One South African retailer immune to Shein and Temu

Pepkor appears to be immune to the effects of Shein and Temu, given the price point at which it sells its products, with the Chinese giants unable to undercut it to the same extent. 

This value proposition has ensured that while other established clothing retailers in South Africa have suffered significantly since the emergence of Shein and Temu, for Pepkor, it has largely been business as usual. 

In the long run, however, the Chinese giants may limit the South African retailers’ topline growth as the market risks becoming saturated. 

This is feedback from Vunani Sentio Fund Managers’ Mtiaz Suliman, who believes that Pepkor offers the most upside of any of South Africa’s clothing retailers. 

Pepkor is known to be an extremely well-run business that has been a reliable compounder since listing on the JSE in 2017. 

The company survived the collapse of Steinhoff to emerge as the largest non-food retailer in Africa, with it having over 6,500 stores in its network. 

Founded with R1,000 in the 1960s by Renier van Rooyen, Pepkor has gone from strength to strength in recent years. 

Pep was first established to target the lower end of South Africa’s consumer market, with it attracting black and coloured customers that were overlooked by other retailers. 

From this beginning, the retailer now estimates that two out of every three baby garments, one out of every two kid garments, and seven out of ten prepaid handsets sold in South Africa come from the retailer.

The retailer also has around ten brands under its wings, including well-loved stores like Ackermans, Refinery, HiFiCorp, Tekkie Town and Incredible Connection.

Suliman believes that Pepkor’s focus on the lower end of the market has made it relatively immune to the emergence of Shein and Temu in South Africa. 

“Pepkor is very well positioned in the South African market regarding its value play and the segment in which they target,” Suliman explained to Business Day TV. 

“They are also more insulated from the threat of Shein and Temu, given the absolute price points at which they sell products. Not to say they won’t be affected somewhat, but much less than other players.” 

Suliman also noted that Pepkor’s growth does not only rely on opening new stores, but also strongly growing its sales on a like-for-like basis. 

This indicates that it is taking market share from its competitors, given the overall stagnation of the economy and market. 

Banking on financial services

Pepkor is steadily leveraging its store footprint and management resources to build out a sizeable financial services business. 

This holds much of the potential upside for the company’s bottom line, with financial services being highly lucrative and cash-generative. 

It is also likely, if well executed, to result in a rerating of Pepkor’s shares on the JSE as financial services companies command higher valuations based on earnings durability and cash generation. 

The benefit from this will be made significantly greater if Pepkor’s new bank, called plusb, is successful and can win over clients in a segment long dominated by Capitec. 

However, the building out of plusb has overshadowed Pepkor’s already strong financial services business, Flash. 

This business has proven to be immensely lucrative for Pepkor, generating R4.9 billion of revenue and R562 million in profit in the retailer’s most recent interim results. 

“They do have these levers of growth, which they are pushing quite hard. Flash has grown strongly, and its credit book is expanding,” Suliman said. 

“This is coupled with their phone business, Foneyam, which offers phones to its retail customer base on credit.” 

Suliman explained that these businesses are adjacent to the company’s core retail offering but offer better growth prospects and margins. 

Pepkor’s bank has particularly strong prospects among the newcomers to the market, with it being able to leverage the retailer’s store footprint and customer base. 

The retailer explained that the bank will be built on top of its +more loyalty and data programme, which has 17 million members in South Africa. 

Much of the groundwork to launch banking services has already been laid. The group has received regulatory approval from the Prudential Authority to establish a bank in South Africa.

Pepkor also acquired CloudBadger Technologies, a South Africa-based team and financial services platform, on 1 October 2025.

In March 2026, the group submitted its section 16 application, which, once approved, will enable it to become officially registered as a bank.

That same month, the company announced that it had appointed Merwe Scholtz to head its new banking initiative.