{"id":811713,"date":"2025-02-17T10:00:00","date_gmt":"2025-02-17T08:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=811713"},"modified":"2025-02-17T10:12:31","modified_gmt":"2025-02-17T08:12:31","slug":"pick-n-pay-under-siege","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/811713\/pick-n-pay-under-siege\/","title":{"rendered":"Pick n Pay under siege"},"content":{"rendered":"\n

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.<\/p>\n\n\n\n

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

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

Pick n Pay\u2019s balance sheet was so disastrous in that it launched a two-phased recapitalisation plan to improve its solvency.<\/p>\n\n\n\n

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

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

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

However, the successful recapitalisation was only one step of the turnaround plan, which many analysts warned would be difficult.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Devin Shutte from The Robert Group said Pick n Pay has underinvested in their business for many years.<\/p>\n\n\n\n

They are now playing catchup with Checkers with store formats, the look and feel of their supermarkets, and their distribution.<\/p>\n\n\n\n

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

Grant Nader from Benguela Global Fund Managers said Shoprite Checkers and Spar continue to improve their offerings.<\/p>\n\n\n\n

Shoprite is aggressively rolling out new stores, and Spar is refocusing its efforts on South Africa after selling its Polish operations.<\/p>\n\n\n\n

\u201cIt 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,\u201d Nader said.<\/p>\n\n\n\n

Compared with Shoprite, which is growing, Pick n Pay is shrinking, which puts it on the back foot. \u201cThey have less margin to play with. They are in a tough position,\u201d he said.<\/p>\n\n\n\n

Pick n Pay closing stores and struggling to grow sales<\/strong><\/h2>\n\n\n\n
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Pick n Pay\u2019s Trading update for the 45 weeks ended 5 January 2025 revealed that Pick n Pay continues to face headwinds in South Africa.<\/p>\n\n\n\n

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

Pick n Pay South Africa\u2019s internal selling price inflation for the period was 2.4%. This shows that the retailer is moving backwards in terms of revenue.<\/p>\n\n\n\n

The main reason for the decline in sales was that Pick n Pay South Africa closed 32 supermarkets<\/a> during the 45 weeks.<\/p>\n\n\n\n

The store closures included 24 company-owned Pick n Pay supermarkets and eight franchise stores.<\/p>\n\n\n\n

Pick n Pay South Africa\u2019s like-for-like sales increased by 1.9% if the store closures were excluded from the numbers.<\/p>\n\n\n\n

This means that sales from Pick n Pay\u2019s remaining stores were still below internal inflation, which shows its sales volumes are down.<\/p>\n\n\n\n

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

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.<\/p>\n\n\n\n

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

The Checkers emporium will include Checkers Fresh-X, Pet Science, Checkers Liquor and Checkers Outdoor.<\/p>\n\n\n\n

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

Redefine Properties, which owns many of South Africa\u2019s top shopping malls, also announced that it is taking back 10,000 square meters from Pick n Pay.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Pick n Pay criticised by South Africans<\/strong><\/h2>\n\n\n\n
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Pick n Pay is also facing criticism from South Africans about recent comments and decisions regarding its PR and marketing strategy.<\/p>\n\n\n\n

Last month, Pick n Pay clients\u2019 personal data was exposed<\/a> on the dark web after one of its service providers suffered a data leak.<\/p>\n\n\n\n

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

In January 2022, Pick n Pay launched its National Vehicle Licence Disc Renewal Service, saying, \u201cCustomers will now be able to renew their licence disc in over 500 Pick n Pay stores\u201d.<\/p>\n\n\n\n

\u201cCustomers can visit any Pick n Pay supermarket or hypermarket to renew their vehicle licence disc,\u201d it said.<\/p>\n\n\n\n

It made it clear that the service was offered to \u2018Pick n Pay customers\u2019 and made it convenient for its customers to renew licence disks.<\/p>\n\n\n\n

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

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

Despite this data leak, the retailer maintained that \u201cNo Pick n Pay customer data was compromised at all\u201d.<\/p>\n\n\n\n

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

\u201cThis 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,\u201d it said.<\/p>\n\n\n\n

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

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

Prominent podcaster Penuel Mlotshwa said the advert lacked brand alignment and there was no need for an overseas person for a local brand.<\/p>\n","protected":false},"excerpt":{"rendered":"

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.<\/p>\n","protected":false},"author":10,"featured_media":811717,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[5223,21722,4067,7520,9838,21723],"class_list":["post-811713","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-checkers","tag-devin-shutte","tag-pick-n-pay","tag-shoprite","tag-spar","tag-the-robert-group"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/811713","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\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=811713"}],"version-history":[{"count":5,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/811713\/revisions"}],"predecessor-version":[{"id":812080,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/811713\/revisions\/812080"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/811717"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=811713"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=811713"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=811713"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}