Shoprite
Holdings Limited’s decision to sell some properties and lease them back is to
free up cash to invest in technology, growing online sales and upgrading
supermarkets to offer more fresh food.
According to the chief executive officer, “These
are the kinds of investments that give us very good returns. Pieter
Engelbrecht, said in an interview after Africa’s biggest grocer reported
first-half earnings growth on Tuesday.
Global retailers are
increasingly leasing rather than owning real estate because “the heavier your
property portfolio gets in your total asset base, the lower your return on
invested capital becomes,” the CEO said. “So eventually we become more of a
property company than a retail company.”
According to Bloomberg News, Shoprite launched online purchase with one-hour
delivery last year and is converting about 80 Checkers stores to its
produce-focused FreshX format. With almost 30 outlets already upgraded, the
remainder will be completed over the next two years.
“We can’t ignore where the world is going and customer data is critically important for the future of retailers,” Engelbrecht said. “We now know much more about our products, our margins and our customers.”