The report covers the integrated performance of the Group's operations for the reporting period 29 June 2020 to 4 July 2021 (FY 2021). Information on the subsidiaries, operating segments and countries of operation included as part of the Group are reported on from pages 10 to 13.
The financial reporting boundary includes the Group's subsidiaries. During the second half of the financial year, the Group disposed of its interest in the Nigerian Supermarket business, closed its operations in Kenya and has subsequently also received binding offers for the sale of assets
and leases for its operations in Madagascar and Uganda.
GRI 102-10/102-49
Other
It was a significant year given that we sold our Nigeria business, closed our operations in Kenya, and classified our operations in Madagascar
Shareholder
and Uganda as discontinued. It is for this reason that the comparative statement of comprehensive figures has been restated.
Two additional Independent Non-executive Directors were appointed after year end on 11 August 2021. These members have been included as
part of the Board of Directors.
SHOPRITE HOLDINGS LTD Integrated Annual Report 2021
4
2
ABOUT
SHOPRITE HOLDINGS
Who we are and what we do
"Shoprite is Africa's largest fast-moving consumer goods retailer."
5
About this report
About Shoprite Holdings
Leadership messages
Performance and outlookApproach to value creation
Shareholder information
2 093 trucks and trailers deliver products to more than 2 900 stores every day, providing more than 24 million customers with a wide range of products.
SHOPRITE HOLDINGS LTD Integrated Annual Report 2021
Disclaimer
Shoprite Holdings Ltd. published this content on 18 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 October 2021 12:21:03 UTC.