Pick n Pay under siege

Pick n Pay is struggling financially and has been criticised for closing stores, turning its back on customers, and using an international celebrity in its advertising.

Over the last few years, Pick n Pay has experienced significant headwinds and lost market share to competitors like Shoprite Checkers and Spar.

To turn the situation around, it launched its disastrous Ekuseni turnaround strategy, which cost it billions and resulted in the retailer becoming technically insolvent.

Pick n Pay’s balance sheet was so disastrous in that it launched a two-phased recapitalisation plan to improve its solvency.

The first step was the Pick n Pay rights offer in August 2024, through which the retailer raised R4.0 billion.

The second step was selling a part of Boxer through an initial public offering (IPO) in November 2024, which raised R8.5 billion.

This strengthened the balance sheet and provided Pick n Pay with capital to implement other parts of its turnaround plan.

However, the successful recapitalisation was only one step of the turnaround plan, which many analysts warned would be difficult.

Analysts said that Pick n Pay will struggle to gain market share from Checkers and Spar, which are investing heavily in growing their store real estate.

Devin Shutte from The Robert Group said Pick n Pay has underinvested in their business for many years.

They are now playing catchup with Checkers with store formats, the look and feel of their supermarkets, and their distribution.

He added that consumers have moved to other retailers, like Checkers, and it will take a lot of work to lure them back.

Grant Nader from Benguela Global Fund Managers said Shoprite Checkers and Spar continue to improve their offerings.

Shoprite is aggressively rolling out new stores, and Spar is refocusing its efforts on South Africa after selling its Polish operations.

“It is competitive on all fronts. This is a scale game where price and margin are important. The retailer with the biggest scale has the biggest advantage,” Nader said.

Compared with Shoprite, which is growing, Pick n Pay is shrinking, which puts it on the back foot. “They have less margin to play with. They are in a tough position,” he said.

Pick n Pay closing stores and struggling to grow sales

Pick n Pay’s Trading update for the 45 weeks ended 5 January 2025 revealed that Pick n Pay continues to face headwinds in South Africa.

It showed that Pick n Pay stores in South Africa struggled, with sales declining by 0.1% over the reporting period.

Pick n Pay South Africa’s internal selling price inflation for the period was 2.4%. This shows that the retailer is moving backwards in terms of revenue.

The main reason for the decline in sales was that Pick n Pay South Africa closed 32 supermarkets during the 45 weeks.

The store closures included 24 company-owned Pick n Pay supermarkets and eight franchise stores.

Pick n Pay South Africa’s like-for-like sales increased by 1.9% if the store closures were excluded from the numbers.

This means that sales from Pick n Pay’s remaining stores were still below internal inflation, which shows its sales volumes are down.

It is particularly telling that many prominent landlords see Pick n Pay as a risk in their retail properties.

In December 2024, SA Corporate Real Estate announced it was replacing Pick n Pay supermarkets with Checkers and Shoprite stores in some of its properties.

It announced that the Pick n Pay supermarket in Montana Crossing will be replaced with Checkers Emporium in Q3 2025.

The Checkers emporium will include Checkers Fresh-X, Pet Science, Checkers Liquor and Checkers Outdoor.

It will also replace the Pick n Pay QualiSave in the Springfield Value Centre with a Shoprite store in the second quarter of 2025.

Redefine Properties, which owns many of South Africa’s top shopping malls, also announced that it is taking back 10,000 square meters from Pick n Pay.

It said the 10,000 square meters it is taking back from Pick n Pay will optimise space in its shopping malls and increase trading density.

Pick n Pay criticised by South Africans

Pick n Pay is also facing criticism from South Africans about recent comments and decisions regarding its PR and marketing strategy.

Last month, Pick n Pay clients’ personal data was exposed on the dark web after one of its service providers suffered a data leak.

The data leak came from Claim Expert – the company Pick n Pay used to offer its licence disc renewal service in 2022 and 2023.

In January 2022, Pick n Pay launched its National Vehicle Licence Disc Renewal Service, saying, “Customers will now be able to renew their licence disc in over 500 Pick n Pay stores”.

“Customers can visit any Pick n Pay supermarket or hypermarket to renew their vehicle licence disc,” it said.

It made it clear that the service was offered to ‘Pick n Pay customers’ and made it convenient for its customers to renew licence disks.

However, after the data leak occurred, Pick n Pay would not accept any responsibility for their clients’ data being leaked online.

Tens of thousands of Pick n Pay clients’ personal details were exposed online and made available on the dark web.

Despite this data leak, the retailer maintained that “No Pick n Pay customer data was compromised at all”.

Therefore, instead of assisting its customers who used their licence renewal service, Pick n Pay put all the blame on the third party.

“This was not Pick n Pay data. We did not provide the data to the service provider. The customers provided their own information directly to the service provider,” it said.

In February 2025, Pick n Pay faced a backlash for its decision to feature international celebrity Rick Ross and music from DJ Khaled in its marketing.

People questioned why Pick n Pay, as a proudly South African brand, used expensive international celebrities instead of local talent.

Prominent podcaster Penuel Mlotshwa said the advert lacked brand alignment and there was no need for an overseas person for a local brand.