Retail news. Semester 1 of 2014 table of contents

Pick ‘n Pay to inject US$21m into TM: HERALD. 17 October 2011

Golden Sibanda Senior Business Reporter PICK ‘n Pay can now inject US$21 million to recapitalise TM Supermarkets after Government approved the South African retailer's proposal to raise its stake in TM Supermarkets from 25 percent to about 49 percent. Former chief executive Mr Brendan Beaumont early this year said the retail chain required US$10 million for capital projects and US$11 million for working capital. After injecting fresh capital in TM, the SA retailer will announce its increased presence by rebranding selected TM outlets as Pick ‘n Pay. Since dollarisation, the local retail giant has struggled to stock adequately while its refrigeration equipment required replacement or rehabilitation.Despite managing to maintain a significant portion of the retail market, TM Supermarkets has faced stiff competition from other players. But all this could be ended after the Ministry of Youth Development, Indigenisation and Empowered approved its proposal to up its stake. Indigenisation Minister Saviour Kasukuwere confirmed the Meikles-Pick ‘n Pay transaction last Friday, adding that fresh capital injection into TM Supermarkets would bring healthy competition. "They wanted to increase their investment in TM to 49 percent," said the minister. "They had about 25 percent and further investment will get them to 49 percent or thereabouts. They will inject capital for rehabilitation of equipment and working capital, which will lead to enhanced supply." He said the ultimate winner would be the consumer, as they "will be able to get better service and prices from the retailer". TM had been desperate to recapitalise after suffering a 2,4 percent shrinkage in 2009 due to serious capital and working capital constraints. Mr Beaumont had said TM had "point-of-sale technology in only six of its 53 branches and this is a key issue in shrinkage and management of selling prices". This had resulted in the retail giant losing its pace among the country's leading retailers with the former CEO putting it at number three after OK and Spar. For well-recapitalised and managed retail businesses Zimbabwe offers good returns, as shown by increased interest in the sector by SA retailers. At one point South Africa's biggest retail chain showed interest in acquiring a stake in OK Zimbabwe, but for unexplained reasons pulled out. Zimbabwe makes for a good retail investment, considering incomes are still low as the economy is yet to recover from a decade of instability. Disposable incomes have largely remained low since February 2009.

 

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Pick n Pay, BP to roll-out small-format stores. 23 Apr 2012

Retailer Pick n Pay and BP Southern Africa have formally combined forces which will see the roll out of small-format Pick n Pay stores located at BP service stations in the major metropolitan areas across SA, the companies said on Monday, 23 April 2012.

PnP Express stores stock between 1,500 and 2,500 product lines and stay open 24/7, catering to the convenience retail market.

The two companies initially signed a memorandum of understanding in July 2008 and have been testing the model since opening the first two PnP Express stores in Hout Bay and Tokai in the Western Cape at the end of the same year. There are currently nine Pick n Pay Express stores on BP forecourts in SA.

"The initial plan is for 120 BP Express stores to be converted to PnP Express stores over the next five years, although additional stores may also be converted after the initial five-year period," Pick n Pay said. The roll out will concentrate on BP sites which are most suitably located for Pick n Pay's customers.

Both companies said they were confident that the dual format brought multiple benefits to the two companies, their franchisees, suppliers, and more particularly to South African customers who were in search of efficient and affordable convenience retailing.

"We've tested the format over the past three years and the feedback from customers is very positive," Pick n Pay's Deputy CEO Richard van Rensburg said.

International experience suggests that small format stores often spur growth and most leading global retailers have a multi-channel presence, including forecourt outlets.

The agreement brings into play key strengths of both businesses, and enables Pick n Pay to expand its small store format while continuing to create new entrepreneurs, in line with its franchise strategy.

Gerard Derbesy, BP Southern Africa CEO said the offering was in line with BPSA's growth and investment plans over the next two years.

According to the companies, the agreement paved the way for significant enterprise development through the development of new and existing franchisees and will add value to B-BBEE (broad-based black economic empowerment).

Chris Reed, franchise director at Pick n Pay, said express stores were small format franchise stores, which, while on BP forecourts, were instantly recognisable as Pick n Pay stores.

"Trading floor sizes are small and typically vary between 150 square metres and 250 square metres," he said.