Pick n Pay wake-up call for shopping malls in South Africa

Retailer Pick n Pay’s strategy to review and downscale its store footprint in South Africa should be a wake-up call for property owners to adapt to coming changes in retail in the country, especially shopping malls.

This includes a move towards newer format stores and a significant deviation from traditional leasing models—a shift that has already taken place in places like the US and Europe.

Under the leadership of returning CEO Sean Summers, Pick n Pay has launched a significant downscaling strategy where it aims to review 100 stores in its portfolio, cutting those that were not performing.

The aim of the strategy is to return the retailer to basics and the core operations that made it one of the most popular and successful retail businesses in the country.

However, to achieve this, Summers and his team have been working hard to cut the fat, exiting locations that were no longer suitable for the business and converting others to the highly successful Boxer brand.

In its latest results, Pick n Pay noted that a total of 40 loss-making Pick n Pay supermarkets were closed or converted under the strategy.

Over the period, 25 company-owned supermarkets were closed, seven were converted to franchise stores, and eight were converted to company-owned Boxer stores.

Summers has been candid about the move, saying that South Africa has too many stores and that retailers are too eager to open them, adding that shopping malls were easy targets.

“South Africa is about to equal, or squeak past, the US on the square meter per capita of retail,” Summers said in an interview after unveiling the company’s earnings.

“If you’ve got retailers who are prepared to just open stores at any cost, then a shopping centre works. But I would question the medium-to-long-term wisdom” of the strategy, he said.

Big changes for retail in South Africa

According to John Jack, chief executive of Galetti Corporate Real Estate, Pick n Pay’s strategy should serve as a wake-up call to all property owners that the retail landscape in South Africa is rapidly shifting.

“Behind the scenes of the strategy, Pick n Pay is reviewing its entire store portfolio,” he said.

“Leases, trading densities, and growth potential are all under the microscope. The goal is clear: exit sites that no longer make sense, hold onto high-performers, and convert anything in between.”

The impact of the strategy is going to be felt across the board, Jack warned, adding that shopping malls with underperforming anchor tenants could take a big hit.

The expert noted that the property sector is seeing Pick n Pay convert stores to Boxer, offload non-core sites, and bring in strong franchisees where they can drive better margins.

In some cases, there’s even been talk of repurposing sites for government or community use.

“It’s a smart way to reposition struggling assets without just shuttering them,” Jack said. “It signals that the retailer isn’t done; it’s just getting more selective.”

Jack said that this shift mirrors what has been seen in the US and Europe, where retailers are downsizing their footprint to boost efficiency.

“It’s not about having the most stores, it’s about having the right stores,” he said.

Fewer but better-performing stores reduce overheads, simplify logistics and allow for targeted marketing and supply chain efficiencies.

Disposing of or converting non-performing assets frees up capital, which can then be reinvested into high-traffic sites, new retail formats or digital transformation initiatives.

“If Pick n Pay pulls this off, it won’t just survive; it could lead the way for others stuck in bloated, outdated operating models.”

“The question is whether they can move fast enough. If this reset is managed properly, it’ll become the benchmark for how South African retailers clean house and rebuild smart.”