e-spaces

Pick ‘n Pay Stores is planning to move into black townships, a programme that will start by establishing franchise model family and minimarket stores in communities such as Soweto, Attredgeville, Tembisa and Vosloorus.

May 17, 2007

By NTEBO MMOPE

Johannesburg – Pick ‘n Pay Stores is planning to move into black townships, a programme that will start by establishing franchise model family and minimarket stores in communities such as Soweto, Attredgeville, Tembisa and Vosloorus.

Frans van der Colf, the general manager of the franchise division, said the programme would start in Soweto, where ordinary business people from the township would be selected to own and run the franchise.

Van der Colf said the company had identified some sites for the family stores in Soweto.

“We want to empower about 15 Soweto residents who own small businesses,” he said.

Neal Quirk, the franchise director, said the retailer was investigating sites in Attredgeville, Tembisa and Vosloorus.

Maureen Nkomo, the Spaza Association’s deputy chairman, welcomed the move.

She said the franchise model roll-out in Soweto was an opportunity for spaza owners. Spaza shops were prepared to group together and raise capital to buy the franchises.

Jerry Moloi, the chairman of the Soweto Small Business Executive Council, also welcomed the strategy.

He said the roll-out of Pick ‘n Pay franchises in Soweto would contribute positively to moving small businesses from the third economy to the second economy.

But he said business owners needed to be educated on the free market system, as some would be threatened by the strategy. “If we want to buy in big volumes and compete with other retailers … we need to begin to club together and [speak] in one voice.”

According to Moloi’s estimation, it would cost between R1.5 million and R2 million to buy a Pick ‘n Pay franchise.

Lawrence Mavundla, the head of the African Council of Hawkers of Informal Business, did not like the strategy because it would disadvantage the township’s smaller retailers.

Mavundla said the idea would force most shopkeepers in Soweto to close down. Smaller retailers did not have the muscle and sophistication to fight big retailers such as Pick ‘n Pay. “I don’t think the businesses would survive.”

He said people were still renting out shops, originally owned by the municipality, and could not offer them as collateral when applying for loans.

“We need security to raise money and are very worried about Pick ‘n Pay coming into the townships.”

Abri du Plessis, the chief investment officer at Gryphon Asset Management, said there was a greater opportunity in Soweto for shopping.

The South African market was moving strongly into convenience shopping, which was already in the townships.

“It is a matter of cost effectiveness to the consumer,” concluded du Plessis.

Pick ‘n Pay Stores said it was re-evaluating the future of its 127-store Score chain after five years of losses.

Pick ‘n Pay gained 0.11 percent to end at R35.60, while the food and drug retailers sector gained 2.92 percent.