We assess the transformation of PIK over the past seven years, and conclude that PIK has not yet reached Stage 3 of its Recovery Plan. PIK’s turnaround thus far has mostly cost-driven, and it will need to eliminate the turnover growth deficit to its main competitor in South Africa. Our analysis of market share shows that while the Boxer chain may have increased its market share, the core Pick n Pay chain’s market share may have dropped to 22.7% in 2019. While growing smaller format stores, we believe PIK may have neglected the larger, full-line Pick n Pay supermarkets. We are concerned that less competitive prices may have contributed to its higher GP margin. A price comparison of items sold in Pick n Pay and Checkers reveals some price premium in PIK, which could pose some risk to its GP margins, in our view.
