How Checkers Sixty60 dominates the on-demand grocery market

Research from 22seven Insights shows that in the last quarter of 2021, Sixty60 – the service from Checkers – made up three quarters of all on-demand grocery delivery spend.

This is clear domination of the space, leaving PnP asap! and Woolies Dash trailing at 13% and 12% respectively.

These insights are derived from the purchasing behaviour of consumers who use the 22seven money management service bought by Old Mutual nearly a decade ago. Insights and reports from this data are produced on the combined and totally anonymised data of its users. When it announced this new unit a year ago, it had reached 400 000 users on the platform. (Of course, this remains a base of a few hundred thousand users of a money management platform, but it is still a significant sample for analysis.)

Simon Anderssen, head of 22seven Insights, says these on-demand delivery services accounted for more than 6% of all 22seven user spending at South Africa’s major supermarkets (excluding Spar).

Between October and December, nearly one in five shoppers (19%) had used one of these apps at least once. Anderssen says a fifth of those (so about 4% of overall shoppers) had used them more than 10 times in that same quarter.

The median transaction value for an on-demand order across all services in Q4 was R484.

Here, Woolies Dash (as one would expect) leads with a median order value of R575 (Checkers Sixty60’s was R481, while PnP asap!’s was R438).

‘Last-mover advantage’

Checkers was not first to online grocery shopping. In fact, among the majors it was last.

Shoprite Group CEO Pieter Engelbrecht memorably calls this the group’s “last-mover advantage”.

No online shopping. No warehouse fulfilment centres. No complicated delivery system.

The service is premised on shifting that entire process (from receipt of order to delivery) to the store itself.

Its 75% market share number is unsurprising given just how rapidly Checkers has scaled the service. It launched modestly in November 2019 (four months before lockdown) and the timing, although not intentional, couldn’t have been better. During lockdown, it quadrupled the base of stores that offered the Sixty60 service in 12 weeks. By early July, that number had topped 233 stores; six months later, it was 266. You get the picture.

Read: Shoprite shows double-digit sales growth, indicating market share gains

It plans to have expanded the service to 80 more stores by the middle of this year, for a total of more than 300. (One presumes these figures are counting both the Checkers supermarket and LiquorShop stores, where applicable. As at July 3, there were only 230 Checkers supermarkets in the country, with a further 38 hyper stores.)

In March, the group revealed that a third of Sixty60 customers are new to Checkers. This is massive for this business and is likely the main reason it continues to take market share from rivals.

Read: Checkers rewards programme attracts over 4.7m customers

Logistics

Shoprite believed it was so important to own the last mile that it purchased 50% of this business from logistics partner RTT Group in December.

When announcing the joint venture, it said the move would give its tech hub ShopriteX the opportunity to continue to evolve the digital experience and in doing so ensure that best-in-class service levels for its customers are maintained. Translated: this deal was all about data and customer service. (Shoprite also owns 26% of Zulzi, which developed the original agnostic grocery shopping app that was then reskinned as Sixty60.)

Read: Shoprite in JV with RTT

Checkers Sixty60’s delivery fee of R35 (introduced in November 2019) has effectively set the price for grocery deliveries. By December 2020, after Pick n Pay had acquired Bottles, this service cut its fee to R35. The model has shifted far closer to that of Sixty60 (from the picking process and how it stages orders, right down to the branded brown paper bag). Woolies Dash also charges R35 per order.

PnP

The problem faced by Pick n Pay is that the ‘asap!’ brand for its app (the rebranded Bottles) is not all that memorable.

The R33 million it spent buying Bottles at least got it to a point where it was able to compete against Checkers. Key going forward is how it markets this service and drives adoption among (existing and new) customers.

The retailer may share some of its plans in its strategic update alongside its financial results on Tuesday (May 17). Given Sixty60’s momentum, PnP asap! runs the risk of being relegated to an app only used by hardcore PnP shoppers, those who don’t live near a Checkers, or as simply the ‘next best’ option.

Woolies

Woolworths faces a similar conundrum, albeit with a fiercely loyal base of customers. The rollout of its Woolies Dash service continues to be rather protracted. It is currently available within a 5km radius of just 31 stores (in Gauteng, Cape Town and Durban).

Not only has it carefully selected its base of large supermarkets in areas where its core upper income shoppers live, it has had to ensure these stores are in centres or malls with sufficient space to stage deliveries before they are delivered by its fleet of bikes.

Woolies is not the kind of supermarket where shoppers would expect to see wooden shelves propped full of orders right up front at the tills.

In fact, a shopper in a Dash store probably won’t even notice the in-store picking and checkout process (which, bizarrely, happens through its normal tills).

… and the others

Spar, which is piloting its Spar2U service, faces an even tougher task because of its decentralised operating model (each store is independently owned and operated). This means that a consistent experience is going to be close to impossible to achieve.

And what of aggregator OneCart (acquired by Massmart last year)?

Its proposition is to offer products from multiple stores in a single shop. Usage of the service remains fairly niche, but the Walmart-owned retailer will surely have some aggressive plans to scale this in the next few years.

Listen to Fifi Peters’s interview with Shoprite Holdings CEO Pieter Engelbrecht (or read the transcript here):