Pick n Pay, Spar and Virgin Active closing stores in South Africa

Major South African retailers, including Pick n Pay, Spar, and Virgin Active, are closing stores across the country, putting malls and shopping centres at risk.

This was explained by John Jack, CEO of Galetti Corporate Real Estate, on the Kaya Biz podcast, who explained the importance of anchor tenants.

As part of Pick n Pay’s turnaround plan, which was needed to create a more sustainable business, the retailer has closed and converted 40 loss-making supermarkets.

This included closing 25 company-owned supermarkets, converting seven to franchises, and converting eight to Boxer stores.

When looking at Pick n Pay’s combined company-owned and franchise stores, the supermarket estate declined by a net of 45 stores to 570 supermarkets by March 2025.

Pick n Pay hasn’t been alone in this. In a trading update released on Thursday, 27 February 2025, SPAR revealed that it had closed 13 stores in the 18 weeks through January 2025.

Recently, Virgin Active has also been closing down gyms. This includes the Jabulani RED club in Soweto, which closed at the end of May.

This will be followed by the club at Boulders in Midrand, which will close at the end of June, and the Riverside club in Mbombela, Nelspruit, which will shut at the end of July.

The effect of these closures will not only impact the retailers themselves, though. This is because these are anchor stores, which draw foot traffic into shopping centres, which is then dispersed to surrounding stores.

Jack explained that shopping centres rely on anchor tenants like Pick n Pay and Woolworths. These retailers drive most of the traffic into shopping centres.

For example, someone may go to Checkers to do their grocery shopping, but decide to stroll around the mall afterwards and purchase things from smaller stores.

These retailers are so valuable that they tend to pay the lowest rent, as little as 25% of what other tenants pay. However, smaller stores can start underperforming if a key anchor tenant leaves due to the reduced foot traffic.

A big anchor like Pick n Pay brings in hundreds, if not thousands, of people each day. While there, they might visit the ice cream shop or browse Exclusive Books. If that anchor disappears, so does the spontaneous traffic, Jack said.

If there aren’t enough other anchor retailers left to sustain foot traffic to the mall in question, that could spell serious problems for the smaller businesses.

The upside

Since major retailers operate on such small margins, Jack said that it is essential for them to have stores in the right locations.

“Often these profit margins actually come in the form of rebates from the supplier when they actually achieve certain levels of volume or whatever it might be.

“That’s what drives those businesses. So, every little percentage needs to be looked at so carefully.” Retailers like Pick n Pay, which need to optimise their business, will very carefully evaluate store locations and customer demographics.

If a store isn’t aligned with its target market and is not generating revenue, it will pull out and focus on rebuilding in the right areas.

However, while losing an anchor retailer may put pressure on shopping centres in the short term, it may offer more benefits in the long run, Jack explained.

For example, some Pick n Pay stores may convert to Boxers, which may be better suited to customers in the area. In areas that weren’t a core focus, the stores were probably tired and outdated, with an average product offering.

By closing these stores, Jack said they can focus more on improving the retail offering at their other locations, and customers will have a better experience.

“Retailers are always trying to maximise. They’re trying to give the customers what they want because they want the customers to come to that store. So, you might find you get an improved experience. They might come up with some cool stores.”