Pick n Pay has reconfirmed that its long awaited entry into Nigeria will take place with local conglomerate AG Leventis. The company has also revealed plans to double store numbers of its discounter format Boxer to 600 within the next five years.
Pick n Pay has talked seriously about entering Nigeria and Ghana since at least 2014, before Nigeria’s economy started to struggle.
In Nigeria, Pick n Pay announced the partnership with AG Leventis back in 2016. Pick n Pay would hold 51% of the joint venture, according to reports at the time. AG Leventis was a big name in Nigerian retail in the 1970s’s 1980s, operating a number of supermarkets/department stores. At one point, the company was reputed to be the largest private sector employer in Nigeria. It subsequently exited retail, along with other retailers such as Kingway and UTC. In 2018, AG Leventis announced it was planning to reenter retail and open stores again. Two years later it looks like it will do that, timed to open before the busy Christmas period.
Pick n Pay’s West Africa entry has been long delayed. In Ghana, Pick n Pay has secured the leases on three malls under construction – The Exchange (Accra), The Edge (Accra) and Greenwich Business Park and Shopping Mall (Tema). However, none of its proposed stores are open and it isn’t obvious when they will open.
In Nigeria, Pick n Pay hopes to avoid the fate of Shoprite, which grew tired of Nigeria’s volatile, weak currency and its repeated targeting by local authorities. There has been some debate about whether Shoprite is/not exiting Nigeria. For accounting purposes, it is exiting Nigeria. In practical terms, it is looking to sell a majority share in the Nigerian Shoprite store network to a Nigerian investor, while retaining a significant but minority share.
In South Africa, Pick n Pay’s home market, it is looking to change tack. Despite the challenges of COVID-19 in the six months to the end of August. core retail sales in South Africa, excluding liquor, clothing and tobacco, showed like-for-like growth of 6.4%.
Pick n Pay recognises that about two-thirds of its core business is still with middle or high-income customers, and revolves around a visit to a shopping mall. By contrast, rival Shoprite has been much more successful at positioning itself towards the much larger number of lower middle income consumers. Given forecasts about the slow pace of South Africa’s economy, the company is looking to take more price leadership. Its head of strategy has revealed that it may double the number of its Boxer discount stores to 600 within five years. Boxer accounts for around 10% of Pick n Pay’s sales in South Africa.
Separately, Pick n Pay has concluded an agreement to acquire on-demand grocery delivery startup Bottles. Online sales businesses have seen explosive growth during the coronavirus pandemic: the Bottles app has been downloaded more than 700,000 times, and the company reportedly has 350,000 registered users.
Pick n Pay first partnered with Bottles in 2018 and leaned heavily on the startup to help it deliver its Grocery Essentials service within one week of lockdown being implemented. Bottles now offers 7,000 SKUs, available for delivery within 90 minutes. The acquisition reflects Pick n Pay’s desire to reaffirm its leadership among the big South African supermarket chains in the online channel and to take on Shoprite’s successful service for its Checkers stores, Sixty60, which promises delivery within 60 minutes.
Ex-Tesco director and Pick n Pay CEO Richard Brasher has said “Our aim is to have a business which customers can access anytime, anywhere and from any place. We already have two large online depots, and a home-delivery and click-and-collect network comprising over 150 stores. Bringing Bottles into Pick n Pay will give us another edge, and enable us to offer more services and more flexibility to customers in this rapidly growing area.”
“It will enable us to build on the tremendous momentum we have achieved by integrating the Bottles business into our existing online offer, and applying Bottles’s agility, innovation and marketing flair across our platform,” Brasher said.
“Our aim is to have a business which customers can access anytime, anywhere and from any place. We already have two large online depots, and a home-delivery and click-and-collect network comprising over 150 stores. Bringing Bottles into Pick n Pay will give us another edge, and enable us to offer more services and more flexibility to customers in this rapidly growing area.”
