PICK N PAY: South African Giants Partner in Landmark Distribution Centre

The famed Pick n Pay Supermarket brand has enjoyed over half a century of sweeping growth and dominance, brought into existence when consumer champion Raymond Ackerman purchased the first four Pick n Pay stores in Cape Town in 1967, and now found as far afield as Mozambique, Mauritius, Swaziland and Namibia.

It remains today a family-owned business, and its central emphasis on the customer has seen it become South Africa’s leading food, clothing, and general merchandise retailer and a giant in the fast-moving consumer goods (FCMG) industry on the African continent. The Group’s store formats range from large, all-under-one-roof hypermarkets to small convenience stores to cater for immediate needs, underpinned by an all-conquering online platform.

CUSTOMER CHAMPIONS

“We keep customers at the heart of our business,” says the Group of what essentially defines the Pick n Pay way. “This philosophy informs everything we do, from how we treat our customers, to the product range we offer and how we design our stores. Putting the customer first means we work hard to understand their diverse and changing needs and how we can serve them better.” As a result, more than half of all South Africans shop regularly in Pick n Pay stores, some of the most loyal customers in the country.

So well-regarded has the Pick n Pay brand become, that its reach has spread well past the borders of its nascent territory. “The Group serves customers across the diverse spectrum of South African society, and is expanding its reach into the African continent. Pick n Pay has established operations in Botswana, Lesotho, Namibia, Swaziland, Zambia and Zimbabwe and now runs 144 stores outside South Africa.

“Pick n Pay is a much-loved brand, valued within society, built on a genuine desire to make life better for our customers and to make a positive contribution to the communities in which we live and work,” is the Group’s overarching assessment of its work to date. “Our strong and unique family values have guided the business for more than 50 years, providing a solid foundation for growth, innovation, service excellence and generosity.”

The Group already operates some 12 distribution centres across the country catering for groceries, fresh and perishable produce and clothing, and until now the two largest had been at Longmeadow in Gauteng and Philippi in the Western Cape. However, almost as paramount as infrastructure and operational efficiency to the Pick n Pay model are the partnerships it has fostered with both suppliers and service providers, long a cornerstone of its approach. The latest, announced in May, sees it team up with Fortress REIT (Fortress), the much-vaunted leading South African Real Estate Investment Trust, in arguably the biggest collaboration to date for either.

One of the largest real estate investment trusts in South Africa, Fortress specialises in developing and acquiring state-of-the-art logistics real estate, and convenient, commuter-based retail centres. It has enjoyed real success as the bounce-back from the turbulence of Covid-19 continues with the most recently released results in June highlighting the completion and letting of 163,000 m² of warehousing, with Fortress’s pro-rata share totalling a value of R1.3 billion. 

“Completing, leasing and pre-leasing a total of nearly 400,000 m² of space in a year full of operational challenges highlights our lending marketing position in the logistics real estate sector,” Fortress commented, while highlighting a definitive long-term strategy to pivot the business’s convenience retail and logistics real estate portfolio balance in South Africa.

“Our focus remains on driving our logistics assets and rolling out our pipeline,” clarified Steven Brown, CEO of Fortress REIT. “This deal cements our business strategy of developing and owning two-thirds of our portfolio in logistics, making us the largest owner and ongoing developer of core, premium-grade logistics real estate in South Africa.”

DISTRIBUTION REVOLUTION

It landed in May an immense coup in this important operational priority, signing by far its biggest logistics development to date through a landmark partnership with Pick n Pay at its flagship, premium-grade Eastport Logistics Park in Gauteng. In a prime location, the Park offers outstanding accessibility and visibility on the Albertina Sisulu Freeway, one of the major arterial routes in Gauteng linking Pretoria to the East Rand. Interest in the node is exceptionally high with Eastport also situated centrally to all Gauteng markets.

Distribution centres are integral components of the distribution chain for products, order fulfilment and produced goods, before shipment to wholesale or retail customers. Often referred to as the hub, if not the heart, of operations, they serve as a bridge between suppliers and their customers and are customer-centric, serving retail stores directly. “Modern and safe logistics parks are in demand, with more clients looking to have a robust and localised supply chain,” agrees Brown.

Pick n Pay confirmed that this new development is set to cover 36 hectares of the immense infrastructure, with Fortress ultimately to own 40% of the development and Pick n Pay acquiring 60% of the new inland distribution site.

Scheduled for completion in 2023, Fortress will fund the incremental capital required for the development from existing available facilities. “The long-term Pick n Pay lease with an option to extend, as well as grow the size and footprint of the facility, is set to position Fortress’s Eastport Logistics Park and the broader R21 area as South Africa’s prime logistics hub, as allied industries and businesses seek proximity and rational integration into the country’s leading logistics ecosystem,” assessed Brown.

“We are proud of our partnership with Pick n Pay at Eastport Logistics Park in Gauteng which will see Fortress Logistics developing one of the largest FMCG distribution centres in Africa.”

For Pieter Boon, CEO of Pick n Pay, this newest inland distribution centre is a key investment in securing competitive advantage. “Fortress’s Eastport facility will help us deliver key logistics and supply chain innovations, achieving efficiencies and growing market share at a time when faster and cheaper service of our stores has never been more important to deliver on our customer promise of low prices and reliable service,” Boon wrapped up.