Retail Overload? Pick n Pay CEO Warns SA is Opening Too Many Stores

South Africa’s retail landscape might be getting too crowded for its own good. That’s the view of Pick n Pay CEO Sean Summers, who says the rapid expansion of retail stores is putting the sector’s long-term health at risk.

In an interview following the release of Pick n Pay’s latest earnings, Summers voiced concern over the sheer number of new stores opening across the country. South Africa’s top five retailers collectively launched more than 700 outlets in 2023 — and they’re already more than 200 stores into 2024.

“If we keep opening stores at this rate, we’ll soon match the US in retail space per person,” Summers warned. “But unlike the US, we don’t have the same consumer spending power to back it up.”

His concern isn’t just about overcrowded shopping centres — it’s about the economics behind them. With South Africa’s economic growth forecast recently downgraded to an average of 1.6% over the next three years, the appetite for high-spending retail simply isn’t there.

A recent comment from Bloomberg Intelligence’s Charles Allen echoed this sentiment. “Sales per square meter must be far lower in South Africa than in the US, simply because consumer spending is lower,” he said. “It raises real questions about how investors plan to justify their returns.”

Retail Space vs. Reality

Pick n Pay, one of South Africa’s major grocery chains, is taking a different approach from some of its competitors. While rivals like Shoprite are forging ahead with aggressive expansion, Pick n Pay has opted to close underperforming stores that showed no signs of recovery.

Instead, the company is channeling its energy into growth areas — like its Boxer chain, which caters to lower-income customers. This bet is already paying off: Boxer’s sales rose 13% over the last year, while Pick n Pay’s core business saw only a modest 1.9% growth.

Summers said the company is in the early stages of a long-term turnaround strategy, and being selective about where and how to grow is part of that plan. “There’s nothing smart about opening stores just for the sake of it,” he added.

What This Means for the Future

Retailers chasing growth by opening stores at breakneck speed may soon hit a ceiling, especially if consumer spending doesn’t rise to match the square meters. In a country where many households are under financial pressure, simply adding more stores won’t automatically lead to more profit.

Summers’ warning serves as a reality check — not just for retailers, but for investors and mall developers too. The question isn’t how many stores you can open, but whether they’ll still be viable in a few years’ time.

{Source: BusinessTech}

Follow Joburg ETC on Facebook, Twitter , TikTok and Instagram

For more News in Johannesburg, visit joburgetc.com