South Africans kiss Pick n Pay stores goodbye

South Africa's Pick n Pay retailer is facing mounting challenges as it continues to shut down both company-owned and franchise stores across the country, with many South Africans bidding farewell to their local outlets. The closures come as part of a broader attempt by the retailer to restore its financial health, amid a period of poor sales performance and shifting market dynamics.

On 4 February 2025, Pick n Pay released its trading update for the 45 weeks ending on 5 January 2025, revealing a 0.1% decline in sales across South Africa. While the retailer's internal selling price inflation stood at 2.4%, the sales numbers were heavily affected by the closure of 32 supermarkets over the period, including 24 company-owned stores and 8 franchise outlets.

The closures are part of a larger strategy, which CEO Sean Summers introduced after taking the reins from former CEO Pieter Boone. In early 2024, Summers announced plans to close or convert 112 stores across South Africa in a bid to streamline operations and improve financial performance.

"The strategy involves closing 35 underperforming stores and converting 70 outlets to the Boxer brand," Summers explained, noting that some stores were located in areas experiencing demographic shifts or where shopping center issues made them unviable. "We will close and get rid of the stores that have no future."

While the overall sales performance showed a negative trend, excluding the impact of the store closures, Pick n Pay's like-for-like sales increased by 1.9%. This is a notable improvement compared to the 0.1% overall sales decline, though still below the 2.4% inflation rate. Over the final 19 weeks of the reporting period, like-for-like sales momentum improved to 3.0%, suggesting that Summers' turnaround strategy may be starting to show positive results.

Despite the encouraging uptick in sales momentum, the closures have left gaps in various shopping centers, many of which are being quickly filled by rival retailers. Shoprite and Checkers are expanding their retail footprint rapidly, taking over the spaces vacated by Pick n Pay. This has been evident with SA Corporate Real Estate announcing plans to replace Pick n Pay outlets with Checkers and Shoprite stores in various locations.

Pick n Pay's shift in strategy also includes moving away from its QualiSave stores, a concept launched in August 2022 that Summers has since admitted was a "blunder." Originally aimed at catering to lower-income markets, the QualiSave format was criticized for failing to meet customer expectations. Summers revealed that converting Pick n Pay stores into QualiSave outlets was an error, which took the brand's focus off its core strength—serving middle-income customers with a more comprehensive shopping experience.

"We had this really, really poor thought about QualiSave being able to compete in those marketplaces," Summers said. "People were highly offended, and I don't blame them. The markets and those population groups absolutely want their Pick n Pay."

After re-assessing the move, Pick n Pay is now focusing on a dual-brand strategy with Pick n Pay and Boxer stores, which cater to different segments of the market. The retailer plans to continue rebranding its underperforming QualiSave stores to either Pick n Pay or Boxer outlets, with the latter focusing on price-sensitive shoppers in lower-income areas.

While the road ahead remains difficult, with Pick n Pay's struggles and closures resonating across South Africa, CEO Summers is adamant that the brand's future will be more sustainable and focused. With its two brands—Pick n Pay and Boxer—coexisting in the retail space, Pick n Pay is confident that it can navigate the challenges and regain its competitive edge.

As South African shoppers adjust to the new retail landscape, the full impact of Pick n Pay's closures and strategic realignment will continue to unfold, but the retailer is hoping that these bold steps will ultimately help it recover and thrive in an increasingly competitive market.