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OK FRANCHISE

SHOPRITE HOLDINGS LTD

 

INTRODUCTION

The franchise division of the Group uses the Group’s supermarket procurement capacity to offer franchisees competitive prices coupled with the resources and skills to provide their customers with a viable shopping experience.

The OK Franchise Division (OKFD) increased turnover by 7.8%, while operating profit grew due to overhead costs lagging the growth in income. A major development during the reporting period was the offer made for Metcash’s franchise division, which will provide OKFD with a further platform to grow its business and franchisees, representing some two years of organic growth without altering its risk profile. The transaction was ratified by the Competition Authority after year-end and will see some 150 members added to OKFD, albeit with a smaller turnover base for the majority of those compared to existing OKFD franchises.
 

STRATEGY

It was a trying time for all the division’s members who are independent traders doing business all over South Africa and Namibia, as well as in Botswana. Because of their dependence on a single store, they are vulnerable to any downswing in the economy. A highly competitive environment, low food inflation, and steep increases in input costs placed a strain on members’ profitability. 

HISTORY

The OK Franchise Division (OKFD) enabled the Group to gain a foothold in a diverse range of costly smaller, convenience-oriented markets situated in rural towns, suburbs and neighbourhoods. The stores offer a wide range of fresh and non-perishable food items, as well as general merchandise. The OKFD encompasses seven supermarket and convenience outlet brands (OK Foods, OK Grocer, OK MiniMark, OK Value, Friendly, 7-Eleven and Priceclub), a wholesaler (Megasave), and three add-on liquor outlets (Enjoy OK Liquor Store, Friendly
Liquormarket and 7-Eleven Liquormarket). The OK brand is only awarded to outlets that meet specific requirements.