South Africa’s retail sector is facing a turbulent period as several major retailers have been forced to close underperforming stores due to economic challenges, rising costs, and shifting business strategies.
The affected retailers, four of were once go-to destinations for local consumers and even voted ‘Coolest Grocery Stores to Shop’ at in The Sunday Times Gen Next Awards‘ on several occasions, include Pick n Pay, SPAR, Woolworths, and Shoprite, as well as Italtile.
While some are cutting losses to stay afloat, others, like Shoprite, are strategically closing stores despite overall expansion.
However, not all retailers are feeling the same pressure. Truworths, the South African clothing retailer, has managed to hold steady in its home market despite a challenging environment.
1. Pick n Pay – 32 store closures in restructuring effort
Pick n Pay has embarked on a major restructuring plan to recover from significant financial losses. As part of its ‘Store Estate Reset’ strategy, the retailer has shut down 32 supermarkets across South Africa. These include 24 company-owned stores and 8 franchise locations, with an additional five company-owned stores converted into franchises.
The move follows a staggering R3.2 billion after-tax loss for the fiscal year ending February 2024. To regain stability, Pick n Pay raised R4 billion through a Rights Offer and R8 billion from a separate Boxer listing. The retailer is now focused on stabilizing its operations and improving profitability.
2. SPAR – 13 stores shut amid operational struggles
SPAR has also been forced to close stores due to a series of operational failures and financial strain. The retailer confirmed that 13 underperforming stores in its South Rand Region have been shut down.
A key factor behind SPAR’s troubles was a failed SAP enterprise resource planning (ERP) system rollout at its KwaZulu-Natal distribution center, which caused severe supply chain disruptions. This led many independent SPAR retailers to seek alternative suppliers, weakening their loyalty to the brand.
To recover, SPAR has been working on fixing system issues, improving pricing visibility, and disposing of non-performing stores. While profitability has shown signs of improvement, the company remains in a fragile position.
3. Italtile – closing and relocating stores due to crime
Italtile, a leading home-improvement retailer, has been forced to close or relocate several stores in high-crime areas. The company has cited rising criminal activity and safety concerns as major reasons behind these decisions.
“As criminal behaviour and illegal activities flourish, we are continuously committing significant effort and investment to bolster our security ecosystem, including, in extreme cases, relocating or closing stores in unsafe areas,” the company stated.
In addition, Italtile faces tough competition from international manufacturers, particularly Chinese tile producers operating in SADC countries. These foreign manufacturers enjoy duty-free access to South Africa while benefiting from protective tariffs in their home markets, putting local retailers at a disadvantage.
Despite these challenges, Italtile remains financially stable, reporting R6.1 billion in turnover for the six months ending December 2024, though this was 1% lower than the previous year.
4. Woolworths – 5 food store closures amid restructuring
Woolworths has also seen some store closures, particularly in its food division. While its fashion, beauty & home segment expanded by 21 new outlets, Woolworths closed 5 food stores, reducing its total to 360 locations.
The company has been shifting its focus toward premium food offerings and expanding its Absolute Pets brand, adding 172 new pet stores under its Woolworths Food segment.
Woolworths has yet to release its December 2024 interim financial results, but its FY24 report (ending June 2024) showed moderate growth overall. The company plans to open 22 more Woolworths food stores by June 2025, indicating a strategic reshuffling rather than a full-scale contraction.
5. Shoprite – 16 Store closures, but aggressive expansion continues
Despite its dominant market position, Shoprite has also closed 16 stores over the past year. However, these closures are minimal compared to its overall expansion, with 264 new stores opened across its brands in South Africa in the same period.
Shoprite is particularly focused on expanding its USave brand to target cost-conscious shoppers, with 43 new USave stores set to open in the second half of its financial year.
Additionally, the retailer is diversifying into clothing, baby products, outdoor gear, and pet retail. Shoprite’s Petshop Science brand has grown to 129 stores, and sales in this category have increased by 56.9% year-on-year.
Despite these store closures, Shoprite’s overall business strategy remains aggressive and growth-focused, making it a stark contrast to struggling competitors.
Truworths dodges the bullet: zero store closure in South Africa
Truworths, the South African clothing retailer, has managed to hold steady in its home market despite a challenging environment. While its Truworths Africa segment saw a slight decline of 1.1% in sales to R8.3 billion, the company’s overall retail sales grew by 2.4% to R12.5 billion, driven by a strong performance in its Office UK segment.
Additionally, Truworths has shown resilience in its online sales, which grew by 38% and now contribute 5.8% to its African retail sales. This growth highlights the retailer’s ability to adapt to changing consumer trends and leverage its e-commerce platform effectively.
Although Truworths has faced difficulties in Zimbabwe, where economic struggles and a thriving second-hand clothing market have forced store closures, it has not announced any closures in South Africa. Instead, the company is focusing on optimising its operations and maintaining its stronghold in the local market.
The bigger picture: retailers adapting to economic pressures
The widespread store closures reflect the economic challenges and shifting retail landscape in South Africa. Several factors have contributed to these shutdowns:
- Weak consumer spending – High inflation and interest rates have led to reduced disposable income and weaker retail sales.
- Operational costs – Rising expenses, including rent, electricity, and security, have made it more expensive to run stores.
- Crime and infrastructure failures – Load-shedding, municipal service breakdowns, and rising crime rates have forced some retailers to shut stores in high-risk areas.
- Failed business strategies – Companies like SPAR, which has a relatively weak online presence compared to competitors (as highlighted by Pitchgrade) and Pick n Pay, which tried to cater to all consumer segments, have struggled with poor strategic decisions, leading to financial strain and restructuring efforts.
While most retailers are closing stores to cut losses and optimise operations, Shoprite stands out as the only major retailer expanding aggressively.
As the sector continues to evolve, companies will need to focus on efficiency, cost management, and adapting to consumer trends to survive the shifting retail landscape.
However, with more store closures and strategic realignments expected in the coming months, 2025 is bound to be a critical year for South African retail.
