Farewell to the retail king

Farewell to the retail king

The long reign of Whitey Basson – the CEO of Shoprite Holdings – as the king of South African retail is almost over.

After nearly four decades, Basson will soon retire from executive duties at Shoprite – the Parow-headquartered retail chain that generates over R130bn in sales from 1855 (Shoprite, Checkers and OK) stores and 359 convenience and liquor stores. When Basson started Shoprite the company was worth just R1m.

What is amazing about Basson’s retail career is the longevity in the CEO post at Shoprite. Shoprite’s majority shareholder and retail tycoon Christo Wiese consistently backed Basson through many changes in the local retail landscape when others might have suggested that putting new hands on the tiller might have been a prudent move.

Rival Pick ’n Pay has seen three CEOs in the last decade alone. Indeed Wiese’s other great retail venture, fashion retailer Pepkor (Pap and Ackermans), saw numerous leadership changes over the decades. Shoprite, however, remained Basson’s baby.

The morphing of Shoprite into the largest retail concern in Africa is a fascinating tale, and perhaps best illustrates why Basson enjoyed such a long executive tenure.

Basson came from an accounting background before joining Wiese’s fledgling Pep Stores in the seventies. By the mid-seventies Basson had become a member of the Pep board, and later took the role as head of operations.

By all accounts it was during his early tenure at Pep that Basson developed a knack of revitalising struggling businesses. In the late seventies Basson convinced the Pep board that diversifying into food retailing business might be a worthwhile move.

In late 1979 Basson managed to snap up a small eight store Western Cape-based grocer, named Shoprite, from the Rogut family.

During 1980 Shoprite was restructured – mainly involving the closure of some stores and opening of new stores. Although Basson had been given a brief to expand Shoprite as quickly as possible, there were stumbling blocks. One of the major challenges was securing new stores openings as Shoprite was still too small to be considered as an anchor tenant by the major shopping mall developers.

But Basson was a master of making smart acquisitions. His first acquisition was six old Ackermans food stores, which were controlled by the Edgars Group, in 1984. But there were setbacks. Shoprite lost the 27 store Grand Bazaars Group, which was snaffled away by a competitor.

The eighties also saw Basson pushing Shoprite into rural markets before advancing on South Africa’s major cities.

By the late eighties Basson had quietly infiltrated most markets without attracting too much attention from the dominant retailers of that time – Pick ’n Pay, OK Bazaars and Checkers.

In 1990 Basson enjoyed a stroke of luck when he bought the coveted Grand Bazaars – gaining considerable critical mass.

The big break came when Shoprite tilted at the Checkers, which had run into financial trouble. The initial advance was re-buffed by Checkers, but a second tilt – made after Shoprite has listed on the JSE in 1986 – was successful. Basically Checkers was reversed into the then small Shoprite listing.

Turning checkers around was no cinch. Initially the 169 strong Checkers store base was generating losses that equalled the turnover of Shoprite.

But within nine months the Checkers chain was turned around. But more importantly Shoprite – comprising 241 stores – now had the scale to compete for anchor tenant space in the large shopping malls springing up rapidly around South Africa.

But Basson gained legendary status in 1997 after he pulled off the most famous takeover deal in corporate South Africa legendary status when acquiring the iconic retailer OK Bazaars for the nominal sum of R1.

OK – then controlled by SA Breweries – was literally losing money hand over fist, and many pundits believed the R1 price tag was too expensive for a business that no-one would be able to turn around.

Not only did the stoic Basson return OK to profitability, but Shoprite managed to build a formidable margin enhancing brand under OK Furniture and successfully incorporate the Hyperama stores into Checkers Hyper stores.

Today the scorecard shows that Basson’s initiatives have seen Shoprite’s various brands holding market share around 30% of the ultra-competitive formal retail food market of South Africa.

Once dominance at home was established and democracy dawned on South Africa, Basson paid increasing attention to pushing Shoprite into African markets.

The first cross-border thrust was in 1995 when a store was opened in Lusaka, Zambia. Today Shoprite has a sprawling – and profitable – presence across numerous African countries.

While Basson enthusiastically drove the African expansion, the wily CEO continued to make smart acquisitions. In the same year as the first store in Lusaka was launched, Basson took the opportunity to markedly bolster its distribution by acquiring central buying organisation Sentra, which acted as a buying group for 550 owner-manager supermarket members.

This allowed Basson to usher Shoprite into the franchising field, opening up smaller markets where convenience shopping is key to winning over consumers.

In late 2002 Basson oversaw the acquisition of the French-owned Champion supermarket group in Madagascar and opened the company’s first outlet in Mauritius (which reportedly achieved the highest turnover ever recorded for a single opening day of trade).

In 2002 Shoprite also acquired Score Supermarkets’ Tanzanian operations – three supermarkets and a small distribution centre.

Two years layer Shoprite launched a wholesale operation in India and franchised its first Shoprite Hyper in that country in Mumbai.

In 2005 Shoprite swallowed Foodworld and Computicket as well making its first move in to the bottle store business with the Shoprite Liquor Shop.

In March 2011 Shoprite acquired Metcash Trading Africa’s franchise division, including the brands like Friendly, Seven Eleven and Price Club Discount Supermarket.

While Basson has been hugely successful in his corporate manoeuvrings over the decades, it should not be forgotten that he was a brilliant shop keeper as well.

At last count Shoprite’s pre-tax profit margin was over 5% – an enviable achievement for a supermarket group priding itself in selling to consumers at the lowest possible prices.

Paying homage to Basson, Wiese said: “Whitey has been a very strong and charismatic leader, who has managed the company through market transitions and challenging times, taking calculated risks to turn the supermarket group into the leading food retailer on the continent.”

Wiese believed Basson fully deserved his reputation as one of ‘South Africa’s retail giants’.

Hail to the king!