Finweek English Edition - - Companies & Markets - ANA MON­TEIRO

IT’S BEEN JUST UN­DER a year since food re­tailer Pick n Pay an­nounced its plans to take on the R20bn con­ve­nience re­tail mar­ket and its game strat­egy has now been re­vealed. The re­tailer is test­ing its con­ve­nience con­cept – known as Pick n Pay Daily – at its first such store, which was opened at the World Wear cen­tre in Bey­ers Naude Drive, Fair­land, north-west of Jo­han­nes­burg, on 23 Septem­ber.

It’s a mar­ket that Wool­worths has catered to with roar­ing suc­cess, al­though its credit-laden con­sumers are tak­ing the “flight to value” and buy­ing down to cheaper com­peti­tors.

Wool­worths has been af­forded a lower rat­ing (it’s trad­ing on an earn­ings mul­ti­ple of 10,4 times) than Pick n Pay (14 times), ow­ing to its credit ex­po­sure and ques­tions about its strat­egy.

Pick n Pay re­mains a de­fen­sive play, along with Shoprite (on a mul­ti­ple of 14,9 times) that in­vestors favour in volatile times.


Pick n Pay Daily stores will be fran­chised and are an op­por­tu­nity for the group to ex­pand its black-owned store base. It’s in talks with BP to roll out its con­ve­nience con­cept to fore­courts in the same way that Wool­worths has done with En­gen.


Wool­worths Foods is go­ing for larger-sized (1 110sq m) stores, which stock a big­ger range of non-pri­vate la­bel brands so as to en­cour­age buy­ers to buy all their goods at Wool­worths. Pick n Pay stores sizes are mov­ing the other way – from large to small (which for Pick n Pay means be­tween 700sq m and 1 000sq m) – which an­a­lysts warn may not be the right move, as the cost of main­tain­ing such stores is higher on a per square me­tre ba­sis. Should the group man­age to keep prod­uct costs down – which Wool­worths, with its pre­mium-qual­ity of­fer­ing, isn’t able to do – Pick n Pay may suc­ceed in cap­tur­ing con­sumers’ favour.

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