Woolworths opens first supermarket as Pick n Pay goes smaller

Woolworths, a food and clothing retailer, opened its first supermarket as it seeks to take on Shoprite Holdings and Pick n Pay Stores for customers that shop weekly.

The expansion comes three days after Pick n Pay, usually associated with supermarkets, announced plans to convert 120 BP Express stores in gas-station forecourts into its own outlets over the next five years. Pick n Pay, based in Cape Town, last year opened a store aimed at high-income earners on the same Johannesburg road where the new Woolworths supermarket is situated.

“Woolworths is moving toward the bigger store model to try and gain market share at a time when Pick n Pay is weak,” Avior Research retail analyst Michael McLeod said in an e-mailed response.

Most of the larger Woolworths’ stores in South African malls are typically dominated by clothing sections with less floor space set aside for food, while its outlets in neighbourhoods offer mostly fresh food. Woolworths opened its first convenience store in Engen’s gas-station forecourts in 2000, and has 42 across the country, with another 34 planned in the next three years.

Pick n Pay’s plans to convert BP Express stores is “just part of Pick n Pay’s catch-up strategy as they have lost ground,” McLeod said. Woolworths can afford to lower prices while Pick n Pay margins at an all-time low don’t offer the grocer that same “luxury,” he said.

The Woolworths supermarket, located on William Nicol Drive, is 2 440 square meters in size, more than 800 square meters larger than its next biggest store in the eastern part of the city.

“Ease of shopping is going to play a big part,” Avior’s McLeod said, adding that Pick n Pay’s nearby premium store is better situated, serving more neighbourhoods and offering easier access for customers.

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