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TWST: Can we start with a brief historical sketch and introduction to Shoprite Holdings Ltd (JNB: SHP)?

Mr. Basson: The Shoprite group, today a flagship retail operation on the African continent and neighbouring islands is a company that started as a mere eight-store chain operation with a turnover of about R13 million in the eighties. From small beginnings the group grew aggressively in the nineties with an acquisition trail and bought out three of the four major supermarket chains in South Africa. The first acquisition was Grand Bazaars, a Western Cape-based operation, followed by the acquisitions of the Checkers group in 1992 and the OK Bazaars group five years later in 1997. Despite doomsayer’s gloomy forecasts, these take-overs proved to be enormously profitable effectively, earning Shoprite group the number one market share position in the South African retail arena. With a saturated local market the group looked at the African continent and since 1995 started opening stores in 13 Africa countries and neighboring islands. In this year the group will open in another three countries in Africa. It will also for the first time venture onto the Asian continent opening it’s first store in Mumbai, India in October 2003. The South African business today represents 90% of the group turnover and 80% of group profit. The success of the group has been phenomenal with major growth rates and return on investments. Shoprite was started with R1 million in capital and the vision of becoming the second largest supermarket group in South Africa. Today the Shoprite group is the largest retailer on the African continent with an annual turnover of R22 billion, almost 1 000 outlets, a broad customer base of 39 million customers per month; 65 000 employees and more than 3 770 suppliers.

TWST: Can you tell us about the important dynamics of the markets you are already operating in -- South African and those 13 additional African countries? What are the main drivers in those markets?

Mr. Basson: Shoprite became one of the three major players in the South African market in the nineties when the group went on the acquisition trail and bought out three of the five main supermarket chains in the country. Today it operates 365 world-class supermarkets successfully in South Africa. With the South African market nearing saturation the group ventured into the broader African market starting to open supermarkets towards the latter part of the nineties in various African countries. Although the African countries are relatively small in GDP terms, it has a large untapped consumer market with little threat of competition other than small-town operators. Shoprite’s decision to enter the African market was based on the fact that the group is well equipped for the Africa continent not only understanding the market but also being better positioned than most international companies to handle the difficulties of service and logistics specific to Africa.

TWST: Have a number of international players tried to enter your markets?

Mr. Basson: The African market remains largely untapped except for a couple of franchises in the French speaking African countries. The Cora group trades in Egypt where Shoprite has a presence and they also have a few franchises in Mauritius and Madagascar.

TWST: Who are your target customers?

Mr. Basson: The Group trades in two distinct customer profiles with two different brand names in South Africa. In the middle to upper end of the South African market the group has a strong presence with the Checkers brand name while the Shoprite brand name serves the lower end of the market. In Africa the Shoprite brand is used exclusively. The group also owns a franchise division trading under the OK brand name.