Shoprite and Pepkor are on a collision course

Pepkor and Shoprite are far ahead of their market peers, with the next areas of expansion setting the two retail giants up for direct competition.

While Pepkor started as an apparel retailer and Shoprite as a grocery retailer, the two companies have diversified and expanded their operations to the point where they are now competing.

This is according to All Weather Capital’s Shane Watkins, who told BusinessDay TV that he considers Shoprite and Pepkor to be quite similar businesses.

“They are both platform companies. In other words, they have an established platform that they can roll out whole new revenue streams in,” he explained

Both retailers are giants in their respective sectors, with Pepkor dominating apparel retail and Shoprite being far ahead of its grocery retail peers.

The two companies have also expanded beyond their respective specialities to develop business lines in different retail and other sectors, including financial services and telecommunications.

While the retailers have avoided direct competition with each other for years, their individual expansion into adjacent markets means this has now become unavoidable.

One of the clearest instances of Shoprite stepping on Pepkor’s toes was the launch of Checkers’ Uniq, an apparel retailer that has already grown to 43 stores since 2023.

This pales in comparison to Pepkor’s footprint of 6,657 stores. However, given Shoprite’s history and capability of rapid store roll-outs, Uniq could present a notable threat to Pepkor in the coming years.

In addition, both retailers have business lines that target the same market segment, particularly lower-income consumers.

Watkins believes the next battleground for these two companies will be in the financial services sector, with Shoprite and Pepkor having invested heavily in their respective offerings.

As the biggest retailers in their fields, both Pepkor and Shoprite benefit from strong customer loyalty and high footfall in their stores, making financial services a logical area for expansion.

Watkins said Pepkor appears to be ahead of Shoprite in this regard, with the apparel retailer’s financial services business now generating R3 billion in revenue.

However, Shoprite recently announced it has acquired R&A Cellular, a technology and payments company set to significantly expand its presence in the informal economy.

Pepkor has developed a strong presence in the informal market, driven by its Flash business, which now supports 176,000 traders.

Both retailers have also announced plans to open stand-alone banking services in the coming years, with Pepkor’s PlusB bank set to launch in the second half of its 2027 financial year.

“These businesses that have the capability of establishing platforms on an existing structure, I think, are going to be quite powerful,” Watkins said.