{"id":788716,"date":"2024-08-29T16:45:00","date_gmt":"2024-08-29T14:45:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=788716"},"modified":"2024-08-29T16:39:02","modified_gmt":"2024-08-29T14:39:02","slug":"pick-n-pay-shutting-down-stores-across-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/788716\/pick-n-pay-shutting-down-stores-across-south-africa\/","title":{"rendered":"Pick n Pay shutting down stores across South Africa"},"content":{"rendered":"\n

Pick n Pay has started closing some stores as part of a plan to close or rebrand around 100 outlets. <\/p>\n\n\n\n

Pick n Pay, one of South Africa\u2019s leading retail chains, has recently released a trading statement highlighting a troubling period of stagnant growth and store closures. <\/p>\n\n\n\n

The statement, covering the 21 weeks ending 21 July 2024, reveals the retailer’s harsh realities over the first five months of the year.<\/p>\n\n\n\n

Sales growth during this period was minimal, with overall sales increasing by only 0.1%. Even like-for-like sales, which compare sales performance at existing stores, saw a modest rise of just 1.1%. <\/p>\n\n\n\n

Pick n Pay South Africa’s sales increased slightly more, with total sales up by 0.6% and like-for-like sales by 1.7%. <\/p>\n\n\n\n

The company attributed the difference between total and like-for-like sales to the closure of several stores in recent months.<\/p>\n\n\n\n

In fact, in the first 21 weeks of the financial year, Pick n Pay shut down 16 supermarkets, including four corporate-owned stores and 12 franchise outlets. <\/p>\n\n\n\n

The company stated that its company-owned supermarkets, which contribute most to the group\u2019s reported sales, have significantly underperformed in recent years. <\/p>\n\n\n\n

As a result, these closures are part of the broader strategy outlined by Pick n Pay CEO Sean Summers in May 2024.<\/p>\n\n\n\n

Summers’ turnaround plan involves closing 35 underperforming stores and converting 70 outlets to the Boxer brand, which caters to the mass market or to Pick n Pay franchise operators in areas where it makes strategic sense. <\/p>\n\n\n\n

Overall, more than 100 stores will either be converted or closed, representing a substantial portion of Pick n Pay\u2019s footprint, considering it operates only 300 company-owned supermarkets in South Africa. <\/p>\n\n\n\n

The closure of these stores equates to roughly 10% of its total owned store base.<\/p>\n\n\n\n

These measures also mark a departure from the strategy implemented by former CEO Pieter Boone, which involved splitting the Pick n Pay brand into two distinct segments: the main brand targeting more affluent shoppers and QualiSave for middle-market consumers. <\/p>\n\n\n

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Pick n Pay Group CEO Sean Summers<\/em><\/figcaption><\/figure><\/div>\n\n\n

This division proved unsuccessful. The product ranges in QualiSave stores were cut too drastically, negatively impacting margins and profitability. <\/p>\n\n\n\n

Some of these underperforming QualiSave stores are now slated for conversion to Boxer, which operates with a structurally lower cost base, making it more suitable for the target market.<\/p>\n\n\n\n

In addition to the 100 problematic stores, Summers indicated that Pick n Pay will \u201cright-size\u201d the rest of its store portfolio as leases come up for renewal, signalling further potential changes to the retailer’s footprint in the future.<\/p>\n\n\n\n

Another notable point from the trading statement was that company-owned supermarkets have consistently underperformed compared to their franchise counterparts. <\/p>\n\n\n\n

However, the group is seeing early signs of progress in its efforts to turn around its company-owned stores.<\/p>\n\n\n\n

Pick n Pay\u2019s operational challenges have been compounded by external factors, particularly the South African economy\u2019s sluggish growth and ongoing load shedding. <\/p>\n\n\n\n

The financial strain of maintaining backup power during load shedding has significantly affected profitability. <\/p>\n\n\n\n

Rising operational costs, increased competition from rivals such as Shoprite and Woolworths, and a reduction in consumer spending have all contributed to the company\u2019s struggles. <\/p>\n\n\n\n

The combination of these factors, along with mismanagement and outdated systems, pushed Pick n Pay to the point of technical insolvency earlier in 2024.<\/p>\n\n\n\n

However, despite the many difficulties, the company has made some headway in shoring up its financial stability. <\/p>\n\n\n\n

Earlier this month, Pick n Pay successfully completed a R4 billion rights offer, bolstering its balance sheet.<\/p>\n\n\n\n

The group also reported that its capital expenditure remains within expectations, and inventory levels are being well managed across both Pick n Pay and Boxer outlets.<\/p>\n\n\n\n

Looking ahead, Pick n Pay is focusing on the next phase of its recapitalisation plan, which includes a planned IPO of the Boxer brand. <\/p>\n\n\n\n

The Boxer chain, which has become a key asset in Pick n Pay\u2019s portfolio, caters to a cost-sensitive market and operates with lower overheads compared to traditional Pick n Pay stores. <\/p>\n\n\n\n

This IPO is expected to bring in additional capital and further strengthen the group\u2019s financial position.<\/p>\n\n\n\n

While the road to recovery remains long and challenging, Pick n Pay is taking decisive steps to improve its fortunes. <\/p>\n\n\n\n

The combination of store closures, strategic conversions, and recapitalisation efforts offers some hope that the retailer can regain its footing in an increasingly competitive and difficult market environment.<\/p>\n\n\n\n

With a stronger balance sheet and a renewed focus on operational efficiency, Pick n Pay\u2019s new management is working hard to guide the company through this tumultuous period and towards a more stable future.<\/p>\n\n\n\n

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Read: End of the road for 890 businesses in South Africa<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Pick n Pay has shut the doors of 16 stores as part of a plan to close or rebrand around 100 outlets.<\/p>\n","protected":false},"author":92,"featured_media":788723,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[4067,853],"class_list":["post-788716","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-pick-n-pay","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/788716","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=788716"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/788716\/revisions"}],"predecessor-version":[{"id":788745,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/788716\/revisions\/788745"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/788723"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=788716"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=788716"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=788716"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}