Botswanan supermarket chain Choppies has opened 3 new stores in Zambia; it now has 13 stores and has the 5th largest supermarket network in the country.
Choppies has spent the summer quietly expanding its store network in Zambia, opening new supermarkets in Matero, Chipata and Ndola. The new store openings have brought up the store network in Zambia to 13.
The retailer entered Zambia in November 2015. That year it opened 10 stores through to the end of December 2016. It didn’t open any further stores in the first half of 2017. Its plan in the current financial year (FY2018), which runs to June 2018, is to open 12 stores. It has allocated BWP114m ($11.3m) capex in FY2018 to expansion in Zambia.
Choppies has told investors that it believes the Zambia business will achieve profitability once about 15 stores are in operation. It does not report the profitability of its Zambian stores separately at present.
Choppies had highly ambitious growth plans and a long streak of success to maintain. Its most recent half year results showed 34% growth compared to HY2016 but falling EBITDA in its home Botswanan market. In Botswana Choppies is now actively diversifying to drive profit growth – adding clothing ranges in its larger Hyper stores and sweating retail space harder by adding concessions.
The challenge outside Botswana
Outside Botswana its challenge is all about finding the right path for sustainable growth, mindful of the perils of debt, cash flow squeeze and operational stretch. Choppies operates stores in seven countries, and is due to launch in Namibia in September 2017. It can boast contiguous country coverage from South Africa up to Kenya – something not even Shoprite or Massmart can claim.
The key challenge can be seen in the scale of the store networks it has: Choppies has a single store in Mozambique and Tanzania, and shortly in one Namibia. It has small networks in Kenya and Zambia, with ambitions to add more stores in each. It has substantial networks in South Africa and Zimbabwe, but both have had to prevail in tough economic conditions. Zimbabwe is an ongoing risk. South Africa will be Choppies’ most important market for investment in 2018, where the retailer really seeks to cement its presence.
CEO Ram Ottapathu has a considerable task ahead. So far, he has met that challenge capably. Its expansion in Zambia epitomizes the quiet, precise strategy that has worked so far to take it out of Botswana and on its way to becoming a genuinely important regional player in the Sub Saharan African supermarket sector.
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