Pick n Pay back on the expansion trail – rolling out eight new stores this year

With its store estate reset programme concluded, Pick n Pay is now back on the expansion trail, with plans to roll out eight new stores in its current financial year.

This comes after the company saw the closure of 117 stores since the programme began, including many franchise stores that were converted to corporate-owned stores.

Aided by the R4.7 billion in proceeds raised from its recent sale of Boxer shares, Pick n Pay’s store strategy will focus on rolling out more compact stores and refurbishing its existing estate.

This should better align the company’s store estate with modern shopping behaviours, as much of its existing estate is ill-suited to these trends.

Pick n Pay released its results for the 2026 financial year on Monday, 25 May, which revealed that the company had made notable progress in implementing its turnaround strategy.

The retailer’s turnaround strategy hinges on six “pillars”, with three out of the four now completed. 

This includes recapitalising the business (done through selling part of its Boxer stake and a 2024 Rights Offer) and re-establishing Pick n Pay’s leadership structures and succession plans.

The third completed pillar is Pick n Pay’s store estate reset plan, which was initiated in 2024 and targeted corporate-owned stores that had no reasonable prospects of reaching profitability.

In Pick n Pay’s 2026 results presentation, CEO Sean Summers said this programme had been completed successfully and is already bearing fruit for the group.

The store estate reset saw Pick n Pay’s net lease finance expense decline by 5.3% to R1 billion, while its net lease interest remained flat at R1.1 billion in 2026 compared to 2025.

In addition, aided by the store reset and the company’s recapitalisation in 2025, Pick n Pay’s core segment’s net finance costs declined by 48.3% to R843 million.

However, the results also attributed the 1.6% decline in turnover for Pick n Pay’s core segment to this programme.

Regardless, with the store estate reset now complete, Pick n Pay can turn its focus to existing stores, with the retailer also looking to get back on the expansion trail.

Pick n Pay opening new, smaller stores

Following the conclusion of its store estate reset, Pick n Pay now has 23 hypermarkets, 285 supermarkets, 419 clothing stores, and 265 liquor shops that are company-owned.

Pick n Pay franchisees now have 211 supermarkets, 7 markets, 190 express locations, 18 clothing stores, and 194 liquor shops.

In an interview with Daily Investor following the release of Pick n Pay’s 2026 results, Summers said the retailer is planning to open eight new stores this year.

“We’ve also got a whole lot of refurbishments that are going ahead. Definitely looking to get back onto the expansion trail again and to continue to refurb some incredible real estate and stores that we have in the group,” he said.

The retailer forecast a net capital investment of R2.6 billion across the group for the 2027 financial year, with Pick n Pay set to account for R1.4 billion of this total, nearly double the R800 million spent in 2026.

Summers explained that, going forward, Pick n Pay’s new stores will be more compact, with the retailer ideally looking for locations that are between 2,300 and 2,500 m².

This will not only ensure Pick n Pay’s rents and rates are kept in check, but also align better with modern shopping trends.

Discovery Bank and Visa’s latest SpendTrend26 report showed that, since 2021, grocery shopping frequency in South Africa has increased by nearly 40%, while the average spend per basket has declined by 8%.

“This suggests that households are making more frequent trips to the store but buying smaller baskets each time,” the report said.

Otto1890 senior equity analyst Alec Abraham told Daily Investor that Pick n Pay’s current store base – consisting of fewer, larger stores in mainly middle- to upper-income areas – does not align with this shift in consumer behaviour.

“Gone are the days of large homes with pantries that can accommodate a large monthly shop,” Abraham explained. 

“Consumers today tend to shop smaller baskets and much more frequently, often picking up on the way from work, or hailing Sixty60, for only what’s needed for that night’s cooking.”

Summers’ plan to make future Pick n Pay stores more compact should help the retailer better align with these changing consumer habits.

“Certainly, our stores are going to be more compact going forward into the future. With the cost of stores today in both rent and rates, it’s important that your stores are built the right size,” he said.

However, Abraham warned that this task could be easier said than done, as some of Pick n Pay’s competitors have continued to grow their footprints while the retailer rationalised its estate, essentially “flooding the zone” in many areas.

The table below shows how Pick n Pay’s store estate has changed since 2024.