The man who started a R73 billion business with R1,000 and no business experience

Renier van Rooyen started Pepkor in the 1960s with no business experience or capital of his own. Today, it is the country’s largest clothing retailer, with a market cap of R73 billion.

When Pep was first established, the company focused on the lower end of the South African market. At the time, it targeted the country’s Black and Coloured people,

Other retailers overlooked this market segment during the Apartheid era, which provided a newcomer with an opportunity.

The bet on this underserved market paid off handsomely. Today, Pepkor has the largest retail store footprint in Southern Africa, with 5,900 stores operating across nine African countries. It also has operations in Brazil.

The retailer oversees 1.9 billion transactions and 30 million identifiable customers, which gives it tremendous scale.

According to Pepkor’s website, 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.

“Today, we are fortunate to have some of the most trusted brands in South Africa operating under our umbrella,” the company said. 

“Ultimately, trust is the golden thread that runs through everything we do. On this foundation, our brands have truly stood the test of time.”

In its latest financial results, Pepkor revealed 7.7% growth in annual revenue to R87.4 billion for the year ended 30 September 2023.

The group’s operations generated R13.0 billion in cash this year, reflecting an increase of 15.9% on the prior year.

“Despite national challenges impacting the operating environment and consumers’ livelihoods, the group secured market share gains in key product categories,” it said.

Renier van Rooyen laid the foundation for Pepkor in 1965 in Upington, where he entered the business world at the age of 23.

Van Rooyen was born in Kenhardt, Northern Cape, on 28 November 1931, the youngest of four children of a poor livestock speculator.

A flash flood destroyed the family’s smallholding when he was 10, leaving them destitute.

His father never recovered and died in 1946, leaving the family dependent on a military pension and charity. Van Rooyen, ashamed of their poverty, withdrew from community activities.

After his father’s death, his mother supported the family through various jobs, teaching him the value of hard work, fairness, and honesty.

His siblings, Gert and Baba, left school early to work. Van Rooyen, determined to improve their circumstances, matriculated from Kenhardt High School in 1948 and worked as a clerk to save for university.

In 1950, he enrolled at Stellenbosch University but left soon after. He repaid his loan and joined the Department of Justice.

He later moved to Upington, where he began his entrepreneurial journey. At 20, he started a private agency and accounting business, serving local farmers and businesses.

Van Rooyen’s retail career began in 1955 when Gustav Gottschalk, an Upington shop owner, decided to sell his store, the Bargain Shop. The store sold second-hand furniture, clothing, shoes, medicine, food, bicycles, and even donkey carts. For many years, he ran the store profitably with the help of his assistant, Piet Strauss.

Gottschalk sold the store to Gawie Esterhuyzen, a partner in a local legal firm who also managed some of Gottschalk’s legal affairs.

Esterhuyzen then approached Van Rooyen to help run the store part-time. As part of the deal, both contributed capital: Renier added £400, Esterhuyzen contributed £300, and the remaining £800 was to be paid over time.

For the next two months, Renier spent his weekends at the store under Gottschalk’s guidance to learn the business, as he had no prior experience. When Gustav finally left, Van Rooyen retained Piet Strauss, who became a valuable friend and right-hand man.

Renier became involved full-time and began restructuring the store. He expanded the trading space to about 170m² by leasing two more rooms in the small building on Brug Street and shifted the stock composition to focus on low-priced clothing, eliminating credit sales.

Sales and profits started to grow, and Van Rooyen enlisted part-time help from Kotie and Elof Alice, with Esterhuyzen working on Saturdays.

Recognizing an untapped market, Van Rooyen saw the potential of the business. In late 1956, he bought out Esterhuyzen’s share for £1,800, and although they remained friends, Esterhuyzen returned to his legal practice.

Van Rooyen, now with full ownership, had to manage all aspects of the business, including purchasing stock. This required monthly trips to Cape Town, a journey of at least 10 hours each way due to the lack of proper roads.

In 1957, Van Rooyen converted the store into a private company, Bargain Stores, and continued to experiment with prices, products, and promotions.

By early 1959, he opened another store in Upington called Upington Volksklere to experiment with selling discounted clothing. By the end of the year, he had developed a successful marketing strategy and identity for his business.

In 1960, Van Rooyen amalgamated the two stores under a holding company called BG Bazaars and moved to a larger premises in Upington’s CBD, which included a small warehouse.

With the business thriving, Van Rooyen expanded his personnel by hiring family members, including his sister Baba, brother Gert, and wife Nella. He also expanded beyond Upington, opening stores in the Western and Northern Cape.

Van Rooyen introduced the innovative concept of self-service in his stores, allowing customers to touch and try on clothes. By the mid-1960s, BG Bazaars had four profitable stores.

He aimed to open at least ten more stores in towns like Prieska, Kimberley, Postmasburg, Vredendal, Moorreesburg, Calvinia, Malmesbury, and Paarl, all within a defined area between Upington and Cape Town.

BG Bazaars’ success was built on offering good quality clothing, blankets, and shoes at very low prices, maintaining low overheads, and providing friendly personal service.

The stores were known for value for money, big volumes, and low margins, similar to retail giants like Wal-Mart.

By 1965, the Van Rooyen family was financially independent. Van Rooyen wanted to expand further but realised it required more capital and resources than his family could provide.

Despite many potential investors backing out, Van Rooyen raised R50,000 of the planned R250,000 and founded Pep Stores in 1965.

With ten years of retail experience, Van Rooyen was confident in his abilities and direction. He believed in a business model focused on higher turnover and lower profits, meeting customer needs, and offering a pleasant shopping experience.

He emphasised low rental costs, low prices, low advertising costs, self-service, mass displays, and open window displays.

In 1965, Van Rooyen launched Pep Stores, incorporating BG Bazaars under this new name. The first Pep Stores shop opened in De Aar, followed by branches in Kimberley and Postmasburg.

By 1969, all BG Bazaars branches operated under the Pep banner.

Realizing Upington’s limitations, Van Rooyen moved his family to Cape Town in 1966. Initially facing a small financial loss, the company turned profitable, achieving a R10,000 profit and a 600% turnover rise by February 1967. By then, Pep Stores had grown to ten branches.

In late 1967, Pep’s head office and warehouse were established in Kuilsrivier. Christo Wiese, who had worked at Pep during university holidays, joined the company full-time as the secretary, responsible for finding new store locations and recruiting staff.

By 1968, Pep Stores had 29 branches, each with an average turnover of R79,000.

Pep’s rapid expansion required new technology, and in 1969, the company acquired new cash registers worth R500,000.

By February 1970, sales increased by 130% to R6.6 million, with profits at 268%. Van Rooyen laid the groundwork for the next phase in Pep Stores’ evolution, focusing on refining methods and practices and creating the Pep identity.

A big shift came when, in 1971, Van Rooyen approached retail legend Whitey Basson to join his business – which was called Pep Stores at that point – as its financial director. 

Van Rooyen was planning to list the company on the JSE as Pepkor. Basson agreed to join the company as financial director and, in 1974, became head of operations.

This move propelled the company to where it is today. By 1981, Pep had grown to 500 stores, 10 factories, 12,000 employees and a turnover of nearly R300 million.

At this point, Wiese bought out Van Rooyen’s holdings in Pepkor and became the major shareholder and chairman.

In 2014, Wiese sold Pepkor to Steinhoff International in exchange for about 20% of Steinhoff’s issued shares.

While the company was listed in 2017, Steinhoff maintained a majority share. However, ever since Steinhoff’s collapse in the same year, the company has been selling off its shares in the retailer to pay off its debts.

In 2023, Steinhoff International announced that it plans to sell up to 6.5% of Pepkor, a move which meant it lost its majority stake in the retailer.

At the time of the announcement, Steinhoff owned 51% of Pepkor, and the successful placement of the shares meant it retained 44.5% ownership of the retailer.

The company remains Pepkor’s biggest shareholder, with the Public Investment Corporation (PIC) being its second-biggest shareholder.

The retailer recently announced that the PIC has increased its stake in the company, such that it now holds over 10% of Pepkor.