Business
Pick n Pay Faces Major Crisis: Store Closures, Market Losses, and Customer Backlash
Pick n Pay, once a leading South African retailer, is now facing significant challenges. Over the past few years, the company has lost market share to competitors such as Shoprite Checkers and Spar. In an effort to reverse its declining performance, Pick n Pay introduced its ambitious Ekuseni turnaround strategy, but the plan failed, leading to billions in losses and pushing the company into technical insolvency.
To improve its financial standing, Pick n Pay launched a two-phase recapitalisation plan. The first phase, a rights offer in August 2024, raised R4.0 billion. The second phase, an IPO of its Boxer stores in November 2024, generated R8.5 billion. While these measures provided some financial relief, industry analysts remain skeptical about the retailer’s ability to regain lost ground.
Challenges in Gaining Market Share
Retail analysts warn that Pick n Pay faces an uphill battle against competitors like Shoprite and Spar, which continue to expand aggressively. Devin Shutte from The Robert Group highlighted that Pick n Pay has underinvested in its business for years, leaving it lagging behind competitors in store formats, distribution, and overall customer experience.
Grant Nader from Benguela Global Fund Managers added that Shoprite is aggressively expanding, while Spar is refocusing its efforts on the South African market after divesting from Poland. This puts Pick n Pay in a difficult position, as it struggles to retain customers who have already moved to other retailers.
Store Closures and Declining Sales
Pick n Pay’s trading update for the 45 weeks ending 5 January 2025 revealed troubling signs. The retailer’s South African stores saw a sales decline of 0.1%, despite an internal selling price inflation of 2.4%. This indicates that the company is losing revenue rather than growing.
A key factor in this decline is the closure of 32 supermarkets during the period, including 24 company-owned stores and eight franchise locations. Even when excluding the closed stores, Pick n Pay’s like-for-like sales growth of 1.9% still lagged behind inflation, signaling a decline in sales volumes.
Adding to the concern, major landlords are distancing themselves from Pick n Pay. SA Corporate Real Estate announced that Pick n Pay stores in its properties will be replaced by Checkers and Shoprite locations. Similarly, Redefine Properties is reclaiming 10,000 square meters from Pick n Pay to optimize its shopping mall spaces.
Customer Backlash Over PR and Marketing Missteps
Beyond financial struggles, Pick n Pay has faced harsh criticism from customers over its PR and marketing decisions.
In late 2024, a data breach at Claim Expert, a service provider linked to Pick n Pay’s vehicle licence renewal service, led to customers’ personal data being leaked on the dark web. Despite being a service Pick n Pay had actively promoted, the company refused to take responsibility, blaming the third-party provider instead. This response infuriated customers, who expected accountability from the retailer.
Further controversy erupted in February 2025 when Pick n Pay released an advertising campaign featuring international rapper Rick Ross and music from DJ Khaled. Many South Africans questioned why a local brand would spend heavily on foreign celebrities instead of supporting local talent. Podcaster Penuel Mlotshwa called out the campaign for lacking brand alignment and failing to resonate with Pick n Pay’s core South African audience.
Can Pick n Pay Recover?
Pick n Pay is at a critical juncture. With store closures, declining sales, and customer dissatisfaction, the retailer faces a tough road ahead. While its recapitalisation efforts have provided short-term relief, regaining market share from fast-growing competitors will require significant investment and strategic changes.
For now, the outlook remains uncertain. Unless Pick n Pay can successfully address its operational inefficiencies and reconnect with customers, it risks falling further behind in the competitive South African retail market.
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