Pick n Pay’s private labels are struggling to keep up with competitors, with the group’s CEO, Sean Summers, voicing his concerns over the dwindling participation of the segment in the sales mix.
Summers, who has been tasked with turning the fortunes of the loss-making company around, on Monday said the retailer’s private labels have become a shadow of their former glory.
According to Summers, Pick n Pay’s private label participation hovers at 11% to 12%, which is far below its potential. He said the segment is facing challenges in sorting out their product range and improving packaging.
“We invented this space, almost, with No Name,” Summers said. “[However], No Name has really gone down to minute numbers.”
In recent years, Pick n Pay expanded its private label offerings to more than 2,300 products, ranging from the budget-friendly No Name line to the premium Crafted Collection by PnP, introduced in 2022. Despite the broader selection, challenges with product range, packaging and positioning hindered the growth.
Pick n Pay’s private labels’ struggles come at a critical time as rival Shoprite has doubled down on its in-house offerings. Shoprite recently reported that its private label sales increased 12.8% this year, contributing more than R30bn to its more than R200bn in supermarket sales.
The group’s Forage and Feast premium line has been a major success, generating more than R180m since its 2020 launch and establishing itself as a high-quality, luxury option. By contrast, Pick n Pay’s Crafted Collection by PnP, aimed at a similar market segment, has faced setbacks.
In a legal duel last year Shoprite won a case against Pick n Pay over similarities. The high court in the Western Cape found that Pick n Pay’s Crafted Collection was too similar to Shoprite’s Forage and Feast, ordering Pick n Pay to halt passing off Crafted Collection products as their competitor’s exclusive line.
The country’s retail industry has witnessed a surge in demand for private label products in recent years, which accounted for more than R89bn of total retail sales in 2023, according to the NIQ State of the Retail Nation report.
The NIQ found that consumers, grappling with economic challenges, now view private labels as affordable alternatives to traditional brands.
Though alarmed, Summers remains optimistic that the segment will recover, especially with efforts under way to rebuild product lines. He said over the past six months, Pick n Pay’s buying team has reinstated more than 3,000 products across stores and enhanced its private label selections.
“These range optimisation efforts are intended to strengthen our customer offer and restore Pick n Pay’s margin mix over time.”
The private labels segment’s underperformance comes as the group on Monday reported a wider loss at the halfway stage as it continued to implement its turnaround strategy.
Its loss after tax widened to R827.4m from a loss of R571.3m a year ago. This translated into a headline loss per share of 136.6c from a loss of 117.48c before.
Group turnover grew 3.7% to R56.1bn.
“As anticipated, the first six months of [the 2025 financial year] remained challenging, however, the group delivered notable progress in a number of key strategic areas,” it said.
“On my return a year ago, I forecast that our financial performance and results would continue to get worse before they got better, and these results reflect that,” said Summers.
“Notwithstanding this, the results are in line with our business plan and encouragingly [the second quarter] showed a consistent by-period improvement over [the first quarter], a trend that continues,” he said.
“Critically, however, the group delivered exactly as planned for the first time in several years, demonstrating greater discipline, commitment and alignment across the business.”
A highlight was the successful conclusion of the Pick n Pay rights offer, which raised R4bn in new capital. The rights offer was 106% oversubscribed, reflecting shareholder support for the recapitalisation plan and a strong vote of confidence in the strategic turnaround strategy.
The group remained on track with its plans to list Boxer on the JSE and A2X by the end of 2024, it said.
The group expects full-year 2025 financial year earnings to show a meaningful improvement on those of the 2024 financial year, supported by sustained earnings growth in Boxer, a reduced trading loss in Pick n Pay and a reduction in interest charges as a result of the advancement of the recapitalisation plan.
The group’s second-half earnings would be largely driven by Black Friday and festive season trading, it said.
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