The Pepkor trajectory
Pep traces its beginning to the Northern Cape town of De Aar in 1965, when Renier van Rooyen opened the first store. With no experience or financial training, he borrowed the equivalent of R1,000 to start the retail company.
He had, however, been exposed to the clothing trade from a young age: after his father died, his mother supported the family by selling clothes she made.
Van Rooyen dabbled in various businesses before starting Pep, including helping farmers with their bookkeeping. It was there that he began to appreciate the dangers of buying on credit, and how people get into debt.
He told the Cape Argus in 1990: “It occurred to me that if I could sell essential goods for cash at lower prices, I could make a profit, while saving consumers unnecessary debt.”
His target market was lower-income working people who didn’t have much money to spare individually, but who collectively represented immense
purchasing power. So, he raised funding from investors (including from Christo Wiese’s father, Stoffel) and opened Pep.
According to a book by Van Rooyen’s son Johann, Pep “became synonymous with quality clothing at discount prices”, with its formative slogan being: “We don’t sell cheap clothing: we sell clothing cheaply.”
Soon after Pep opened, Van Rooyen moved the head office from Upington to Cape Town, which was the main source of the clothing the store sold, as well as the heartland of an important segment of customers —“the coloured community”.
By February 1968, Pep had 18 stores with an average turnover per store of R79,000. By the end of that year, the store base had nearly doubled to 29.
Van Rooyen had no qualms about heading into a price war with rivals.
Along the way, Pepkor proved the making of some of SA’s toughest executives. Besides Wiese, there was Whitey Basson, hired as Pepkor’s finance director in 1971, shortly before it listed on the JSE in June 1972. Basson was immediately thrust into a crisis, as a fire caused by an electrical short-circuit destroyed the
main warehouse and Pep’s headquarters in Kuils River. Products worth R1m (which in 2010 was estimated to be equivalent to R100m) were destroyed.
Some years later, in 1979, it was Basson who convinced Van Rooyen to take a gamble on a little-known Western Cape grocery chain called Shoprite, and diversify into food.
Van Rooyen left the group in 1982 at the age of 50, selling his stake to Wiese. After that, Shoprite bought the near-insolvent food retailer Checkers, and Pepkor bought upmarket chain Stuttafords, clothing retailer Smart Centre, DIY chain Cashbuild, as well as Harties, Waltons and OK Bazaars (for R1).
It expanded overseas too in 1992, into the UK and Australia. By 1998 Pepkor had a turnover of more than R20bn, with pretax operating profit of R480m obtained from 2,641 stores.
In 2003, Pepkor accepted a buyout offer from private equity group Brait, along with Wiese. Then, in 2014, Wiese accepted a R62bn buyout offer for Pepkor from Markus Jooste’s Steinhoff, laying the platform for its turbulent past few years.