Pick n Pay can change South Africa’s retail market forever

John Jack, CEO of Galetti Corporate Real Estate, argues that if Pick n Pay’s turnaround strategy is successful, it will become a benchmark for other South African retailers to do the same.

Jack said Pick n Pay’s strategic downscaling, which forms part of its turnaround strategy, marks a turning point for the South African retail sector.

Pick n Pay CEO Sean Summers, who returned to lead the struggling retailer in 2023, launched an aggressive ‘back to basics’ reset.

This reset includes closing or converting underperforming stores. In its results for the year ended 2 March 2025, Pick n Pay said 40 loss-making supermarkets were closed or converted.

25 company-owned supermarkets were closed, seven were converted to franchise stores, and eight were converted to company-owned Boxer stores.

As a result, the total number of Pick n Pay supermarkets, both company-owned and franchise stores, declined by a net of 45 stores to 570 supermarkets as of March 2025.

Jack said this strategy is about cutting back to the core and building a leaner, more profitable machine that can respond to where the market is now.

He added that Boxer is the kind of retail model more players should be watching “Boxer’s stripped-down, high-efficiency format is the future of South African retail,” he said.

He said Boxer’s aggressive expansion across South Africa is smart, focused and cost-effective, which bodes well in South Africa, where consumers are under pressure.

Pick n Pay is learning from Boxer, in which it has a 66% stake, and is reviewing its entire store portfolio to ensure an optimised portfolio.

The review, Jack said, includes leases with landlords, trading densities, and the growth potential at each store.

• Sales per square metre, also known as trading density – Low-performing stores relative to operational costs are prime candidates for closure.
• Lease commitments, termination penalties, escalation clauses, and landlord relationships will affect decisions.
• Overlapping catchment areas – Locations cannibalising sales from stronger nearby stores are considered.
• Demographic fit – If the target market no longer aligns with Pick n Pay’s customer value proposition, it is a candidate to be converted to a Boxer store.

“The goal is clear: exit sites that no longer make sense, hold onto high-performers, and convert anything in between,” he said.

“We’re seeing them convert stores to Boxer, offload non-core sites, and bring in strong franchisees where they can drive better margins.”

Pick n Pay moving towards a more cost-efficient model

Jack said by shedding underperforming assets, Pick n Pay is moving toward a nimbler, more cost-efficient model.

“Fewer but better-performing stores reduce overheads, simplify logistics and allow for targeted marketing and supply chain efficiencies,” he said.

“Disposing of or converting non-performing assets frees up capital, which can then be reinvested into high-traffic sites, new retail formats, or digital transformation initiatives.”

He said Pick n Pay’s strategy, if successful, can force its competitors to react and significantly impact South Africa’s retail property sector.

“Malls with underperforming anchor tenants could take a hit, but savvy landlords and developers will see opportunity,” he said.

“This shift mirrors what we’ve seen in the US and Europe, where retailers are downsizing their footprint to boost efficiency,” he said.

For property owners, this is a wake-up call to adapt to new formats, invest in flexibility and start thinking beyond traditional leasing models.

“If Pick n Pay pulls this off, it won’t just survive; it could lead the way for others stuck in bloated, outdated operating models. The question is whether they can move fast enough,” he said.

“If this reset is managed properly, it’ll become the benchmark for how South African retailers clean house and rebuild smart.”