Sefalana, Choppies rivalry boils over

Competition between the country’s two largest retail supermarkets intensifies by the day, with Sefalana Holdings Group threatening to reclaim market dominance while Choppies Group says it will remain dominant forever.

Since last year, Sefalana, which is the first company to list its securities on the Botswana Stock Exchange (BSE), had been vigorously spreading its wings in an effort to up its market share and value. Sefalana became the first market leader about 20 years ago, before Choppies came into the picture. However, the group, whose shares are held in majority by the BPOPF, became more conservative and comfortable at 40 percent market share. It was only after Chandra Chauhan took over as Chief Executive Officer (CEO) that Sefalana cracked out of its shell and became more vocal and vigorous in the market. Chauhan previously told BG Business that he had to ‘fix’ Sefalana operations, and return it to profitability before increasing its market share, currently estimated below 30 percent.

Choppies, whose market share exceeds 35 percent, is twice the value of Sefalana, at P4.7 billion-market capitalisation. However, since its vigorous expansion, Sefalana’s market capitalisation has possibly improved significantly. The group operates Sefalana Cash and Carry, Sefalana Hyper and the Shoppers brand. At the beginning of the 2013 financial year, Sefcash comprised three Hyper Stores, 25 cash and carry stores and 16 supermarket retail stores across the country. But Chauhan increased his company’s market presence by opening additional Shoppers supermarkets in Tonota and Gaborone West. “We will continue to open stores until we reach 40 outlets locally,” Chauhan said in his financial report this week.

The growth has led to the company’s gross revenue exceeding P2.3 billion, while Choppies’ currently exceeds P4 billion. While Choppies concluded an acquisition in the Zimbabwean market, being its second regional expansion, Sefalana on the other hand made its debut regional expansion into the Namibian market at the same time. Currently, Choppies operates over 56 stores in Botswana while over 15 stores are in South Africa and Zimbabwe. Sefalana had however cautioned its shareholders that they were in yet another negotiation with a third party within the region, which will see Sefalana acquiring another business in the region. “If successful the deal would significantly have an impact on the company’s securities and its value,” Chauhan cautioned. Ottapathu however would not be left behind, saying that since competition is intensifying, “We will expand our retail network more this year”.

Ottapathu says Choppies remains bigger than other retail supermarkets and will remain dominant in the market forever. Ramachandran, also Choppies’s biggest single shareholder said discussions  were still ongoing regarding identified markets, which Choppies wants to expand to. “But I will not share that with you until agreements have been made,” he said. While Choppies runs distribution and warehousing outlets at the same time, Sefalana on the other hand operates car-trading dealerships and manufacturing outlets, which are also performing satisfactorily.

Last modified on Friday, 31 January 2014 12:50

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