Conduct a SPACE analysis for Shoprite, Pick and Pay and Spar based on $2023$ financial reports and the article below.

Pieter Engelbrecht

As its rivals languish, the supermarket giant is stepping up the pace in the retail space, with a strategy focused on increasing both its store base and its complementary retail offerings to grow its revenue and market share. With sales up $14\%$ to R$121$bn in its $26$ weeks to end$-$December, it seems to be working out for the group

We don$$t give up$.$ Failure is not an option.

That$$s one of the big lessons Shoprite CEO Pieter Engelbrecht learnt from $20$ years of working closely with his predecessor, Whitey Basson. It must have been a formidable set of footprints for Engelbrecht to follow. It was Basson, after all, who was responsible for growing Shoprite

from an eight$-$store family franchise in the Western Cape into the retail juggernaut that today operates about $3,000$ corporate stores as the biggest supermarket chain in Africa.

But Engelbrecht seems to have done all right for himself. The company has doubled in size in the eight years since he took over from Basson, it has nearly $30-$million customers and, with $160,000$ employees, it$$s the largest employer in South Africa after the government. It$$s opening a store a day.

And it can tick off $58$ consecutive months of market share gains in South Africa.

As Engelbrecht tells it$,$ when he joined Shoprite in $1997$ the business took $19$ years to reach R$10$bn in revenue; today, it does R$10$bn every $15$ days.

The numbers in the group$$s interim results, announced last week, tell the story. Sales were

R$14\mathrm{.}8$bn higher in the interim reporting period, taking the total to R$121$bn$,$ an increase of $14\%.$ R$9$bn of that came from $$other operating segments$($up $23\%),$ including Transpharm, Medirite and Computicket. Non$-$South African supermarkets grew sales $6\mathrm{.}2\%,$ to R$10\mathrm{.}6$bn$.$ All for a gross profit of R$28\mathrm{.}6$bn

Sales at its core supermarkets division $$ Shoprite, Checkers, Liquor and other $$ was up $14\mathrm{.}6\%,$ to R$97\mathrm{.}5$bn$.$ Group trading profit grew $10\mathrm{.}7\%$ with diluted headline earnings per share increasing $7\mathrm{.}6\%$ to $621\mathrm{.}4$c$.$ Dividends rose $7\mathrm{.}7\%$ to $267$c$.$

When it comes to market share, the group is sitting pretty too: the Shoprite unit has almost $20\%$ market share in its lower$-$ to mid$-$income category, while Checkers already has $15\mathrm{.}2\%$ in the premium end of the market.

It$$s a difficult space though. As Sasfin Wealth senior equity analyst Alec Abraham tells the FM$,$ what struck him most in Shoprite$$s numbers and commentary was the sense of the collapse of consumer wealth to critical levels. That extreme pressure on the consumer is evident in negative volumes, he says, with consumers buying fewer items and more of the cheaper brands.

On top of that, $$South African food retail is extremely competitive$,$ says Engelbrecht. $$The margins are low, we have Amazon coming in$,$ so you have to adapt and learn as the competitive landscape changes $...$ there are great competitors in South Africa and great brands. For some it goes better than others.$$ There$$s no doubt Shoprite is the one $$going better than others$$ at present.

Spar is grappling with software glitches that have cost it dearly. $$And it seems to have lost its local competitive advantage with the delayed launch of on demand $[$retail$],$ says Abraham. The exit from Poland, potential debt restructuring, and potential Swiss exit haven$$t done much to improve its fortunes either.

As for Pick n Pay, it$$s still smarting from reporting its first$-$ever loss in its interim results to end$-$August. Then there was the recent announcement about a R$4$bn rights offer, which hammered the share price.

In Abraham$$s view, the company is mired in an untested and unproven fixup strategy with extremely high execution risk. $$Against this background $...$ it$$s difficult to imagine how it can halt the market share loss $...[$It$$s$]$ no wonder the Pick n Pay share is just sinking further.$$

In contrast, Shoprite$$s strategy is to increase its store base and complementary retail offerings to grow its revenue base and take on as much market share as possible by $$aggressively leveraging its value proposition and excellent execution$,$ Abraham says.

Indicatively, Shoprite shares are up about $5\%$ over the past six months, while Spar$$s have dipped more than $7\%.$ Pick n Pay$$s have almost halved. Over a broader horizon, if you$$d put R$100,000$ into Shoprite shares three years ago, you would have almost doubled your money with dividends included. Over five years, Shoprite$$s share price is up more than $50\%,$ excluding dividends. For Pick n Pay, an investor who$$d taken a R$100,000$ flutter would be left with about R$30,000$ over five years, while a similar bet on Spar would have a punter poorer by more than half.

Casparus Treurnicht, portfolio manager at Gryphon Asset Management, believes the share prices of Spar and Pick in Pay are a realistic projection of where those companies are in regard to Shoprite.

$$Shoprite is just focusing on what$$s important and has done its work before