Pieter Engelbrecht, CEO of Shoprite: We have a purpose to help people survive

0:00This BBC podcast is supported by ads outside the UK. If journalism is the first draft of history, what happens if that draft is flawed? In 1999, four Russian apartment buildings were bombed, hundreds killed. But even now, we still don't know for sure who did it. It's a mystery that sparked chilling theories. I'm Helena Merriman, and in a new BBC series, I'm talking to the reporters who first covered this story. What did they miss the first time? The History Bureau Putin and the apartment bombs Listen on bbc.com or wherever you get your podcasts From the Winter Olympic and Paralympic Games To the European Athletics Championships The 2026 sporting calendar is packed full of big events Keep up with all the action with More Than The Score The podcast that goes beyond the score sheet Join expert BBC sports journalists every Monday to Friday For interviews with sports stars, big talking points and the stories behind the headlines.

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1:19Hello, I'm Jo Kuyungi, BBC Africa business correspondent, and this is The Interview from the BBC World Service. The best conversations coming out of the BBC. People shaping our world from all over the world. There have been so many disagreements between me and my family. Putting on a show, that is what it means to be Lady Gaga. Only the things that you can't solve with government and private sector is where you bring philanthropy in. There's no place in the world where women are equal. Every generation, every generation has to fight to maintain democracy.

2:00For this interview, I met Peter Engelbrecht, the chief executive officer of South African-based ShopRite Holdings, the biggest supermarket chain in the country. The company employs 163 ,000 people and with 3 ,000 stores across nine African countries. He talks about selling food in a country where incomes are low and a quarter of all children don't eat enough protein. He says he sees potential to grow the business in South Africa and beyond, despite having closed its operation in some parts of the continent. I see us as being an institution and not only just a retailer selling stuff. We really go to the extra mile to make sure that we give customers affordable products.

2:46That's why I think ShopRite is the only retailer in the world that sells a loaf of bread for 20 pence and sells an industrially produced, beautifully hygienic packaged biscuit for five pens. We feel we have a purpose to also help people survive.

3:10Welcome to the interview from the BBC World Service with Peter Engelbrecht in a conversation I recorded last month. If I take us back a couple of years, we really, like in 1994, we crossed the Limpopo River and had this big dream of, can I say, conquering Africa. And we opened a number of countries. We at some point were 16 or 17 countries through the continent. Then, unfortunately, about 10 years ago, things started to turn the other way. We started to get hyperinflation. Currencies devalued at a tremendous speed and we had very high inflation in a lot of countries. That necessitated us to actually close a number of countries.

3:59That then meant that we had to refocus and then we invested quite heavily into South Africa. We're still in nine African countries, mostly in the south from Ghana south. And we invested a large amount of capital in systems. We re-platformed the entire business for the first time in our history, issued a loyalty program. We refer to it as our extra savings program. We currently have 34 million customers on that program. That equates to more than 75 % of the adult population of South Africa that has a savings card in their pocket. But that allowed us to have a fantastic database around people's buying behavior.

4:45And so we invested even more in how to return that data into intelligence. It's the use of the data. We don't make gut-filled decisions anymore. We base it on actual factual data. And what does your success say about the state of retail in South Africa and the overall economy? So South Africa at the moment economically is not doing well. We have almost a zero economic or GDP growth. But retailers in South Africa are as competitive as they come. We have been gaining market share in the formal market for now six consecutive years for every single month of the six years. And we're still on that path.

5:33Continue to open stores. We open around 300 new stores a year. We have around 3 ,000 stores currently. And then there's also, we started some new businesses to accelerate the growth. We in pet, in pharma care, wholesale, specialized baby stores, outdoor, and then financial services. These days have become a very big income driver for us as well. On top of that is, of course, we've also created a media unit where we do retail media, also media buying. And it's part of the precision retail I was referring to is that how we use the data back into the media where we know exactly where people frequent.

6:21A simple example would be we would want to do a marketing campaign for a specific product and we know which mediums each customer are using, either Instagram, Meta or X. And so be able to have less spillage in terms of marketing spend and be directly to the consumer that we are targeting. Now, the South African government had planned to raise the VAT from 15 % to 16 % by 2026, but later dropped the idea. Was it right to drop it? And how would such a hike have affected your business or your customers? I do think it was the right decision not to do it, because the consumers are really under strain at the moment in South Africa.

7:07They are at the limits. We are doing so much to just help our people survive, I almost want to say. ShopRite for me is an institution. It's not just a retailer that sells stuff. We really go to the extra mile to make sure that we give customers affordable products. That's why I think ShopRite is the only retailer in the world that sells a loaf of bread for 20 pence and sells an industrially produced packaged biscuit for five pence. And we've got a number of products in that price range. We have in the USAFE business 1 ,900 items. We have 172 items under 20 pence. We learned here that around 40 % of our girls has to miss school sometimes during the month.

8:05And so we developed a 20-pens eight-pack sanitary pad. So that's what we do, which I think sets ShopRite as a business. I see it as more of an institution than just a retailer that sells stuff to people to make money. We do that also, but we feel we have a purpose to also help people survive. And speaking about the supply chain, how do you keep prices low without putting extra pressure on local suppliers to cut their costs? We will always put pressure on manufacturers to reduce their input costs. We have formed a global partnership with four other retailers also working together, understanding what is driving the input costs.

8:56I personally feel that over the last five odd years, food globally has become incredibly expensive. And a lot of that input costs that are being, let's say, blamed or given as a reason to increase prices, I do not subscribe to that model in all instances. I definitely feel that some prices are unjustified or price increases. If I compare prices globally, the same product, same brand, and then we can have as much as 100 % difference from one country to the other. I do not understand that. I'm trying to understand this cost components much better. What we do, of course, internally is we run as an efficient and low cost as possible business.

9:49In our supply chain, simple example, over the last seven years, we've been able to reduce our fuel consumption of our delivery trucks by 10 litres per 100 kilometre. If you think we travel around a million kilometres a week, you can think what that does to the overall supply chain. And then the innovation that we do in our stores, we've got more than 30 meal solutions under five rand. Now, five rand is 20 pence. And that's what we try to do to help people just come by and help save people's lives, basically. And a big worry is the nutrition of the children. That is still a challenge that Africa must face.

10:37We currently have around 25 % of our children under 5 years old that has got a condition they call stunting. In other words, they malnutrition, they don't get enough protein, so they don't develop as they should and properly. So in 15 years from now, when those children are 20 years old, we have to deal with that problem. I mean, we're not short on challenges, but certainly we have the means to come up with the solutions. It's purely just, do we have the will to do it? So your own report shows that food insecurity in South Africa is at its worst level in more than 10 years. How serious a situation is this?

11:19There's unfortunately a multiple answer to this. Firstly, I'm going to say the South African farmers, or let me call them producers, is probably of the most astute people in the world. They do an incredible job to make sure that this country has got fresh produce and we've got produce all year round and we've got enough of it. Where there's the challenges, we've been lobbying with government for a long, long time to allow vaccination of birds for avian flu. And we have a very high anti-dumping duty on poultry, which means if we get avian flu in South Africa, we've got a problem with the supply chain.

12:02We can't just switch on a global supply chain quickly when that happens. Similarly, we're currently sitting with food and mouth disease, so meat prices through the roof. But there is still enough food produced in South Africa for the people of South Africa. For now, we have to invest in this global supply chain. our ports need serious upgrading. In order for our farmers to still be able to be competitive in the global markets, we need a serious improvement in our local supply chain in terms of railroads and the ports per se. But as far as production and food, I think South Africa is still in a positive position.

12:50There's a lot of improvements that have already been done. Some good news since the new government was formed, the government of national unity, there's already been some positive action in terms of the vaccination that I've mentioned earlier. So, yeah, there are some good things happening also. The ports are currently being put on tender, like what they did in Namibia, where the Walfers Bay port is now run by MSC and not by government. and it's a good example of how efficient we can be. Where would you say the challenges are right now for the government when it comes to the economy? I mean, we can't hide.

13:31I mean, we have a big corruption problem in South Africa. There's a lot of money that can flow to consumers that are currently not reaching the consumer. Elicitrate in alcohol, elicitrate in tobacco. And we can carry on. There are a long list of things that we can do unnecessary spending and wastage that can help to get the economy to grow again. We've got all the resources. South Africa, a couple of years ago, was the second largest gold producer in the world. Now we're not even under number 10. There's a multitude of opportunities in South Africa that can make it one of the most prosperous countries, certainly on the African continent.

14:17It's got the largest economy of all countries on the continent, with Nigeria being number two. But still, I believe there's an enormous amount of potential that can be released and improve the quality of the life of the people of South Africa.

14:36You're listening to the interview from the BBC World Savvies, people shaping our world from all over the world. If journalism is the first draft of history, what happens if that draft is flawed? In 1999, four Russian apartment buildings were bombed, hundreds killed. But even now, we still don't know for sure who did it. It's a mystery that sparked chilling theories. I'm Helena Merriman, and in a new BBC series, I'm talking to the reporters who first covered this story. What did they miss the first time? The History Bureau Putin and the Apartment Bombs Listen on BBC.com or wherever you get your podcasts

15:41big talking points and the stories behind the headlines. More Than The Score from the BBC World Service. Listen now, search for More Than The Score wherever you get your BBC podcasts.

15:59For this episode of The Interview, I'm speaking to Peter Engelbrecht, the Chief Executive Officer of South Africa's largest supermarket chain, ShopRite. Peter very rarely gives interviews, and it's taken about two years for our team to get this one. I'd love to have met Peter in person, but it wasn't possible in this case. So I connected to him from the BBC Bureau in Nairobi while he was in his headquarters in Cape Town. Since we recorded the interview, there have been press reports in the South African media that ShopRite might be withdrawing from two other African markets. The company has already left Nigeria and Kenya, among others.

16:39We put this to ShopRite, but we are yet to hear that they will confirm this. OK, let's return to my conversation with Peter Engelbrecht. Even though overall inflation is coming down, as you said, prices of basic foods like vegetable oils, cooking oil, are still going up faster than average costs. How much are you having to increase prices in store? Some of these are now internationally priced commodities like grain and oil. You mentioned oil now. But the factual position is currently, as I sit here today, we have got 1 ,200 and something products that are cheaper now than what it was last year.

17:20In our USAID business, which is a limited assortment, pretty comparable to like Aldi or Lidl, which you may be familiar with, 1 ,900 items in that store, 172 of those items are under 10 rand. So we do from our side as a retailer as much as we can in terms of making sure that costs or prices don't go up unjustifiably. Are you seeing shoppers change the things they buy as a result? Definitely so. We've seen a massive increase of the promotional item participation in the basket. So it can vary between 35 to 50 percent of the basket now consists of promotional items. The second thing is 96 % of our customers buys at least one of our private labels.

18:19In other words, they're looking for better value. Of our private label items, 91.3 % of them are locally produced. When I said that I see us as being an institution and not only just a retailer selling stuff, we also try to develop small suppliers. we provide funding, we've got early childhood development centres, we've got home gardens. I think we're the only company, certainly South African company, that I know that's got an employee trust where the employees get a dividend twice a year similar to what a shareholder would get. So we really are trying to be leading in terms of what can be done to improve people's lives.

19:08We're also the largest private employer in South Africa after government. I cannot recall now a year where we have not added new jobs or created new employment. I can't remember a year that didn't happen. Competitors are closing stores, they are retrenching people, etc. We are actually creating jobs. You've also been growing your delivery service. Do you see this as a future? And what does this mean for the future of the stores? It was almost necessitated when we went into the COVID lockdown period. We were then just testing around it. And, you know, we weren't sure exactly what model would work best in South Africa.

19:53Because each country has got different limitations. If you look at Europe, Europe's minimum wage or let's say wages are much higher than ours. So therefore, they got in for the model to pick from very sophisticated distribution centers. We picked from store. We won eight stores when COVID lockdown started. We then put all effort behind it and accelerated. And it's become a very successful story in that we now don't talk about digital and physical or bricks and mortar anymore. We talk about the omni-channel. Our entire business now includes the delivery service. So our aspiration is to be Africa's most affordable, accessible omnichannel retailer.

20:41So I cannot imagine us ever going back and all that service is not available. It's become so integral part of people's lives. And we're actually extending that service now to also medical care. I mean, the whole idea is when you go to a doctor, by the time you get home, your medicine is waiting for you. What would you say is the future of the retail industry in Africa? At the moment, I must say the scenario of Africa as a continent from a food retail point of view is not that rosy. It's a story of devaluing currencies and a story of high inflation. At the moment, I don't see green shoots on that.

21:26I'm constantly looking across the continent for expansion abilities. Maybe we will go back to some of the countries where we've left now physically and maybe go back with a digital solution because of our local home delivery service is so successful. There may be opportunities for that as we go forward. A lot of retailers in Africa also is leaning more and more into the banking world, financial services. So I still see a lot of opportunity for growth for retailers in general, barring the two points that I made, the story of devaluing currencies and high inflation. Maybe I can add slightly also the availability of hard currency.

22:13If a country doesn't have hard currency available, it's not possible to procure a product. And that has also been a limitation in some of the countries where we currently actually trade is that there's a limited amount of hard currency available from the central bank and then it means you can't trade cross-border. Now, we know that South Africa has one of the highest unemployment rates in Africa. What does that mean for a business like ShopRite? So we have very strict employment rules around employment equity, about race, and we've got BEE, Black Economic Empowerment. So there are rules that we have to stick by.

22:55So that determines also what the profile of your workforce looks like. We are fortunate that we didn't have to change anything in our business to make these targets, as was said by the Department of Labor, because by natural nutrition and the millions, Literally, I can say to you, the hundreds of millions that we spend every year in training our people, upskilling them, have stayed us very good in time. So much so that these equity targets are not concerning us at all. More than 70 % of our employees are female. More than 93 % of our employees are black. So, I mean, we're not worried about that.

23:43So lastly, how hard is it to be a young person in South Africa right now? It is really hard. There are many people that question and have their own views around the unemployment. But I mean, we're talking 40, 50 percent of people under 25 that are unemployed, that has to be dependent on grants from the government. In other words, subsidizing them. And we're not talking a lot of money here. This is our people. We see it. We see the poverty. We see the young children. And if you would come with me on a field trip and go visit some of our stores, it is sometimes devastating to see how hard it is.

24:29And what I'm more concerned about is what do we do to create hope for them? A dream that I can follow. The South African youth needs a dream. They need hope. Because if we're going to go to desperation, then a country is in deep trouble. That's when all sorts of things go wrong politically. That's when countries go into civil wars and all that. I'm not saying we're there. I'm just saying we need to make sure, and certainly in the shop right world, we try our best to ensure that there's hope. Thank you for listening to the interview from the BBC World Service. You'll find more in-depth conversations on the interview wherever you get your BBC podcasts, including episodes with US President Donald Trump, the Colombian artist Doris Salcedo and Irish historian Catherine Corliss.

25:30Until the next time, bye for now. If journalism is the first draft of history, what happens if that draft is flawed? In 1999, four Russian apartment buildings were bombed, hundreds killed. But even now, we still don't know for sure who did it. It's a mystery that sparked chilling theories. I'm Helena Merriman, and in a new BBC series, I'm talking to the reporters who first covered this story. What did they miss the first time? The History Bureau, Putin and the apartment bombs. Listen on BBC.com or wherever you get your podcasts. Winter Olympic and Paralympic Games. To the European Athletics Championships.

26:16The 2026 sporting calendar is packed full of big events. Keep up with all the action with More Than The Score, the podcast that goes beyond the score sheet. Join expert BBC sports journalists every Monday to Friday. For interviews with sports stars, big talking points and the stories behind the headlines. More Than The Score from the BBC World Service. Listen now, search for More Than The Score wherever you get your BBC podcasts.