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Can Pick n Pay do it alone?

Jun 2nd 2011, 09:50


Can Pick n Pay do it alone?

Now that the Walmart deal has been approved it is only a matter of time before the South African retail landscape changes significantly. The giant’s entry will have implications for all South African retailers, it’s not just the grocery specialists who will find themselves under fire. Arguably the retailer with the most to lose from Walmart’s entry would be Pick n Pay. It poses the question: Can Pick n Pay afford not to do a deal with Tesco?

I have no doubt that Tesco would pursue a deal and executives at Pick n Pay have openly stated that there have been talks between the two parties. The Ackerman family has stressed that the company would remain a family controlled business but when a giant jumps into your swimming pool you might be better off with some support of your own. Pick n Pay is a great business but it has had difficulty defending its position against local opposition in recent years, and one has to question their ability to take on Walmart without the help of another global player.

A deal with Tesco could unlock value to patient shareholders and provide the expertise required to develop better efficiency and grow the Pick n Pay business. It would also provide Tesco with the opportunity to win a battle against Walmart.

A Tesco partnership would make life very difficult for Walmart. Pick n Pay has a very strong food retail business and it is easier to build on that, than to develop a retailer with a small food component. Pick n Pay also has a store footprint that is well developed and has better distribution.

This is very exciting period for the industry.

Click here to purchase Planet Retail’s NEW report, Walmart in South Africa – The Beginning of a New Age

Craig Ballantyne


Please feel free to make comments or raise new issues by emailing the editor

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