South African retail giant Pick n Pay plans to open 200 news stores to its Boxer discount chain stores over the next three years. At the moment they have 342 company-owned stores. The move is part of the company’s bigger strategy to take on Shoprite in the lower income market.
Pick n Pay CEO Pieter Boone told shareholders on Wednesday that South Africa’s food and grocery market is set to grow by almost R200 billion over the next five years. He explained that most of the growth will be driven by the lower income part of the market. Pick n Pay currently only has an 11% share of this market, reports Fin24.
“This is a big opportunity for us. The good news is that through Boxer and Pick n Pay Value, we are gaining market share in this segment of the market. We also have work to do in the middle and the more affluent parts of the market,” he said. Overall, the group has about 16% market share in the formal grocery market, Boone adds.
According to Fin24, Pick n Pay has its sights on the higher end of the market, with its Select chain, which is in competition with Checkers’ FreshX stores and Woolworths.
Alec Abraham, senior equity analyst at Sasfin Wealth told Fin24, that Pick n Pay’s results were difficult to assess, given the market disruptions and distortions – but ultimately, he reckoned the group’s performance was “fairly good”.
“What was particularly good was the fact that they are continuing to benefit significantly, from all of the changes and improvements that Richard Brasher has implemented in the business,” said Abraham.
“But the reality is competition is very stiff. At the low end you’ve got a fairly good competitor in Shoprite,” he added.
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