People’s Trading Centre, the leading supermarket chain in Malawi and Spar franchisee, is restructuring its store portfolio. The move is aimed at aligning customer segments more closely with its brands and shutting poorly performing stores.

Two years after a major closure of 20 of its stores, People’s Trading Centre (PTC), a subsidiary of Malawian conglomerate Press Corporation, will shut more stores and restructure its store portfolio to more closely match its customer segmentation. PTC has announced it plans to close 17 stores, most or all of which are franchised stores run by independent Malawian retailers.

Currently, before the restructure, PTC operates four retail banners:

• People’s Metro – large supermarket/wholesale stores in urban areas. Larger stores include an in store bakery, butchery counter, hot prepared food.
• People’s Cash and Carry – supermarket/wholesale stores in rural areas.
• People’s Supa Save – a mix of supermarkets and convenience stores, all in major cities.
• People’s Express – smaller convenience stores.

The reorganisation takes account of the two retail brands for which PTC is the franchisee – Spar and Food Lover’s Market. In effect it means that the People’s brand will be used for lower and middle income consumers while Spar and Food Lover’s Market will be used as the lead brands for wealthier consumers, with Food Lover’s Market as the most premium brand.

After the restructure, PTC will effectively lose the People’s Cash and Carry and People’s Supa Save brands. Instead it will increase the number of People’s Metro stores from the current 8 to no less than 26 stores across the country. PTC are calling People’s Metro a “new brand”, confusingly. These stores will still be a hybrid retail/wholesale format, but more geared towards cash and carry and away from the mainstream supermarket format.

PTC will, instead, use Spar as its lead supermarket format, aimed at taking on Shoprite directly. The company aims to develop more than 15 stores, up from its current three.

PTC will consolidate all its convenience stores under one banner, People’s Express. CEO James Madondo has also said that he ultimately aims for the People’s Express banner to be on 30% of Malawi’s forecourts.

The company was less bullish about Food Lover’s Market. Since taking on the franchise in late 2016, PTC has only opened a single Food Lover’s Market, in Lilongwe. Madondo has simply said that PTC will continue to look for space in [premium] shopping malls (of which there are very few in Malawi), a tacit admission that he sees little opportunity to grow the brand in Malawi.

The restructuring throws down the gauntlet to Shoprite, which entered the country in 2001 and now has seven supermarkets in Malawi. PTC took on the Spar franchise (which had been in Malawi before, and exited) in 2015 and has only opened one store each year so far. The real question is one of consumer spending: PTC is betting that Malawi’s consumer spending is enough to support 15 Spar supermarkets, which is a challenging goal to deliver on. We also expect Shoprite to respond to this move, because if – still an if – PTC is successful in growing the Spar network up to more than 15 stores, we expect it to put Shoprite to be under real pressure in Lilongwe and Blantyre.