{"id":798379,"date":"2024-11-04T10:30:00","date_gmt":"2024-11-04T08:30:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=798379"},"modified":"2025-02-18T10:39:54","modified_gmt":"2025-02-18T08:39:54","slug":"the-shops-taking-on-pick-n-pay-and-checkers-in-south-africa-and-winning","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/798379\/the-shops-taking-on-pick-n-pay-and-checkers-in-south-africa-and-winning\/","title":{"rendered":"The shops taking on Pick n Pay and Checkers in South Africa – and winning"},"content":{"rendered":"\n

The appetite for discount retailers like USave and Boxer in South Africa is gaining significant traction as consumers continue to look for ways to save in a challenging economy.<\/p>\n\n\n\n

This was one of the key findings in McKinsey & Company’s 2024 State of Grocery Retail in South Africa report<\/a>, which outlined that the country’s grocery market is showing early signs of recovery in 2024 after facing sustained pressure for several years.<\/p>\n\n\n\n

Mapping some of the key trends shaping South Africa’s grocery retail market, a key finding is that discounters are experiencing rapid growth.<\/p>\n\n\n\n

There is “a persistent emphasis on cost-conscious shopping, highlighting an evolving retail landscape that is adapting to meet the needs of budget-savvy shoppers,” said McKinsey & Company.<\/p>\n\n\n\n

The report noted that in 2024, shoppers are increasingly focused on value and affordability, with the average monthly cost of household food baskets rising to R5,336\u2014a 6% increase from the previous year.<\/p>\n\n\n\n

Meanwhile, disposable income has only grown by 4% to 5%, prompting consumers to be more price-conscious.<\/p>\n\n\n\n

According to the report, a notable 76% of shoppers are more inclined to purchase products on promotion, and 63% have switched to store brands to manage their budgets effectively.<\/p>\n\n\n\n

This appetite for low-cost shopping has materialised in the country.<\/p>\n\n\n\n

“South Africa\u2019s discount retailers are growing twice as fast as the total market,”<\/strong> said McKinsey.<\/p>\n\n\n\n

For example, Pick n Pay\u2019s Boxer and Shoprite\u2019s Usave grew at a combined compound annual growth rate (CAGR) of 12% between 2019 and 2023, compared with the 6% CAGR for the market as a whole.<\/p>\n\n\n\n

\"\"<\/a>
Source: McKinsey & Company’s 2024 State of Grocery Retail in South Africa report<\/figcaption><\/figure>\n\n\n\n

Looking at some of these retailers, while Pick n Pay itself has been battling some headwinds, its low-cost Boxer business reported close to 20% sales growth from the second half of its financial year to the end of February 2024, and climbed 12% in the six months through August 25.<\/p>\n\n\n\n

Recently, Pick n Pay said that it will list its low-cost Boxer business on the Johannesburg Stock Exchange by the end of the year and that the South African grocer will raise as much as R8 billion in the process, making it the continent\u2019s biggest offering this year.<\/p>\n\n\n\n

Pick n Pay wants to add 200 new discount grocery Boxer stores by 2026. It currently has 500 stores.<\/p>\n\n\n\n

\u201cThe Boxer IPO remains pivotal to our strategy, and their remarkable performance continues to prove it is an exceptional business,\u201d said<\/a> Pick n Pay Chief Executive Officer Sean Summers. <\/p>\n\n\n\n

\u201cWe are excited to see it thrive as a listed entity,\u201d he added.<\/p>\n\n\n\n

\n
Pick n Pay’s R8 billion Boxer lifeline<\/a><\/blockquote>