Pick n Pay’s strategic downscaling marks a turning point for SA’s retail sector. Under the leadership of returning CEO Sean Summers, the retailer is undergoing a significant ‘back to basics’ reset including the closure or conversion of more than 100 underperforming stores and the closure of more than 30 stores to date.

Pick n Pay is not downsizing for the sake of it, says John Jack, CEO of Galetti Corporate Real Estate, it’s about cutting back to the core and building a leaner, more profitable machine that can respond to where the market is now and not where it was five years ago.

Post a R4 billion rights issue, Pick n Pay listed their discount arm, Boxer which raised R8.5 billion with Pick n Pay to retain a 65.6% stake. Jack says Boxer is the kind of retail model more players should be watching.

“Boxer’s stripped-down, high-efficiency format is the future of South African retail, especially with stretched consumers. The brand’s expansion is smart, focused and cost-effective,” he says.

Behind the scenes, Pick n Pay is reviewing its entire store portfolio. Leases, trading densities, and growth potential are all under the microscope. The goal is clear: exit sites that no longer make sense, hold onto high-performers, and convert anything in between.

“We’re seeing them convert stores to Boxer, offload non-core sites, and bring in strong franchisees where they can drive better margins. In some cases, there’s even talk of repurposing for government or community use. It’s a smart way to reposition struggling assets without just shuttering them.”

A case in point is the new flagship store in Westown Square, KwaZulu-Natal, which forms part of the ‘Super Seven’ strategy to reinvest in priority locations. It signals that the retailer isn’t done; it’s just becoming more selective.

Jack adds that when looking at corporate portfolios, Pick n Pay considers sales per square metre (trading density) with low-performing stores relative to operational costs prime candidates; lease commitments, termination penalties, escalation clauses, and landlord relationships which affect decisions; overlapping catchment areas – locations cannibalising sales from stronger nearby stores; demographic fit – where the target market no longer aligns with Pick n Pay’s customer value proposition, and whether or not a site can be repurposed (e.g. Boxer, franchisee, or logistics hub).

In other cases, the strategic location value where sites that hold long-term land value or redevelopment potential may be retained despite short-term underperformance.

By shedding underperforming assets, Pick n Pay is moving toward a nimbler, more cost-efficient model. Fewer but better-performing stores reduce overheads, simplify logistics and allow for targeted marketing and supply chain efficiencies. Disposing of or converting non-performing assets frees up capital, which can then be reinvested into high-traffic sites, new retail formats (like Boxer) or digital transformation initiatives.

The impact is going to be felt across the board. Malls with underperforming anchor tenants could take a hit, but savvy landlords and developers will see opportunity, notes Jack: “This shift mirrors what we’ve seen in the US and Europe, where retailers are downsizing their footprint to boost efficiency. It’s not about having the most stores; it’s about having the right stores.”

For property owners, this is a wake-up call to adapt to new formats, invest in flexibility and start thinking beyond traditional leasing models.

“If Pick n Pay pulls this off, it won’t just survive; it could lead the way for others stuck in bloated, outdated operating models. The question is whether they can move fast enough,” he says “and if this reset is managed properly, it’ll become the benchmark for how SA retailers clean house and rebuild smart.”